Headlines: July 4th, 1997

Gordon Brown, in his Budget statement, announced an injection of more than £3b for education and health. Education will receive £2b, made up of £1b extra for local authority spending on schools and £1b for school repairs to be spent up to 2002. The additional £1.2 funding for the health service will go into patient care.Local education authorities will now be able to tackle the problem of class sizes. The new money will allow them to start hiring teachers. The £1b will also be spent on books and equipment, including information technology equipment and more training for teachers and headteachers. There will be more specialist schools and resources to develop effective programmes to improve discipline and cut truancy.

Both authorities and unions feel that their pleas for more cash have been heeded. “I’m delighted” said Graham Lane, education chairman of the Local Government Association. He added: “We will now be able to stabilise the education service next year, and there will be no need for bigger classes.” David Hart, general secretary of the National Association of Head Teachers echoed the same view: “I’m absolutely delighted that the Chancellor has listened to the pleas from schools, which told him in words of one syllable that if he stuck to the previous government’s spending plans, next year would have been a disaster.” Nigel de Gruchy, head of the National Association of Schoolmasters Union of Women Teachers, said: “The relief Mr Brown has given for education will be welcomed across the country.”

It was made clear that the additional funding will not be used to meet pay increases. The Chancellor said that he will continue to look for restraint in pay settlements in the public sector. David Blunkett said: “I shall be expecting the School Teachers’ Pay Review Body to take full account of the Chancellor’s view.

The £1.2b injection of cash into the health service will be supplemented by transferring at least £100m from administration into patient care. There is also a prediction that up £85m a year may come from an initiative to reduce fraud in the NHS. There was a welcome from across the health service at the prospect of new money. The British Medical Association said the extra money would wipe out deficits of up to £750m this year and give the NHS a fresh start. Chairman Sandy Macara said: “We will have to spend much of it before the cheque comes in. Hospitals will draw down in anticipation of next year’s money.”

Both education and health will benefit as a result of investment channelled through the Public Finance Initiative. Geoffrey Robinson recently announced changes to streamline PFI and said that his priority areas were schools and hospitals. The first development from this streamlining is an announcement of £1.3b for new hospital schemes. Work on the 14 approved schemes will start over the next 18 months.

Health managers applauded the PFI progress, but added a warning about the £2.4b hospital maintenance backlog.