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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.