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The Minister of State, Department for Education (Mr Nick Gibb)
I congratulate my hon. Friend the Member for Redditch (Karen Lumley) on securing today’s debate. I welcome the opportunity to discuss school funding issues in Worcestershire with her and my other hon. Friends. I recognise her concern about the level of school funding in Worcestershire. Despite what my hon. Friend the Member for Worcester (Mr Walker) said, I think that this is a glamorous subject to debate, and I am delighted to be doing so.
Worcestershire is one of the lowest funded authorities in the country. In funding allocations per pupil, Worcestershire is ranked 142nd out of 151 authorities, receiving, as my hon. Friend the Member for Redditch said, £4,028 per pupil compared with an average of £4,398. To put that in context, in neighbouring Birmingham, the figure is £4,790, which is £762 more per pupil, and in Tower Hamlets it is £6,792—a staggering £2,764 more per pupil per year.
I know that my hon. Friend’s concern is shared by my hon. Friend the Member for Worcester, who tabled an early-day motion last June calling for a fairer funding system for schools and raised the issue in the House at business questions last week. I also know that the F40 group, which represents many of the lower funded local authorities in England and of which Worcestershire is a member, has met my noble Friend Lord Hill and raised those issues with him. I know that all these concerns are also shared by my hon. Friends the Members for Wyre Forest (Mark Garnier) and for West Worcestershire (Harriett Baldwin).
The reason for the situation is the unfair and illogical funding system that we inherited from the previous Administration and that we are committed to reviewing. Indeed, we are doing so, as my hon. Friends will be pleased to know, with some of the finest minds in the Department for Education, who are sitting behind me—not directly behind me, but behind my hon. Friend the Member for Grantham and Stamford (Nick Boles), although he also has a fine mind and will, I am sure, contribute to the debate.
To be fair to the previous Government, they had been reviewing the system as well. The method of distributing school funding is based on a formula created in 2003. That was subsumed into the dedicated schools grant using the spend plus method, which took the funding spent by local authorities in the financial year 2005-06 and moved it forward by uplifting it by a set percentage each year for every authority and adding funding for ministerial priorities. That means that the inequalities in the system that existed in 2005-06 have been amplified by the percentage increases in subsequent years. In the words of my hon. Friend the Member for Worcester, the grant has ossified and it repeats and amplifies the unfairness. The effect is that schools facing similar challenges can receive vastly different funding. Two schools with the same needs should receive the same funding; it should not depend on an historical allocation made for a different set or a different generation of children.
Therefore, in our White Paper, “The Importance of Teaching”, we said that we would consult on developing and introducing a clear, transparent and fairer national funding formula based on the needs of pupils. We recognise that not all schools are the same and that their funding should reflect the needs and characteristics of their pupils. Worcestershire, for instance, receives funding for sparsity of nearly £2.5 million a year. However, the system no longer reflects needs adequately, depending more on what schools received in the past than on the characteristics and needs of pupils in their schools now. We want all schools to be funded transparently, so that schools and parents can see why there are differences.
We are already working with partners—such as the Local Government Association, the Association of Directors of Children’s Services, teacher and governor associations, and the Independent Academies Association—to develop options for the future funding of schools, with the aim of consulting in late spring. No doubt my hon. Friends will contribute to that consultation process. It is likely to cover the merits of a national funding formula, transitional arrangements and the factors that should be included in such a formula.
I know that my hon. Friends will be disappointed that we have not been able to go further in our first year. We inherited a perilous economic state from the previous Administration, and the Government have made it clear that deficit reduction and continuing to ensure economic recovery are the most urgent issues facing Britain. Our budget deficit in the last financial year was £156 billion—the highest among the G20 countries. The interest on the accumulated Government debt to date is £42.7 billion a year, which is significantly more than the total schools budget. Unless we take serious measures to tackle the deficit, we will face a higher cost of borrowing as capital markets demand greater compensation for the heightened risk. Ultimately, without the action that the Government are taking, we would now face an economic crisis.
As with other public services and Government spending, we have had to make difficult decisions about funding for schools. I hope that my hon. Friend the Member for Wyre Forest will understand that, given that we do debate the difficult issues that he raised in his remarks. We have had to make very difficult decisions in relation to the spending review period. In reaching those decisions, we needed to balance taking urgent action to manage the public finances with protecting the most vulnerable and recognising that education faces particular pressures.
I am pleased that we are protecting funding in the system at flat cash per pupil, before adding the new pupil premium. Flat cash per pupil means that as pupil numbers go up, the overall budget increases in line with those numbers. The pupil premium is in addition to that and will be worth £2.5 billion by 2014-15.
In that context, I hope that my hon. Friends will see this as a good settlement for schools, in the circumstances. As ever, the budget for each individual school will vary; it will depend on each school’s particular circumstances and the decisions made by local authorities and school forums about how best to allocate funds.
Harriett Baldwin
Will the Minister address my point about free school meals in rural constituencies, where many schools no longer offer a dining room?
Mr Gibb
Yes, I am happy to respond to my hon. Friend’s question. I recognise the concerns about using free school meals as a measure, but they are the only available method that can correlate deprivation at pupil level, rather than at postcode or area level, so they are the most accurate reflection of deprivation. There is quite a lot of academic evidence that free school meals accurately reflect the levels of deprivation in an area. However, we will continue to look at the issue, and we might in future include a measure of, for instance, whether pupils ever qualified for free school meals during a period of, say, six or three years. In that way, those who qualify for free school meals for just one year, then no longer qualify, will be eligible for the pupil premium.
The other thing that is happening as a consequence of policy on free school meals is that local authorities are pressing schools and parents to apply for free school meals, which they might not have done in the past. That will have a double benefit, in that more pupils will qualify for the pupil premium, as well as being able to have a meal at school.
The flat-cash settlement means, of course, that it will take time to move to the fairer funding system that I have been talking about. However, funding reform will be introduced in such a way as to minimise disruption and ensure that schools’ resources are not subject to sudden and dramatic change.
Our priority for 2011-12 is the introduction of the pupil premium. I have said before, and make no apology for repeating, that closing the attainment gap between those from the wealthiest and the poorest backgrounds is central to our education policy, and that was reflected in the speech by my hon. Friend the Member for Redditch.
Mr Robin Walker
Does the Minister agree that a key issue in closing the attainment gap is early intervention to give people the best chances and the best start in their education? Another issue that needs to be prioritised, therefore, is the early intervention grant. Disappointingly, however, it is likely to go down in Worcestershire over the next couple of years. Will the Minister look into that to see how we can concentrate resources in the right places to prioritise early intervention as the Government address these issues?
Mr Gibb
My hon. Friend makes a good point. That is why we have allocated £2.2 billion to the early intervention grant. It is vital to intervene early to catch problems before they become more systemic in a child’s life. My hon. Friend is right, and I will look into the issues he raises to ensure that there is not some undue unfairness in the allocation of the grant in Worcestershire. I will write to him shortly.
Although the exact amount of the pupil premium will depend on the number of children known to be eligible for free school meals, as recorded in the January 2011 census, which is not yet finalised, the numbers recorded in 2010 give an indication of the numbers for Worcestershire. On that basis, schools in my hon. Friends’ local education authority area will receive about £3.8 million of additional funding from April 2011 to help them tackle deprivation.
The pupil premium will be worth £625 million in 2011-12 and build to £2.5 billion in 2014-15. That is significant spending to help the most disadvantaged children in society. To ensure that the premium is introduced as smoothly as possible, we have made the indicator for next year known eligibility for free school meals, which my hon. Friend the Member for West Worcestershire mentioned. In future, we aim to include those who have previously been eligible for free school meals so that not only the value of the premium but the number of children eligible for it will rise year on year. Overall funding for the pupil premium will rise from £625 million this year to £2.5 billion in three years’ time.
My hon. Friend the Member for Redditch will appreciate that I am unable to pre-empt the findings of the funding review, and I know that she will be disappointed about that. However, I hope that she and my hon. Friends will take in good faith a commitment from me carefully to study the issues that they have raised in the context of the school funding review and in our consultation later this year.
Question put and agreed to.