Shephard paper admits schools are short of cash

DONALD MACINTYRE

Political Editor

An all-day Cabinet meeting to discuss Tory strategy up to the next general election was overshadowed yesterday by the embarrassing leak of a confidential Whitehall paper warning that "insufficient resources threaten the provision of education in the state school sector".

John Major was said to be furious after the leak of the brutally candid draft prepared for Gillian Shephard, Secretary of State for Education and Employment, eclipsed the carefully planned public relations impact of what he had billed "the biggest review of government policy for two decades".

Although ministers, including Mrs Shephard herself, made clear that she had not used the paper at the meeting, and parts of it "bore no relation" to her actual presentation, Labour's education spokesman, David Blunkett, to whom it was leaked, said its exposure "undermined John Major's 16th attempt to relaunch his party".

Brushing aside the embarrassment caused by the leak, Mrs Shephard said on BBC Radio last night that she had presented a series of slides on achievements, development of policy and "areas where we need to exercise care" to Cabinet colleagues but she had not warned that lack of money was damaging education, as set out in the leaked draft.

Confirming there will be a leak inquiry, Mrs Shephard said in an earlier statement: "It was a malicious act . I take it seriously and we will be looking into it." The Government was "united in regarding education and training as vitally important", she said.

The paper, apparently prepared within Mrs Shephard's immediate circle of advisers, and marked "restricted - policy", lists a series of achievements on education and training by the Government, but adds: "This should be one of our major success stories but it is not. On education, Labour maintains a lead over us of about 30 per cent compared with 20 per cent a year ago. There is a perception that schools are under-funded and peace in the classroom is threatened."

The leaked draft goes on to warn, in what Mr Blunkett interpreted as an implicit rebuke for the priority attached by Mr Major to the expansion of grant-maintained schools, that: "The need to improve standards must not be overshadowed by arguments about the mechanism through which education is delivered."

The paper also warns that if the new Job Seeker's Allowance - the replacement for unemployment benefit dogged by computer problems and delayed until next autumn - "is not introduced successfully and on time, unemployed people will not receive the benefit to which they are entitled".

In language clearly intended to boost Mrs Shephard's case in the public- spending round, it warns that any cuts in higher education "would affect a whole segment of middle-class youngsters, losing both their votes and those of their parents".

Michael Heseltine, the Deputy Prime Minister, said that reports representing the paper as what Mrs Shephard had actually presented to the Cabinet were a "travesty and wholly inaccurate". But he acknowledged that she had raised the issue of funding at the Chequers meeting.

Mr Heseltine said: "She made a point about resources. She is a spending minister. There has never been a spending minister in a public- spending review who didn't talk about resources."

He said that Mrs Shephard had also raised the Job Seeker's Allowance, emphasising its importance but saying that it should be introduced "when it was ready and effective".

Party officials did not disguise ministers' dismay at the leak's effect on a meeting, which they had hoped would seize back the political initiative for the Tories.

They became aware of the leak as the session neared its end, when Hugh Colver, Conservative Central Office's chief press spokesman, passed a note to Mrs Shephard after being alerted in a telephone call from a reporter. The leak overshadowed the meeting, which also discussed presentations from Peter Lilley on welfare state reform, Michael Howard on law and order and Kenneth Clarke on the economy. In a statement issued after the meeting, Mr Major insisted that it had been "a good day", and stressed "the priority that I attach to the education of our young people". He promised "further announcements on teacher training and continuing the improvement of standards and discipline in the classroom".

He said welfare was a "critical area" but had looked at the future provision against a background of expenditure now totalling pounds 15 per day for each working person.