The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)
My Lords, My Lords, with the leave of the House I will now repeat a Statement being made in the other place by my right honourable friend Justine Greening, the Secretary of State for Education. The Statement is as follows:
“This Government believe that all children should have an education that unlocks their potential and allows them to go as far as their talent and hard work will take them. That is key to improving social mobility. We have made significant progress: nine out of 10 schools are now good or outstanding and the attainment gap is beginning to close. We have launched 12 opportunity areas to drive improvement in parts of the country which we know can do better. But all this has been against a backdrop of unfair funding. We know that the current funding system is unfair, opaque and out of date. This means that, while we hold schools to the same accountability structure, we fund them at very different levels. In addition, resources are not reaching the schools that need them most.
School funding is at a record high because of the choices we made to protect and increase school funding even as we faced difficult decisions elsewhere to restore our country’s finances, but we recognise that, at the election, people were concerned about the overall level of funding as well as its distribution. As the Prime Minister has said, we are determined to listen, so that is why today I am confirming our plans to get on with introducing a national funding formula in 2018-19. I can announce that this will now additionally be supported by significant extra investment into the core schools budget over the next two years.
The additional funding I am setting out today, together with the introduction of a national funding formula, will provide schools with the investment they need to offer a world-class education to every child. There will therefore be an additional £1.3 billion for schools and high needs across 2018-19 and 2019-20, in addition to the schools budget set at the 2015 spending review. This funding is across the next two years as we transition to the national funding formula. Spending plans for the years beyond 2019-20 will be set out in a future spending review.
As a result of this investment, core funding for schools and high needs will rise from almost £41 billion in 2017-18 to £42.4 billion in 2018-19. In 2019-20 this will rise again to £43.5 billion. This represents £1.3 billion in additional investment: £416 million more than was set aside at the last spending review for the core schools budget in 2018-19 and £884 million more in 2019-20. It will mean that the total schools budget will increase by £2.6 billion between this year and 2019-20, and funding per pupil will now be maintained in real terms for the remaining two years of the spending review period to 2019-20.
For this Government, social mobility and education are a priority. Introducing the national funding formula—something shied away from by previous Governments—backed by the additional investment in schools we are confirming today will be the biggest improvement to the school funding system for well over a decade. I said when I launched the consultation last December that I was keen to hear as many views as possible on this vital reform. I am grateful for the engagement on the issue of fairer funding and the national funding formula. We received more than 25,000 responses to our consultation, including from Members from across the House. We have listened carefully to the feedback we have received.
We will respond to the consultation in full in September, but I can tell the House today that the additional investment we are able to make in our schools will allow us to: increase the basic amount that every pupil will attract in 2018-19 and 2019-20; for the next two years provide for up to 3% gains a year per pupil for underfunded schools and a 0.5% a year per pupil cash increase for every school; and continue to protect funding for pupils with additional needs, as we proposed in December. Given this additional investment, we are able to increase the percentage allocated to pupil-led factors, and this formula settlement for 2019-20 will provide at least £4,800 per pupil for every secondary school—something which I know Members in some areas in particular will welcome.
The national funding formula will therefore deliver higher per-pupil funding in respect of every school and in every local area. I believe that these changes, building on the proposals we set out in December, will provide a firm foundation as we make historic reforms to the funding system, balancing fairness and stability for schools. It remains our intention that a school’s budget should be set on the basis of a single, national formula, but a longer transition makes sense to provide stability for schools. In 2018-19 and 2019-20, the national funding formula will set indicative budgets for each school and the total schools funding received by each local authority will be allocated according to our national fair funding formula, and transparently for the first time.
Local authorities will continue to set a local formula, as they do now, for determining individual schools’ budgets in 2018-19 and 2019-20, in consultation with schools in the area. I will shortly publish the operational guide to allow them to begin that process. To support their planning, I am also confirming now that in 2018-19, all local authorities will receive some increase over the amount they plan to spend on schools and high needs in 2017-18. We will confirm gains for local authorities, based on the final formula, in September.
The guide will set out some important areas that are fundamental to supporting a fairer distribution through the national funding formula. For example, we will ring-fence the vast majority of funding provided for primary and secondary schools, although local authorities, in agreement with their local schools forum, will be able to move limited amounts of funding to other areas, such as special schools, where this better matches local need.
As well as this additional investment through the national funding formula, I am today also confirming our commitment to double the PE and sports premium for primary schools. All primary schools will receive an increase in their PE and sports premium funding in the next academic year.
The £1.3 billion additional investment in core schools funding that I am announcing today will be funded in full from efficiencies and savings I have identified from within my department’s existing budget, rather than through higher taxes or more debt. This has required some difficult decisions, but I believe that it is right to prioritise core schools funding, even as we continue the vital task of repairing the public finances.
By making savings and efficiencies, I am maximising the proportion of my department’s budget which is allocated directly to front-line head teachers, who can use their professional expertise to ensure that it is spent where it will have the greatest possible impact. I have challenged my civil servants to find efficiencies, as schools are.
I want to set out briefly the savings and efficiencies that I will secure. Efficiencies and savings across our main capital budget can release £420 million. The majority of this will be from healthy pupils capital funding, from which we will make savings of £315 million. This reflects reductions in forecast revenue from the soft drinks industry levy. Every £1 of England’s share of spending from the levy will continue to be invested in improving child health, including £100 million in 2018-19 for healthy pupils capital.
We remain committed to an ambitious free schools programme that delivers choice, innovation and higher standards for parents. In delivering the programme, and the plans for a further 140 free schools announced at the last Budget, we will work more efficiently to release savings of £280 million up to 2019-20. This will include delivering 30 of the 140 schools through the local authority route rather than the central free schools route.
Across the rest of the DfE resource budget—more than £60 billion per year—I will also reprioritise £250 million in 2018-19 and £350 million in 2019-20 to fund the increase in spending that I am announcing today. I plan to redirect £200 million from the department’s central programmes towards front-line funding for schools. While these projects are useful, I believe strongly that this funding is most valuable in the hands of head teachers.
Finally, alongside this extra investment in our core schools budget, it is vital that school leaders strive to maximise the efficient use of their resources to achieve the best outcomes for all their pupils and best promote social mobility. We already provide schools with support to do this, but we will now go further to ensure that support is effectively used by schools.
We will continue our commitment to securing substantial efficiency gains over the coming years. Good-value national deals that procure better-value goods and services on areas all schools purchase are available: for example, under the deals, based on our existing work, schools can save on average 10% on their energy bills. We will expect schools to be clear if they do not make use of these deals and have higher costs. Across school spending as a whole, we will improve the transparency and usability of data so that parents and governors can more easily see the way in which funding is spent and understand not just educational standards but financial effectiveness, too. We have just launched a new online efficiency benchmarking service which will enable schools to analyse their own performance much more effectively.
We recognise that many schools have worked hard up to this point to manage cost-base pressures on their budgets, and we will take action this year to provide targeted support to those schools where financial health is at risk, deploying efficiency experts to give direct support to them.
The significant investment that we are making in schools and the reforms we are introducing underpin our ambition for a world-class education system. Together, they will give schools a firm foundation that will enable them to continue to raise standards, promote social mobility and give every child the best possible education and the best opportunities for the future”.
My Lords, that concludes the Statement.
Baroness Kramer (LD)
My Lords, I agree that this is a sleight of hand. Perhaps the Minister will confirm that there is not one single new penny coming into education for our young people in the Statement. I agree that it is robbing Peter to pay Paul and I hope he will tell us a lot more about Peter and the losses to programmes that schools have been relying on. More importantly, will he confirm that in the Statement there is actually a cut in funding for education—£315 million—which will be cut from the healthy pupils capital funding,
“to reflect reductions in forecast revenues from the soft drinks industry levy”?
So in fact this is an announcement of a £315 million cut in the budget for education and schools.
The Statement refers to 30 schools that will be removed from the free schools programme and delivered through the local authority route. Is the Minister expecting local authorities to provide substantial funding to support these 30 schools and, if so, can he tell us which local authorities are now so flush with money that they are in a position to provide significant numbers of additional schools if there is not a single penny coming from the central budget to support them?
As the Minister talks about efficiency for schools, I join many others in saying that, looking at schools today, you can see remarkable efficiencies introduced by one head teacher after another, but it looks as though a significant amount of the savings is meant to come from new energy efficiencies: a 10% cut in energy bills overall. The Minister will be well aware that the largest component of an energy bill is the cost of energy. Will he tell us how he will prevent volatility and price rises in the energy bills that are presumed within the Statement?
I actually think it is beneath the Government to come up with this announcement when after a moment’s reading it becomes apparent that there is sleight of hand and a difference between the announcement and its implications and the reality that is contained within the Statement. I suggest that if we are to encourage the British people to recognise the importance of politics and to respect any party in this House, it is time for that to stop.
Lord Nash
My Lords, the noble Lord, Lord Watson, asked why the Statement was being made today. It is so that schools can go away for their summer break knowing that we will be introducing a national funding formula. No doubt that will be welcome to them.
All schools have to run themselves more efficiently and we as a Government have to make efficiency savings. We have already predicted that our scheme to self-insure academies will save £600 million by 2020. We have introduced LocatED, an organisation set up specifically to find free school sites. It is already showing that it is buying sites very effectively and we believe there will be significant savings from that. Our efficiency advisers are not an insult to head teachers. They are a support. I invited the noble Lord, Lord Watson, to look at the efficiency tools on our website. I am disappointed to hear that he obviously has not done so, particularly given the Labour Party’s appalling record of spending money in the past.
So far as free schools are concerned, since 2014 90% of them have been located in areas where there is a recognised need for places, which of course is many areas, given that despite a massive increase in immigration, the Labour Party actually reduced the number of school places in this country. As for listening to its proposals across the board, doing so would result in bringing us back to the edge of bankruptcy, as it did the last time that it was in government. As I said, we have increased the core school funding. In answer to the point about local authorities, we are working extremely collaboratively now with them on free schools. We believe that we can do so more collaboratively, and that energy is only one part among many of the savings we can make.
Lord Knight of Weymouth (Lab)
My Lords, further to the question asked by the noble Baroness, Lady Kramer, I too was drawn to the announcement of the further 140 free schools, which said that 30 would go through the local authority route. I am interested to know exactly how that works, given that this is the Minister’s responsibility, and how much more efficient that is than going through the department. Will he answer her question as to whether the local authorities concerned will get any money to pursue that route?
Lord Nash
Yes. As I said, we have been working very collaboratively with local authorities to plan much more accurately with them precisely where they want free schools. Local authorities obviously often produce free school sites on a peppercorn for no money. It is also clear to us that some local authorities have perhaps not been spending their basic need money, as they should have been, but relying on the central programme. I believe that this can be done efficiently. The local authorities that we work with certainly seem keen to provide many more of these schools. We go through a process whereby they decide where they want the schools to be and, effectively, an open process is then gone through whereby school providers can approach them and be approved, initially by the local authority and then by the department.
Baroness Farrington of Ribbleton (Lab)
My Lords, the answer from the Minister to the question about whether local authorities will get more money for embarking on this project was, in short, no. They will not get more money but will have to find the money though doing things more efficiently, according to the Minister. Will he please accept that his repeated assertions about the Government’s commitment to social mobility can be answered by all the research which shows that good, early childhood education involving parents is the best way to help children who underachieve, and that Ministers repeatedly referring to childcare are ignoring the educational issues? Will the Minister please answer the questions that he is being asked and not the ones he prefers?
Lord Nash
The answer to the question on where the money will come from is that local authorities are funded substantially to provide their basic need budgets. We will look to them to use those budgets to fund some of these places through new schools and the free schools programme. I agree entirely with the noble Baroness that the early years are a vital part and that the younger we can support all our children, the better.
Lord Elystan-Morgan (CB)
My Lords, the Statement makes it clear, does it not, that the award is entirely conditional upon savings? So that there be no shred of ambiguity left, can the Minister confirm that if in fact there is no saving, there will be no award and that if there is but a percentage of saving, there will be a percentage of that award? Furthermore, if it be the case that there would appear to be an achievement of saving which does not fit neatly into the timetable, will there be credit for a notional saving and what will happen if it turns out to be a smaller sum than that which was first anticipated?
Lord Nash
No—it is not conditional on savings. We have a firm intention to bring in a national funding formula. We are the first Government for many years to tackle this point. We consulted on it. Schools want a fair funding formula, and I am disappointed that noble Lords are not pleased that we are going ahead with these plans. I am sure schools will be. They are all asking for it. It is not a condition. This is our plan. This will happen. The department has a budget of £60 billion per annum. We have shown over the past few years that the Government can run things efficiently, and we are determined to do so in the future.
Lord Addington (LD)
My Lords, the Statement talks about those with additional needs. Will there be good, in-service improvement of skills for those dealing with those with special educational needs in the mainstream classroom? There have already been some changes made for new people training, and I thank the Minister for that, but there will be considerable savings if people are better trained to handle the pupils in their classrooms and to recognise the most commonly occurring conditions such as dyslexia and dyspraxia and to tell the difference between the two. Are we going to do this? If we do, we will take some of the pressure off expensive things such as special schools.
Lord Nash
The noble Lord makes an extremely good point. We all acknowledge the importance of continuous professional development. We must remember that teachers are initially trained for only nine months, most of which is in the classroom. We are looking at reforming initial teacher training. In multi-academy trusts, we are increasingly seeing much greater emphasis on continuous professional development throughout a teacher’s entire life, particularly in the first three to five years of their engagement in the profession.
Baroness Massey of Darwen (Lab)
The Minister talks about a world-class education. I am glad that at last the word “teacher” has been mentioned because teachers create world-class education. I go into schools and find head teachers desperate about losing teachers. Can the Minister say how this can be prevented?
Lord Nash
I think I have a Question tomorrow on teacher retention. Teacher retention is looking a lot better this year. I was referring to multi-academy trusts. We have seen a transformation in the past few years in career development opportunities for young teachers. Historically, a young teacher coming into the teaching profession in their early 20s could look forward to perhaps being a head teacher in 20 years. I can just about remember what it feels like to be in one’s early 20s, and 20 years is light years away. Now we are seeing young teachers becoming a head of subject in their mid 20s, a head of school responsible for teaching and learning, behaviour and safeguarding and parent relationships in their late 20s with all the rest of the administration, accounting and HR done by the MAT centrally, and becoming a head in their 30s, so the career development opportunities for teachers are much greater than they were. I am hearing consistently from people who work in multi-academy trusts that this is having a very good impact on teacher retention. We have an economy in which we are experiencing full employment in many areas in the country. The issue in relation to teacher recruitment and retention is not unique to this country, and it is not unique to the teaching profession. It is one of the consequences of having such a strong economy. The early signs are that teacher retention is improving.
Lord Evans of Weardale (CB)
My Lords, I draw attention to my declared interest as a governor of a multi-academy trust. I broadly welcome the thrust of the Minister’s Statement, although as a former public servant I am always slightly suspicious of spending commitments that are going to be funded through efficiencies because sometimes what you take with one hand disappears in another. Nevertheless, it would be helpful if the Minister could let us know what efficiencies there are from running schools within a multi-academy trust system because a number of common services which otherwise have to be run separately in each school can be shared between schools, and that is an area where potential efficiencies have not yet wholly been captured.
Lord Nash
I am grateful to the noble Lord for his comments. What we are seeing through the multi-academy trust system is that a group of schools working together can employ one much more highly qualified accountant rather than each individual school having someone who often really struggles with the accounts, takes a very long time and would rather not do it. We are seeing a huge number of MATs achieving substantial savings in purchasing. One study said that primary schools working together in MATs was resulting in a saving of £146 per annum per pupil. I think it is self-evident that this is working, and we have plenty of examples. I would be happy for any noble Lord who is interested in this to attend a teach-in to hear about it in much greater detail.
Lord Lexden (Con)
I would like to ask my noble friend about the more than 25,000 responses that have come in to the consultation exercise. Have they come from all parts of the country to provide an indication of how people feel in different areas? Have comments come from all those most closely involved in and concerned about education—namely head teachers, teachers, governors and parents themselves? Is the Minister able to give any indication at this stage whether there is clear evidence that, overall, a positive view was being taken in the country of the principle of the basic idea of a national funding formula?
Lord Nash
My noble friend makes a very good point. We have had a very wide response from all areas of the country. It is clear, particularly in those areas of the country that historically feel that they have been underfunded—we have discussed here before the vast differences in funding per pupil that can occur between two schools not that far apart—that this news will be welcomed by schools, despite what some Peers have said. It will be very welcome to move to a system that is not a postcode lottery and not based on very out-of-date information. I am certain that this will be welcomed by schools.
Lord Paddick (LD)
My Lords, will the Minister kindly answer the question asked by my noble friend Lady Kramer regarding the efficiencies and savings mentioned in the Statement? Some £315 million is going to be saved from the healthy pupils capital fund. Will the Minister confirm that that is actually a £315 million cut, as suggested in the Statement, which says:
“This reflects reductions in forecast revenue from the soft drinks industry levy”?
Lord Nash
Well, that has only recently been announced and I have to say that our plans on it were not very far advanced, so I think describing it as a cut is rather unfair. As I have said, we are making sure that resources are focused more on core school funding and in the hands of head teachers.
Lord Young of Norwood Green (Lab)
My Lords, I am assuming that £50 million of this saving is because we have not mentioned the expansion of grammar schools. I hope that is the case and I would welcome confirmation of that because, if we are focusing on areas of real need, if ever there was a waste of money it was that. I would also welcome some indication that we are going to continue with the expansion of the university technical college programme.
Lord Nash
The noble Lord is quite right that as a result of the fact that, as I have already said, we will not be removing the ban on new selective schools, there will undoubtedly be some saving there. We intend to continue with the UTC programme, selectively and carefully. There are a lot of lessons to be learned from the early years of the programme but we are confident that it can become very successful, and we have some very good examples of that. I see that my noble friend Lord Baker is not in his place; I am sure that if he were here he would be on his feet very quickly to mention some of them. We certainly intend to continue with the programme.
Baroness Tonge (Non-Afl)
My Lords, have the Government considered ending the charitable status of private schools, which some people see as of rather dubious benefit to the community and state schools? If so, how much money would be released, which could then go to state schools for their direct benefit?
Lord Nash
We have not considered that because we do not plan to do it. Were we to lean heavily on the independent sector, it would probably result in a much greater burden on the state sector, because there is no doubt that the country saves a huge amount of money on state education by the number of people who go to private schools. We have, however, made it absolutely clear that although the independent sector does a great deal to support state schools in terms of both bursaryships and school partnerships up and down the country—I was recently in York, where there is a strong school partnership—we think that some independent schools can do more. We are in active discussions with the Independent Schools Council and the other independent school organisations. They are very willing to help and we will be working with them so that they can help the state sector much more. There is a lot that they can do to help the state sector—particularly in teaching, the use of sports facilities and sports personnel and preparing pupils for applications to university.
Baroness Morris of Yardley (Lab)
My Lords, part of the problem is that it is such an unclear Statement. There are so many questions, but we are not getting particularly clear answers in response, so I return to two issues that have already been raised to seek further clarification. The wording of the Statement,
“deploying efficiency experts to give direct support to”
schools, reads to me like real people going to schools to give advice. In his response to my noble friend on the Front Bench, the Minister implied that it is an online tool. Can he clarify exactly what is meant by those words? If they are real people, how much will that initiative cost? I also return to the part of the Statement which talked about 30 of the 140 new schools coming through the local authority route. It would help me to know whether local authorities will be able to say that they do not want to spend their money in that way.
Lord Nash
We have done a great deal of work in the department on efficiency in schools. There is no doubt, despite what people say, that some schools have grown their budget a bit like Topsy. I see that the noble Baroness is nodding. Interestingly, our most successful education providers are also our most efficient financially, because, as any organisation has to when it faces financial pressures, they go back to a bottom-up approach to budgeting. Schools that do that spend their resources where they are needed and think about where they want to spend them rather than, as has happened in a number of schools, through consistent increases in funding over many years, where their budgets have grown like Topsy. There are significant efficiency savings. Many schools have grasped that, but there is no doubt that some have not, and we now have a number of experts—we currently work with about 20—who are well versed in this. We will be making them available to schools that need them.
We have no intention of forcing free schools down the throats of local authorities. It is a collaborative approach. We have been working collaboratively with local authorities on free schools and see much greater scope to do so in future.
Baroness Farrington of Ribbleton
My Lords, will the Minister take advice from somebody who has chaired an education authority and knows the sorts of questions that arise? He is talking about a national funding formula. Parents, teachers and governors will ask how the calculation has been made as to what is appropriate. They will make comparisons—I am not doing so—between Scotland, Wales, Northern Ireland and English regions. We will have to refer them to him. Can he assure me that in calculating the amounts per pupil, all pupils in all countries and in all areas have been treated fairly, equally and on the same assumptions about need?
Lord Nash
Well, the whole purpose of the funding formula, which is for England only, is to treat everybody much more fairly. As for comparisons with Wales and Scotland, I hope that parents will make them, because they will be able to see that what has been happening in the Welsh education system is no lesson for the future and that what has recently been happening in the Scottish education system is deeply disturbing.
Baroness Watkins of Tavistock (CB)
My Lords, will the Minister clarify that additional CPD—continuing professional development—required for teachers, school nurses and health visitors in relation to the manifesto commitment on child and adolescent mental health improvement will be funded separately and will not have to come out of the standard formula?
Lord Nash
I do not think that I can confirm that, but we are investing £1.4 billion in child and adolescent mental health. We will produce a Green Paper on mental health later this year, and we have worked closely on a number of pilot projects between mental health and schools. I shall look at this and write to the noble Baroness.