Question: Labour and the Liberal Democrats promise to pump billions more in to education. How much are you going to spend?

Theresa May: We're committed to spending the same overall amount on schools as the Labour Government has set out. But we want to spend it differently, because too much of the money that is currently in the budget for spending on schools is kept back by Government to be spent on Government's priorities and it's kept back by local education authorities. So we would change the way schools are funded by moving to a national funding formula, sending all the money direct to the schools and by doing that we would be devolving on average an extra £540 per pupil. The schools would take on some extra responsibilities but some of that money would be freed up for them to spend on their priorities.

Question: Don't you think it sounds rather defensive to say we will spend what Labour spend. Why haven't you costed your own specific proposals?

Theresa May: We have costed in the sense that we are saying that within the overall sum that is going to be spent we can devolve more of that money down to schools and give schools the freedom to decide how to spend it on what is right for them and what is in the best interests of the children in their classrooms.

Question: Labour's key pledge is to recruit 10,000 new teachers, the Lib Dems 17,500 - how many teachers will you recruit?

Theresa May: We are not setting an overall limit of this sort. If you look at what the Labour Party are proposing, they have said that they will recruit an extra 10,000. They claim that they've recruited an extra 11,000 over the last four years but in fact when you look in detail at the figures that includes unqualified teachers and instructors who aren't qualified teachers and supply teachers as well. So it's not quite the figure they are making it out to be. They claim they are going to recruit extra teachers without doing what is necessary to make teaching a profession that would be attractive to people, namely to get rid of the red tape that is leading to such an increase in workload for teachers.

Question: Teacing unions say there are teachers shortages - do you detect that too?

Theresa May: Absolutely, there is a real crisis of teacher shortages. There are a number of solutions. We need not only to recruit more new teachers, we need to retain existing teachers, cutting down on the workload and bureaucracy is a key element to that. We need to ensure that teachers have got time to teach and also that they are allowed to exercise their professional judgement in the classroom. We want to free up teachers so that they can teach children rather than be form fillers. So we would address the problem that is causing teachers to leave and causing the shortages in the profession when all Labour and the Liberals are talking about is setting a target for a number of new teachers, without really addressing the real issue.

Question: Roughly - how many teachers short are we?

Theresa May: It is difficult to get to the real figure. The Times Educational Supplement came up with a survey recently with the figure of 10,000 teacher vacancies. The official government figures are lower than that but government figures have a very strict definition of what a teacher vacancy is. For example, if a school fills a post for a term with a supply teacher, then it isn't counted as a vacancy although they don't have a permanent teacher in post.

It is difficult to get a handle on the real figure. All I would say is, you can see how great a crisis this is when you look at the number of schools that have had to be on a four day week or had to send children home early at some stage.

Question: So 10,000 teacher shortages is a realistic figure?

Theresa May: The TES did a survey which said 10,000 - whether the figure is 10,000 or higher is difficult to say, but certainly there is a real crisis with teacher shortages and I suspect the figure is probably higher than 10,000.

Question: Your big idea is free schools. Schools will have complete control over their admissions policy. Is this a return to grammar schools?

Theresa May: Free schools, by having control over admissions policy will be able to decide how they choose pupils or whether they want to select pupils but that doesn't have to be by academic ability. We could very well see some new grammar schools being created but they could also decide to select on a geographical criteria, if for example they wanted to be a community school, or faith based and church schools will be able to select on the basis of interviewing parents which they were able to do until Labour took that right away from them in 1998.

Question: This will involve schools taking on more responsibility, as you mentioned earlier. Won't that result though, in more red tape, more bureaucracy for these schools in the sense that they have to do a lot of the administration?

Theresa May: Well no. Firstly, this is not something that is based on a shot in the dark. We did of course introduce grant maintained schools when we were last in government, and those proved to be very successful. And what we saw from the grant maintained schools, and the free schools are like the grant maintained schools in this sense, that they have their budget and they have the freedom to spend it as they wish. And what we saw, and what will happen with free schools, is that actually they are able to get rid of a lot of the administration and bureaucracy that results from being part of a local education authority. We will also ensure that we are cutting down on all the bureaucracy from the centre, from the DfEE, in terms of circulars and directives and red tape and regulation. So a lot of that will have been swept away and schools will be free to, for example employ more administrative staff, perhaps a secondary school might want to employ a bursar, to take on the work that relates to any extra responsibilities.

Question: Labour say your free schools will cost £4 billion, are they right?

Theresa May: We are certainly able to devolve down to the schools £4 billion which is currently being spent by central government or local government. It is on the basis of that figure that we are able to say that we would on average devolve an extra £540 per pupil to schools.

Question: So you will be able to devolve that down through central government?

Theresa May: From central government. We will get the money direct from central government to the schools, on the basis of a national funding formula.

Question: What are your targets for class sizes?

Theresa May: We are not setting any targets for class sizes. I think it is up to the school to decide within their budget, how they best want to spend it in the interests of children in the classroom. And for the schools to decide the sort of class sizes that they think are right, rather than government coming along and imposing a class size on them. What you've seen as a result of the infant class size limit that the government has imposed, is that there are some problems created for other schools. I was actually visiting a junior school the other day, who said that they are very concerned that the impact for them of the reduced size in the infant class, as they come in to the junior school, means that they are actually going to lose funding and therefore they may have to lose teachers.

Question: What role to LEA's play in your new structure for schools?

Theresa May: They will have a very specific function to perform.

Question: A smaller function though?

Theresa May: A much smaller function yes. Local authorities will still have the role of statementing children for special educational needs and for certain support services for statemented children. They will also have retained the function of education welfare officers. And they will also have a duty of making sure every child in their area is in appropriate education.

Question: Looking to the future, do you think their will always be a role for LEA's, or could those functions not be devolved or provided by someone else, another body?

Theresa May: We feel that these specific functions I have identified are for local authorities to perform in education, but in addition to those functions I have identified they would be free to offer other services to schools if the schools wanted to buy them. But it would be up to each school to decide where they would best get particular services like premises maintenance, personnel functions and so forth.

Question: You've promised not to introduce top up fees - the Lib Dems have pledged to abolish tuition fees - they've gazumped you haven't they?

Theresa May: It is always very important with the Liberal Democrats to look at the small print of what they are proposing. They are not abolishing a requirement for students to make a contribution towards the cost of their education at university. All they are doing is deferring the requirement for students to pay to the point where they have graduated. There are a significant number of people who don't pay tuition fees because of the means tested element to it, as I understand from the Liberal Democrats proposals, and certainly what we are seeing in Scotland, is that graduates will all pay £2,000 back when they earn a salary of £10,000 and so for some students they could actually be paying more in contributions to the cost of their education than they currently are.

Question: Universities UK say that universities face a funding shortfall of £900 million per annum. How would you meet this shortfall?

Theresa May: I would certainly agree that universities have a funding problem. This is why we want to change the way our universities are funded for the future. We want to move away from the situation we currently have where the teaching costs are met from an annual grant from the higher education funding council. We will change this gradually, it will take time, we will move universities on to an endowment basis so we would provide a lump sum which would be an endowment for a university against which they will draw an income to pay for their teaching costs. We can do this immediately by the sale of the outstanding loan book and by selling the student loan book each year. We would also put assets from funds raised elsewhere, such as the sale of the radio spectrum, into these endowment funds and gradually we would endow the universities.

Question: You say gradually. Not all universities would be endowed immediately?

Theresa May: No they wouldn't. It wouldn't be possible to do that. We are talking about significant sums of money. We would have a bidding process. We would consult with the sector as to what the criteria should be, to determine who should be an endowed university but we would then say to universities it is up to them to put in a bid to become an endowed university.

Question: You want to get to a stage where all universities receive this endowment but how much would that cost?

Theresa May: We haven't put a figure on this because it depends on the proposals put forward by the universities. You can't say automatically that a particular grant being received today will be an equivalent of an endowment fund of X million. Of course we have rule of thumb figures that we've been working on but we will wait to see what the universities would propose in the bids they put forward. So it is difficult to say how much over time it will cost, but the number endowed at any time will depend on the funds available.

Question: Have you ruled out some form of graduate tax?

Theresa May: We are looking at restructuring the current system where graduates repay loans. So as now they would take out a loan and repay that loan, but we would provide them with two new features. First of all, we would double the threshold that they have to repay from the £10,000 that Labour reduced it to, to £20,000. So for example, a student teacher starting off in work would not be having to pay their loan back immediately. We would also provide tax relief against the repayment.