Education Funding (Cambridgeshire)

Tuesday 8th January 2013 Westminster Hall

16:00

[Dr Julian Huppert (Cambridge) (LD)]

It is a pleasure to serve under your chairmanship, Mr Weir. I am delighted to have secured this debate on an issue affecting every pupil in Cambridgeshire.

Educating our young people to the highest possible standard is vital for a fair and stable society. Every child should be given an equal and fair opportunity and educated to the best of their ability, no matter what their skills. Education should be the priority. Whatever financial situation that we find ourselves in, we must never bankrupt our children’s future. They get only one shot.

The pupil premium was on the front page of the Liberal Democrat manifesto, and we are now delivering it in government. In Cambridgeshire, our schools are getting £1.8 million to help 2,100 children from poorer backgrounds get a good start in school, with critical flexibility for heads to work out how best to spend it for their pupils. Every child deserves a fair start in life. However, Cambridgeshire has a systematic problem with basic funding for pupils.

Ever since the Tory county council under Baroness Blatch cut funding for schools in the 1980s, Cambridgeshire schools have been consistently under-resourced. Her cuts have been perpetuated, as central funding for schools has been based on previous years’ funding, with no opportunity to close the gaps that have grown. The Tory cuts have been perpetuated by the Labour Government and this Government so far. Children now are paying for poor decisions made in the ’80s.

Pupils in Cambridgeshire get far less funding than pupils almost anywhere else in the country. In 2009-10, Cambridgeshire got £34 million less funding than the English average, and that trend has continued. For the financial year 2012-13, the dedicated schools grant placed Cambridgeshire 143rd in funding out of 151 local authorities. That funding covers nursery provision, mainstream schools, special schools and all high-needs pupils.

The Government’s new approach makes the problem even more obvious. Basic school funding is, reasonably and sensibly, being separated out from early years and high-needs funding, so that people can see what is happening. The schools element of the funding for 2013-14 gives Cambridgeshire the least of any of the 151 local authorities, at £3,950 per pupil per year. The English average is £4,550.

What possible reason can the Government give for why pupils in Cambridgeshire deserve 13% less funding than the rest of the country? Other than historical accident—I hope that the Minister agrees that it is wholly wrong to punish kids now for political decisions made in the ’80s—why do pupils in Surrey, Buckinghamshire, Essex, Bedfordshire, Hertfordshire and Peterborough deserve more cash?

Of course schools serving more challenging communities should receive more funding, but that is supposed to be addressed, at least in part, by the pupil premium, and Cambridgeshire has challenging communities. Educational attainment in the north of Cambridge and the north of the county, in the fenland area, is significantly lower than it ought to be. I can see why people in expensive areas could argue for more funding—teachers must be paid enough to be able to afford to live near their schools—but Cambridge is a very expensive area. The Cambridgeshire Schools Forum has been campaigning for a number of years to narrow the funding gap between the higher and lower-funded local authorities. I have been delighted to support it over many years, both when I served on Cambridgeshire county council and now as MP for Cambridge.

Two years ago, on 7 February 2011, I raised the issue in education questions:

“Cambridgeshire gets less school funding per pupil than almost anywhere in the country. If we received the per pupil average across England, we would have some £34 million more for education. Can the Secretary of State explain why pupils in Cambridgeshire deserve so much less money, and will he review that?”

The Secretary of State for Education replied:

“They deserve to be treated like every other student. We are reviewing funding and will be publishing a paper in the spring to try to ensure greater equity in the allocation of schools funding.”—[Official Report, 7 February 2011; Vol. 523, c. 19.]

I agree with everything that he said. Pupils in Cambridgeshire deserve to be treated like every other student. That is all we ask.

The Cambridgeshire Schools Forum and I, and many others, were delighted by the promise of greater equity in the allocation of schools funding. We know that it takes time, and we know that we may not end up exactly at the English average, but a commitment to greater equity was what we wanted.

Instead, the gap has widened. We receive £600 less per pupil than the English average for schools block funding, and with 73,800 pupils, according to the Department for Education’s figures, so we are now short by £44.3 million across the county, compared with the English average. For an average two-form entry primary school, that is a difference of £250,000 a year in funding—enough for seven teachers on average pay. Alternatively, the money could be spent on more teaching assistants, better teaching materials, more activities or better school buildings; there are so many options. Yes, the national budget is limited, but Cambridgeshire kids deserve what everyone else gets.

We had hoped that the national funding reforms might start to address those inequalities. However, it now appears that the earliest any such change might be possible is 2015-16. That is having a real effect on children’s lives. Philip Hodgson is chair of the Cambridgeshire Schools Forum, and I served with him as a governor. He says that

“standards in Cambridgeshire are slipping in some areas or not improving at the same rate as better-funded local authorities. Cambridgeshire schoolchildren will suffer from the underfunding for even longer unless action is taken now to begin the introduction of fair funding”.

The gap in Cambridgeshire is widening because there is not enough resource to close it.

I have been in contact with my local head teachers to ask them about their individual situations. They are positive about the pupil premium. Many heads have said that it allows them to do things they had never been able to do before. At Chesterton community college, for example, the principal, Mark Patterson, has been able to fund specialist reading teachers to deal with the handful of pupils who reach secondary school every year unable to read at an appropriate level. Rather than having them continue to fall behind, he can give them the right support to keep up, which is fantastic. However, all the heads are concerned about the tightness of the funding that they in Cambridgeshire face.

Chris Beddow of Abbey Meadows says:

“As a school serving a challenging demographic area, we receive a considerable amount of extra funding. However, when compared to a school of similar size in Peterborough, we receive £80,000 less, due to funding differentials between authorities. How is this justifiable as our costs are the same? Cambridge is growing and as a school we are building extra capacity and growing. This year will see our numbers grow by 10%; however, our funding will only grow by 6%. Again, I fail to see how this gap is justifiable.”

To give another example, I recently heard from Steve Jordan, the head teacher of St Paul’s primary school in my constituency. The school, which is small, has been working on an extremely tight budget. Although it has been just about able to stay in the black, it has had to keep eroding its reserves to do so. It has a capital budget of about £7,000 a year. The school’s management cannot maintain the standard of the school site as they wish. The school field needs replacing. It is becoming a health and safety hazard, with rubble beneath the soil gradually working through, and drainage is being affected by tree roots in the pipe work, which the school cannot afford to repair. It is shocking that schools such as St Paul’s are so stretched that they cannot carry out small but necessary repairs. It is not a new problem; it has happened because decades of under-investment have compounded it in those schools.

I welcome the Government support for new school buildings. Cambridgeshire has a demographic bulge at the moment, and the county is frantically opening new primary school places to cope. The bulge will then move on to secondary school, and we will then need financial support to deal with that. I specifically welcome the inclusion of the Manor school in the Government’s priority school building programme. It will make a huge difference to the school, which was visited by the Minister’s predecessor, and the services that it can provide. It is especially welcome because it will be a grant, not tied to any PFI constraints. While I am mentioning the Manor, I pay tribute to Ben Slade, the school’s former principal, who was energetic and inspirational to many pupils and others.

Our problem with schools is that the deal is simply unfair. In Cambridge, there is a range of 16-to-19 education providers, including the excellent Cambridge regional college, which will sponsor the new university technical college in Cambridge, and two sixth-form colleges, Hills Road and Long Road, which educate thousands of 16 to 19-year-olds to a consistently high standard. I have spoken to both principals, Linda Sinclair and Chris Sherwin. They describe a funding situation in which they are struggling to keep their heads above water.

The problem is not unique to Cambridgeshire. Sixth form colleges across the country are suffering from the same problems. Although there are only 94 sixth- form colleges in England, they educate more than 150,000 16 to 19-year-olds and send more people to higher education than independent schools, with almost a third of those young people coming from the least advantaged areas of the country. Almost three quarters of those colleges are rated as either good or outstanding by Ofsted.

Hills Road sixth form college does phenomenally well at getting pupils into Oxbridge, beating every school in the country, other than Westminster and Eton, which is a great achievement for a state-funded school. The state sector can work wonders at much lower cost than any private education, but it needs appropriate funding and does not get that.

Sixth-form colleges face particular inequity. They have to pay VAT on goods and services, with a couple of exemptions, whereas schools and academies are reimbursed for those costs. That costs the sixth-form college sector some £30 million per year—about £320,000 per college—which could be spent on education. Can the Minister try to persuade the Treasury to fix that bizarre discrepancy, which also applies to regional colleges? Anne Constantine of Cambridge regional college highlights that

“The VAT bill on revenue spend at this college in the last financial year was £1.2 million of non-recoverable VAT, most of which was incurred in relation to 16-18 learners, a sum”

that could be reinvested in learning if they were treated the same as schools.

Pupils at sixth-form colleges are ineligible for free school meals. Will the Minister support the Association of Colleges “No free lunch” campaign to ensure that students in sixth-form colleges get the same as they would at a maintained school sixth form, an academy, a free school, a university or a technical college?

Sixth-form colleges are funded less than the alternative providers, and that funding is also being reduced. Hills Road sixth-form college, for example, devised a plan to cope with average funding of £4,500 per student—a fairly small amount, compared with what is available at key stage 4 in a number of other providers—but the more recent announcement of a simplified pro-rata funding scheme from 2016-17, at a rate of £3,900 per student, means a further 13% budget cut. That pro-rata funding system is a redistribution of funding between 16-to-19 institutions and not a national cut—it does not save money for the national purse—but it means that sixth-form colleges, such as Hills Road, that deliver large programmes with high success rates will lose heavily. They will no longer be able to act as an exemplar in the state system.

The new figure of £3,900 per pupil per year is less than is available at key stage 4, but must be used for the much wider aspirations of those aged 16 to 19. It does not allow for enrichment activities and does not cover extra costs of subjects, such as experimental sciences, and does not allow pupils to have funding to study a fourth A-level, which is particularly important for those who want to do double maths and go on to study sciences at a number of universities. A particular problem is that sixth-form colleges cannot cross-subsidise between different age groups, because they have only a narrow intake.

A particular issue affects Long Road sixth-form college. There is large growth in sixth-form places, as schools and academies expand into sixth-form provision, benefited by their financial advantages over sixth-form colleges, but without the matching increase in the numbers seeking to go on to sixth form. That makes the financial pressures far worse at Long Road, for example, and both Hills Road and Long Road colleges are facing serious cuts to their budgets. That will affect their ability to provide the quality of education that their students deserve.

It is not even clear how these changes will affect those colleges. Institutions that currently deliver larger than average-sized programmes, such as Hills Road, will have to reduce them by 2016-17 to match the new funded level. That will have to be managed gradually over the next three years, because the prospect of doing it all at once in 2016, as they face the cliff edge, would be too painful to contemplate. Can the Minister confirm whether institutions that reduce their programme sizes gradually over three years will be fully protected until 2015-16, in terms of funding per learner, by the formula protection mechanism, or will they be penalised for trying to avoid a cliff edge? Can he confirm—this is an issue for Long Road in particular—whether guided learning hours that are focused on enrichment, rather than specifically on qualifications, will also be included in that protection? If the Minister needs further details, I am sure that the principals will be delighted to talk to him.

Sixth-form colleges are not clear how their funding will operate. They need certainty. They are also concerned about the combined impact of all the changes happening at once. The decrease in income due to the decrease in student numbers as a result of expanded post-16 provision without demographic growth, the continued removal of entitlement funding and the decrease in income as a result of the new funding methodology will all hit at the same time, and they are already being hit. The 2011-12 funding impact survey of sixth-form colleges showed that almost half of sixth-form colleges have already had to drop courses. Several reported that science, technology, engineering and mathematics courses were removed from the curriculum, and a quarter indicated that at least one modern foreign language had been dropped. They are also having to reduce or remove enrichment activities, such as sport, music and drama and careers guidance.

Schools and sixth-form colleges in Cambridgeshire do a good job on limited resources. I am not asking for favours or special treatment. I simply ask for fairness: fair funding for Cambridgeshire pupils, so that they no longer get the least per pupil in the country, and fair treatment for sixth-form colleges, so they no longer face lower funding and higher costs than other providers. If we are to build a strong economy and a fair society, we must ensure that everyone can get on in life.

16:15

[The Minister for Schools (Mr David Laws)]

It is a pleasure to serve under your chairmanship again, Mr Weir. I congratulate my hon. Friend the Member for Cambridge (Dr Huppert) on securing this important debate, which will be of great interest in his constituency and in the county that he represents. I am grateful for the opportunity to address a number of issues that he has raised.

The Department accepts that Cambridgeshire is, on our latest figures, the 143rd lowest-funded authority in England. My hon. Friend knows that the Government are determined to address the injustices in our funding system and to seek, over time, to introduce a fairer national funding formula. We are still committed to doing that. I will explain later precisely how we will deliver that in the years ahead.

I am happy to meet my hon. Friend, head teachers and college principals from his constituency in the weeks ahead if he feels that there are further points to be made about funding fairness for Cambridgeshire and the other issues that he has mentioned, and should he want the opportunity for head teachers and principals to put those points directly to me.

I am grateful for the opportunity to address the important concerns that were raised today, which will be of interest to many families in Cambridge and Cambridgeshire and many of the people who work in the educational establishments that my hon. Friend mentioned.

We intend to move to a fairer funding formula across the country, and I will explain how we will do so. Our aim is for every child to be able to succeed at school, regardless of their background and where they live. That is why the Government, despite having to make difficult decisions on public spending since we took power in May 2010, have protected pre-16 school funding in real terms over the spending review period. As part of that, we introduced the pupil premium, which we advocated in our general election manifesto and which, by the end of this Parliament, will have targeted an additional £2.5 billion per year to disadvantaged pupils.

My hon. Friend mentioned how much additional money his county—his constituency—is receiving. He will be pleased to know that the per-pupil amount of the pupil premium will be rising from some £623 per pupil in the current recent educational year to £900 per pupil in the year that we are heading into, which will be a big help to many educational institutions with a large number of disadvantaged youngsters. However, we need an underlying system to support that investment and to ensure that pupils are not disadvantaged as a result of a national school funding system that, frankly, does not distribute funding fairly.

My hon. Friend has highlighted some reasons why the current system for funding schools is in desperate need of reform. It is based on an assessment of need that dates back to at least 2005-06 and it has not kept pace with the changing demographics and needs of pupils. It is also complicated, so head teachers, governors and parents are unable, usually, to understand how their school budgets have been calculated and what the justification is. In addition, the current system is not designed to support the successful expansion of academies. Therefore, it is difficult to demonstrate that schools maintained by local authorities and academies are being funded equitably, which is the Government’s intention.

For the lowest-funded authorities, such as Cambridge, that outdated system may well mean an allocation that does not reflect the current needs of schools in the county. It is not right that schools with similar circumstances in different areas of the country can receive vastly different funding for no clearly identifiable reason. That is why, on 26 March 2012, my right hon. Friend the Secretary of State for Education announced our intention to introduce a new national funding formula during the next spending review period. That formula would distribute money fairly across the country, targeting need and getting rid of some of the anomalies that make the current system so unfair and irrational. However, reforming such a complex system—particularly in an environment where, for understandable reasons, all Departments’ budgets are so constrained—is far from easy, and it is important that we do it at a pace that schools can manage, including schools in parts of the country that have been better funded in the past. The last thing that we want is to cause destabilising changes to school budgets, which cause anxiety and distract schools from delivering high educational standards for their pupils.

We are moving gradually towards introducing a new funding system at a pace that gives us sufficient time to agree to the construction of a new formula and that allows schools enough time to adjust to changes in their funding arrangements. At present, we are planning to introduce the national funding formula in the next spending review period. In the meantime, from April, the local system will be simpler and more transparent, meaning far less complexity for us to untangle when we come to address the national system.

Our first step is to ensure greater transparency and consistency in the allocation of funding locally. For 2013-14, the dedicated schools grant has been allocated in three clearly identifiable spending blocks: schools, early years education and high-needs pupils. We set each block for each local authority using details of its spending in 2012-13 and then agreed the blocks with each authority. The spending blocks provide greater transparency over how much has been spent in each of those areas.

We are also making changes to how funding is allocated to schools, so that, within local areas, pupils to the age of 16 begin to attract similar funding regardless of where they go to school. Moving to a more consistent way of funding schools may mean that local authorities and their schools forums have to think radically about how they distribute money to their schools, and a new local formula will inevitably generate shifts in school budgets. That may be uncomfortable, but if we can start to iron out some of the inconsistencies and unfairness that pupils and schools currently experience, that will ultimately help to pave the way towards a fairer, more pupil-led system.

Local authorities have worked hard under the new arrangements to build new formulae that adequately reflect the needs of their schools. However, for some areas, particularly Cambridge, that has proved problematic, and some schools are facing considerable budget changes. I also understand why in Cambridge, as a lower-funded authority, my hon. Friend is worried about how the changes will be managed. Although the budget changes are necessary to reflect a new system, we are clear that they should not be unmanageable, not least in areas such as his. That is why the Secretary of State announced in June that schools will continue to have planning certainty through the minimum funding guarantee. Therefore, in most cases, schools will not lose more than 1.5% of their budget per pupil in 2013-14 and 2014-15, and many schools will gain. In addition, the Secretary of State and I confirmed in October last year that we will continue to operate a minimum funding guarantee beyond 2014-15. We cannot confirm its exact value until the new spending review period, but we are absolutely committed to protecting school budgets from unmanageable changes.

I reassure my hon. Friend that we will carry out a thorough review this year of the impact of the new simpler formula on pre-16 funding, making any necessary changes based on that evidence in 2014-15. Over the coming weeks, we will start to work with local authorities to explore the effects of different factors, such as the lump sum and deprivation factors, so that we can ensure that a robust system is in place for 2014.

The Secretary of State announced on 2 July 2012 that, from April 2013, we are introducing a new national funding formula for 16 to 19-year-olds in education and training. That new formula will be based on the principle of funding per student, rather than the existing system of funding per qualification, which my hon. Friend mentioned. That will allow sufficient income for each student to undertake a full programme of study, whether vocational or academic.

Our objective is to introduce a system of fair funding that will provide a place in education or training for every young person who wants one and will support full participation by 16 and 17-year-olds by 2015. The new formula will give many benefits, including taking into account the needs of the disadvantaged, implementing the recommendations of the Wolf report and supporting the envisaged A-level reforms. The new formula will fund full-time students for an average of 600 teaching hours, which will be sufficient to offer a significant programme of study. The formula will mean that all students aged 16 to 19 will be funded using the same formula, removing the historical differences between schools and academies and sixth-form colleges.

I understand that some school sixth forms and sixth-form colleges that offer a predominately academic programme to their students, such as Hills Road in my hon. Friend’s constituency, are concerned about their funding under the new 16-to-19 funding formula. I am aware of that institution’s reputation, not only in Cambridge, but across the country. In response to my hon. Friend’s question, I confirm that we will provide at least three years of full funding protection from the formula changes, while we continue our reform of qualifications, including the forthcoming A-level reforms. I also confirm that the 30 hours currently focused on enrichment activities are included in that protection. Detailed allocations of funding for 2013-14 will be announced in March. Arrangements beyond 2014-15 will not be announced until the next spending review has been completed. As part of the process, we have established a ministerial working group with key sector representatives to consider the best way to implement the reforms to programmes of study and associated funding changes, as well as to help us to ensure that the reforms work in the best interests of all young people.

My hon. Friend mentioned VAT, and I am sympathetic to the concerns expressed about the different VAT treatment that sixth-form colleges receive from the Government. I have asked officials to raise the matter with the Treasury and Her Majesty’s Revenue and Customs and to report back to me.

On free school meals, it is only the entitlement to a free meal that is different for schools and academies compared with colleges. There is no actual funding given by the Department for free school meals for sixth- form pupils, even in the school and academy sector, which complicates dealing with the injustice in entitlement. We are currently looking at options for extending eligibility further across the 16-to-19 sector.

We also seek to address concerns around capital funding, which my hon. Friend mentioned. We have more than doubled the capital funding that will be made available in this spending review period to support specifically the provision of additional places to those made available in the same period by the previous Administration. We have made £2.8 billion available for basic needs in this spending review. Most recently, in last year’s autumn statement, the Chancellor announced £980 million of additional capital funding for basic needs over the next two years. That will help us to expand good and outstanding schools where there are shortages of places and to establish new academies and free schools where there is that basic need.

I am grateful to my hon. Friend for drawing attention in this relatively short debate to the funding issues faced by schools and sixth-form colleges in Cambridgeshire. I hope that I have provided some reassurance that our aim in making these reforms is ultimately to ensure that England has a fair and transparent funding system precisely to deal with some of the injustices that areas such as Cambridgeshire may have suffered in the past. A new national funding formula will reassess need across the country and will allocate funding accordingly. A refreshed distribution of funding will renew confidence in the system, but only if we put the right formula in place. The Department is working actively on the issues now in the run up to the spending review that will happen before the summer, and it is a preoccupation of mine. I am happy to meet my hon. Friend and any representatives from the education sector in his constituency to discuss this further.