01 NOV 2017

Schools Funding - a note

My commitment to ensuring that our schools are better funded is a matter of public record (local press passim) and I have welcomed recent announcements of additional funding for our schools. Frustrated by some of the media coverage and correspondence from schools over this I decided to ask the House of Commons Library to review what has been sent to me and what has been in the local media. The House of Commons Library is non-partisan and has subject experts, including statisticians, in a wide range of areas. I have also received information from the Department of Education. In this briefing I set out the situation and the response to some of the challenges in terms of both income and costs.

In recent years I have supported our schools over funding in many ways - arranging meetings with the Prime Minister and other Ministers, supporting the f40 group who have campaigned for better funding over a number of years or indeed of submitting petitions in the House of Commons. I have also lobbied Ministers on behalf of our schools and children on the matter. It is wrong to say that there have been cuts to education as campaign groups suggest. This is misleading. The new formula used to disperse the money to schools provides cash gains in respect of every school and the independent Institute of Fiscal studies (IFS) is clear that, with our new investment of £1.3 billion, the schools budget will now be maintained in real terms per pupil from this year to 2019-20 when the current funding round ends.

The additional £1.3 billion we have announced for schools means that core funding for schools and high needs will rise from almost £41bn in 2017-18 to £42.4bn in 2018-19, and £43.5bn in 2019-20. This means that overall across the country funding will be maintained, in real terms per pupil, over the next two years. These figures represent an increase of over 3.4% in 2018-19 and 6.1% in 2019-2020 based on 2017-18 figures.

Issues around school funding are complex and the formula used historically to distribute funding to schools has been unfair and opaque and based on data which is now well out of date. I am therefore pleased that the Department of Education has listened to many concerns on this. Earlier in the year there was a consultation on the National Funding Formula to which the Secretary of State has responded with the announcement made in July that we are investing an additional £1.3 billion across 2018-19 and 2019-20, over and above existing spending plans.

I have responded positively to this but the figures have been challenged by those who feel that the £1.3 billion is insufficient and that there have been 'cuts'. I have not claimed that this new funding formula or the additional £1.3 billion will address all these concerns but they are certainly a step in the right direction. The campaigning we have done for a fairer funding formula has been recognised.

INCOME
What the increase in funding for the schools budget means in terms of funding per pupil is that schools with low pupil-led funding will have their funding topped up to reach the minimum per pupil funding levels, which are £4,600 in 2018-19 and £4,800 in 2019-20 for secondary schools, and £3,300 in 2018-19 and £3,500 in 2019-20 for primary schools. These figures are 'floors' and not 'ceilings' and I will continue to make the case for schools in this constituency. These are figures which some head teachers told the Minister for Education are acceptable to run schools.

The new national funding formula (NFF)
The NFF is the system for distributing core funding to schools. The new NFF will mean that, for the first time, school funding will be distributed based on the individual needs and characteristics of every school in the country. This will direct resources where they are needed most, and provide transparency and predictability for schools.

Within the NFF, about 90% of funding is based on the pupils in the school (known as 'pupil-led funding'). This provides:

  • a basic amount for each pupil, which increases as they progress through the key stages;
  • funding for those with additional needs who are more likely to be behind their peers
  • the minimum per pupil funding level to which I have already referred.

About 10% of the funding is based on the characteristics of the school itself, ('school-led funding') including a £110,000 lump sum for every school and extra funding for small schools in sparse rural locations, and those experiencing high levels of pupil growth.

The formula also includes a funding floor that means every school will be allocated at least a 1% increase by 2019-20, with at least 0.5% in 2018-19, compared to baselines.

The main changes to the formula
The additional £1.3 billion investment allows an increase in the funding that all pupils attract through the formula, compared to what we originally proposed. We are doing this in three ways:

  • The basic amounts for pupils at each key stage have all increased;
  • There will be a minimum per pupil funding level for primary and secondary schools (as above);
  • In 2018-19 the formula will provide, as a minimum, a 0.5% per pupil increase for every school, and in 2019-20, an increase of 1%, compared to baselines. That replaces the previous suggestion of a floor of minus 3% per pupil: now, every school will attract a cash increase.

Secondary schools in this constituency have received increases of between 1% and 3.4%. Yet some have still been telling parents that the per pupil amount will drop to £4,100 per pupil when it will rise to £4,800 and that they must make up the difference. This is disingenuous.

COSTS
The Institute of Fiscal Studies has confirmed that overall funding per pupil across the country will now be maintained in real terms over the next two years. In reviewing the announcement and looking at original proposals prior to consultation they said 'First, there is more money. The average cash-terms increase in funding [per] pupil between 2017-18 and 2019-20 is... . equivalent to a real- terms freeze". This brings us on to the question of costs. Just like many others organizations, schools of course face cost pressures. Alongside getting the income figure right, the government has been looking at how it can help schools manage these costs.

The Department of Education understands that schools have faced cost pressures to date, and in addition to a significant package of advice and support available to schools, the Department will be providing targeted efficiency advice and support to schools that are in financial difficulty this year. High level analysis indicates that if the 25% of schools spending the highest amounts on non-staff expenditure were instead spending at the level of the rest, a saving of over £1bn could be achieved.

Some of the calculations being used to try to show cuts are based on a flawed calculation that starts from the position of school budgets in 2015-16, and then calculates the cost pressures on school budgets over 4 years. This baseline is never mentioned. Nor is the fact that most of these past pressures have already been absorbed by schools whilst at the same time as standards continue to rise.

Funding children with special educational needs (SEN) and disabilities.
The government is concerned to ensure support for children who face the greatest barriers to their education and thus is also reforming the funding for children with high needs. A 'high needs NFF' will mean that, for the first time, this funding will be distributed fairly and consistently across the country. Through additional investment every local authority will see a minimum increase in high needs funding of 0.5% in 2018-19, and 1% in 2019-20.

In summary
In summarizing what the new plans will achieve the IFS says 'Given the current state of the school funding system, the latest proposals imply school funding reform is moving in the right direction'

The Question remains is the additional £1.3 Billion enough. This is, of course, a political point and I am sure that every sector would say they want more. However, we have to understand that we can only provide more if our economy does well which is what we have been trying to do. Although schools may want more, and although costs have risen, an increase in cash cannot be called a cut. Some data being quoted is prior to the recent government announcement and so no assessment of the new funding has been included.

Other data is using the Consumer Price Index to look at inflation. On questioning the House of Commons library on this I was advised that the CPI is not the best measure of the costs faced by a school. This is why so much attention is paid to the IFS on cost pressures. The national increases announced by the Government are slightly above the forecast levels of the GDP deflator (2018-19 and 2019-20) which is a measure of the economy-wide inflation. While it is not an education-specific measure is does at least cover future year.

Also overlooked is the fact that pupil numbers are set to rise in coming years. As a majority of the school funding is based on a per pupil basis, more pupils means more money. This is why schools are so keen to fill their places to ensure economies of scale.

I hope that those schools that are still campaigning against the cuts will join me in welcoming this progress in school funding and the fact that rather than cuts additional funding has been put into this important budget.

End note:
The Department for Education has published details of funding to very school which you can access at this link. The Institute of Fiscal Studies has published an assessment of these figures.

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