National Funding Formula: Social Mobility

Tuesday 22nd May 2018 Westminster Hall

[Mr Charles Walker in the Chair]

11:14

A one-minute silence was observed in memory of the victims of the Manchester attack.

14:31

[Wera Hobhouse (Bath) (LD)]

I beg to move,

That this House has considered the effect of the national funding formula on social mobility.

My thoughts are with all those affected by the terrible atrocity last year in Manchester. We lived in Manchester for many years, and our children went to the arena many times. It could have been them.

A few weeks ago, I joined headteachers from Bath who had given up their Saturday to march through the city because schools are in the depths of a funding crisis that the Government are refusing to acknowledge. We are at a point where teachers are quite literally shouting in the streets, trying to get the Government to listen to them. Today, I am calling on the Government to listen—to listen to the people who are tasked with preparing the next generation for their lives to come, and to listen to them when they say they do not have enough money to do so.

The issue should not be a political football. Teachers simply do not have the resources to do their jobs properly. In 2015, schools were promised they would be funded in line with inflation. Later they were promised that

“each school will see at least a small cash increase.”—[Official Report, 29 January 2018; Vol. 635, c. 536.]

That has not happened. Schools are facing higher costs from increased pupil numbers, pensions, national insurance contributions, pay awards, inflation and the apprenticeship levy, while facing a reduction in the education services grant. By 2020, £8.6 billion will have been taken out of the system.

School budgets are at breaking point, with 55% of academies reporting deficit budgets and 75% of secondary schools saying they are spending more than their income. Some 23 local authority areas will see cuts of at least 5% by 2019-20. Some 91% of schools face real-terms cuts by 2019-20 as compared with 2015-16. As cuts continue, teachers as well as support staff are lost, because staffing forms around 85% to 90% of school budgets. In the last two years, 15,000 posts have been deleted in secondary schools.

[Jeremy Quin (Horsham) (Con)]

Out of curiosity, I want to pick up on the point the hon. Lady is making and on funds being moved from one part of the country to another. Does she accept there are circumstances where some schools have historically received more funds but have perhaps had demographic changes, while other areas have also had demographic changes but need more funds? There has to be a point where a reallocation is necessary. We need that reallocation in West Sussex, for a start.

[Wera Hobhouse]

I accept the hon. Gentleman’s point, but if he will allow me, I will point out how things look for my local authority of Bath and North East Somerset, where school funding per pupil is falling in 58 schools and increasing in only 17. I would like to see local authorities where that balance is different.

In my local authority, three out of four schools are losing funding. For example, under the new funding system, one school in my constituency—Twerton Infant School and Nursery—will see a 0.5% increase next year. However, in September, it will be paying its teachers 2% more. It will also be paying its support staff between 2% and 5% more. If we add inflation on top—it is currently 2.5%—the financial outlook starts to look incredibly bleak. The school is facing a funding black hole of at least £50,000.

During Education questions last week, I asked the Minister whether school funding was rising in line with inflation. He dodged the question and suggested that the Government were helping schools by giving them advice for managing their energy bills. That very same day, the headteacher at Twerton Infants, George Samios, had been sitting with his business manager trying to find £50,000 in savings. Needless to say, £50,000 is significantly more than the school’s energy bill.

[Layla Moran (Oxford West and Abingdon) (LD)]

My hon. Friend is making a powerful speech. Does she agree that, while raising teachers’ pay on the main scale is very welcome, it is pointless if it is not new money coming to schools? Otherwise, that money is being taken away from the frontline—the children.

[Wera Hobhouse]

I completely agree with my hon. Friend. My school is facing a funding black hole of £50,000. I assume that the situation in her schools will be exactly the same.

Responses like that of the Minister show how far detached the Government are from schools and teachers in Bath and across the country, as well as from the impact of their decisions on our young people. Twerton Infants has already had to cut the one-to-one support it used to have for children who had experienced early adversity and trauma.

That situation is not unique to Twerton. Headteachers from schools across Bath tell me regularly about the difficult decisions they are having to make. Parents will come to the school and ask, “Where is the extra support for my child with special educational needs?” The school will answer, “We are sorry, we do not have the funds to provide that anymore.” If a school wants to put on extra support for a child with autism, that is not going to happen. If a school wants an extra member of staff to look after classes at lunchtime or to help children who are finding it difficult to transition, that is not going to happen. As one Bath headteacher put it:

“By starving our schools of funding, we are accepting that our children can get by on a cut-price education. Morally, let alone economically, this is indefensible.”

Where is the understanding from Government of how our young people learn and progress? Where is the commitment to our children’s futures? The Government say there is more money in the system than ever before, but there are more pupils in the system. The Government hide behind deliberately complex figures and funding streams and obfuscate the real picture.

I have recently become a trustee of a multi-academy trust in Bath. The trust’s main concern is that it no longer has the funds to employ support staff, because its budgets are becoming tighter every year and it has no more reserves. The local authority in Bath, which used to support schools, is making staff redundant, especially those in welfare roles. The Government expect trusts to take over those functions, but the trusts do not have the money to do so.

What further increases the pressure and creates a vicious cycle is that good and experienced teachers are leaving the profession in growing numbers. Teaching is already a difficult job, but it is becoming so hard that many teachers find it impossible to cope. My academy trust in Bath finds it increasingly difficult to recruit qualified teachers, and it is worried about the de-professionalisation of teachers. Trusts, although not my particular trust, are employing teachers without qualified teacher status. That cannot be right.

I know the teaching profession very well. I taught secondary school children modern languages. An already difficult job became even harder when the resources were not there and class sizes were heading towards 30. It is our young people who suffer. Good classroom practitioners know that during a lesson they cannot just engage with the five pupils at the front or the five at the back. With large class sizes, it is the 20 pupils in the middle who are the most difficult to reach. What happens if teachers do not reach those young people? Those young people lose out, and an awful lot of them are losing out. If children do not receive the right support, they do not reach their full potential.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate the hon. Lady on securing what I would call a timely debate. In Coventry, I have visited 12 to 15 schools out of probably just over 100. Each of those schools is losing £275 a year per pupil. Nationally, probably about 3,000 youth clubs have been closed, which needs to be taken into consideration. The Government say that they have put more money in, but we should not forget that they cut £4.5 billion over the last couple of years, and put in £1.5 billion. Is it any wonder that schools are in the state they are? Certainly in Coventry there is very serious concern about rising numbers in classrooms. Does the hon. Lady agree?

[Wera Hobhouse]

I very much agree with the hon. Gentleman. It is not just about what happens in our classrooms; it is about what happens outside them. He makes a very powerful point. It is about the importance we place on our young people and their future. It is not only about schools, but about youth services, support and, as we are discussing today, social mobility and how we help people from disadvantaged backgrounds to thrive fully.

[The Minister for School Standards (Nick Gibb)]

I would not normally intervene at this stage in a debate, but I wanted to point out to the hon. Lady that when the national funding formula is fully implemented, funding for schools in Bath and North East Somerset will rise by 8.8%. That is one of the largest rises of any local authority. In her own constituency, it will rise by 7.1%, and the funding for the school she mentioned—Twerton Infant School—will rise to £5,457 per pupil, compared with the national average of £4,189.

[Wera Hobhouse]

I thank the Minister for that intervention, but it is very clear that talking in percentages hides the real picture and does not tell us the per pupil funding. My headteacher in Twerton is absolutely clear that per pupil funding is going down, year on year, and the pupils who are particularly suffering are those who need extra support.

[Nick Gibb]

With regard to Twerton Infant School, I was talking about per pupil funding. It will rise to £5,457 per pupil once the national funding formula is implemented in full, compared with the national average of £4,189 per pupil.

[Wera Hobhouse]

I am listening to my headteacher, who has given me the numbers. If he gets a 0.5% increase, but has to pick up increases in teachers’ pay and in support staff, his overall funding is going down. If the Minister is happy to meet with me and that headteacher, we can probably discuss it at an individual level.

If children do not receive the right support, they do not reach their full potential, which is a national tragedy, because we lose out as a country. We lose out on the nurses and teachers of the future, the software engineers and the hospitality professionals—the list is endless. We deprive Britain of the people who will continue building its prosperity. The worst thing is that the loss of opportunity particularly affects children and families from poorer areas.

In my maiden speech, I said that whenever I mention that I am the MP for Bath, people go, “Ooh, Bath, how beautiful!” It is, but like almost every other place in the country, Bath suffers from serious inequality. One fact illustrates that perfectly, and it is well known in Bath, but perhaps not outside it. Twerton Infant School, which I mentioned, lies on the number 20A bus route. Three stops on from Twerton, life expectancy increases by seven years. Let that sink in for a second—seven years’ difference over a five-minute bus journey. The so-called “fair funding” formula eradicates the extra funding that used to go to schools in catchment areas with high levels of deprivation.

[Jeremy Quin]

We all agree that funds must be there to support those most in need. Personally, I welcomed the national funding formula’s emphasis on ensuring that children who come from deprived backgrounds, or who have English as a second language and need extra support, get that targeted support. That is in addition to the pupil premium, which was a great triumph of the coalition. I think the hon. Lady is being a little unfair on the national funding formula.

[Wera Hobhouse]

I thank the hon. Gentleman for his intervention. I go by what I see on the ground. I have just explained that I am a trustee of a multi-academy trust. We are facing a problem with the loss of local authority staff, particularly in welfare and support roles. Trusts are meant to pick up those roles. They cannot, because they do not have the money, so staff who are helping young people with difficulties are not supported. That is the tragedy.

The important point is that the schools that most need the support are losing the most money. However, as we know from an announcement last week, the Government have found some extra money—£50 million for grammar schools. To me, that clearly demonstrates that the Government are committed to inequality. Inequality has no place in our society. Every child has the right to achieve their full potential, and should receive the support and education to do so. That costs money, and the state has a duty to provide it.

Schools are in a funding crisis. I very much appreciate the Minister’s being here today. I urge him to listen not just to me, but to teachers and headteachers across the country.

14:39

[Stephen Lloyd (Eastbourne) (LD)]

It is a privilege to serve under your chairmanship, Mr Walker. I thank my hon. Friend the Member for Bath (Wera Hobhouse) for securing the debate. It was very short-notice but, as she flagged up, this is an important issue.

This is one of those fascinating debates where it is a bit like the old cliché of apples and pears, in the sense that one side says one thing, and the other side tweaks it a wee bit, says, “It’s an apple, not a pear,” and stands the argument on its head. Rather than going round in circles, which we can do, frankly, for hours, I will mention one point in particular that strikes home to me.

I have been involved in politics for nigh on 20 years, and previously I spent many years in business. In all the years that I have been in politics, I have discovered that senior public sector people very rarely put their head above the parapet—for obvious reasons, as doing so can put their career in jeopardy. Whether that is right or wrong is irrelevant to the argument. The main thing is that colleagues will remember that, last year, 5,000 headteachers across the country not only wrote to their Members of Parliament and to the Government but went on a march, because they were so anxious about what they said were real-terms cuts to our schools budget. Before I get on to those cuts, I reiterate that I have never seen, in all my years in politics, so many senior people within schools say, “We can’t be doing with this any more. We’re going on a march. We need the money, otherwise our schools are in trouble.” That was so significant to me.

Clearly I know a lot of my local schools, and I met a lot of the heads both when I was first an MP and during the time after I was briefly defenestrated before coming back as the Member of Parliament. I have known some of those people for a long time. I can even remember, in the halcyon days of the coalition, trying to get them to go public on particular issues. There was no way that they would put their head above the parapet, because they did not need the grief. On this issue, however, heads across the country—in Labour, Conservative and Liberal areas across England—were so angry that they rose up and said, “Our schools are facing a crisis.”

To be fair, the then Secretary of State, the right hon. Member for Putney (Justine Greening), listened and came up with an additional £1.3 billion. I am quite sure that there were sound political reasons for that as well, because of the snap election, but I will give her due credit because I think she deserves it. Despite our being on different sides politically, I thought that she was a good Secretary of State.

[Layla Moran]

Does my hon. Friend agree that it was slightly concerning that that £1.3 billion was not new money? When the Public Accounts Committee, on which I sit, questioned representatives from the Department on where that money would come from, they said that the vast majority of it was coming from so-called efficiency savings. At the time, they were unable to tell us exactly where the money was coming from. Does my hon. Friend share my worry about that?

[Stephen Lloyd]

I entirely agree. A lot of it was apparently not new money, and anyway, even with the best will in the world, it just held everything in place for 12 months—it did not solve the problem. As my hon. Friend has emphasised, as we began to pick into and drill down into those figures, what did we discover? We discovered that quite a lot of it was not the new money it was initially alleged to be.

Having said that, I pay tribute to the right hon. Member for Putney. I believe that her heart was in the right place and that she was fighting the schools’ corner as strongly as she could. I certainly think she was probably more on our side of the divide when it came to grammar schools, which is possibly why she is now the ex-Secretary of State—but who am I to make such an allegation?

I come back to the important fact that the headteachers—the people who know—say that funding is going down; there are not net increases, and it has been going on for years and causing real problems. Teachers have not had a decent wage increase in many years, and again, there is a real cross-party push on that. We are hearing soundings from within Government that there is an appreciation that teachers’ wages need to be increased more in line with inflation, similar to the situation in the NHS. However, it is terribly important, to pick up on the point made by my hon. Friend the Member for Oxford West and Abingdon (Layla Moran), that that is done with new money. If we finally do get that salary increase for teachers, and there is the same story of efficiencies—after seven years they are really beginning to cut into the lean muscle, with the fat having gone from the whole sector—that will be very disappointing. If the Government sign off a good pay increase on the one hand but then on the other hand say that it has to come from school budgets, we will go even further backwards.

I have known the Minister a long time; I hold him in genuine respect, even with our disagreements in the past. I urge him to make a statement today about the scale of the salary rise and a commitment that it will funded by new money and not taken from school budgets, which would just make a bad situation chronic.

My hon. Friend the Member for Oxford West and Abingdon and I have tabled an early-day motion today, specifically urging that the Government find new money to pay teachers a decent increase after their many years of getting static salary increases. I urge hon. Members to sign the early-day motion; I am sure it is very much a cross-party aim that many of us would support.

As I said, it comes down to apples and pears. The National Audit Office—as we all know, it is a highly reputable, respected body—says that in 2018-19, schools will experience additional cost pressures of 1.6%. That may not sound an awful lot, but after a few years of consistent 1%, 2% and 2.5% rises, and a failure to get net funding increases, it adds up considerably. The additional cost pressure comes on top of several years of static Government funding and increases in pupil numbers, salary increments, employer national insurance contributions, employer pension contributions and inflation, meaning that real school budgets have seen a decline of—wait for it—about 15%.

I was in business for years before I went into politics. I know how to trim and how to make efficiency savings. When times are tough, we have to go through efficiency savings. I wholly signed up to those necessary efficiency savings in coalition, but there comes a time when a line needs to be drawn. If someone is looking at a 15% real-terms cut in their business, school or hospital, they are heading for a car crash. That is why I, my hon. Friend the Member for Bath, my hon. Friend the Member for Oxford West and Abingdon, who is the Liberal Democrat lead in this area, and the Labour party urge the Government to make a longer-term, significant increase to contributions to the schools budget, as well as a separate increase to teachers’ wages.

[Layla Moran]

Does my hon. Friend recognise from meetings he has had with headteachers, as I have had, that the reason why this is significant is that roughly 75% of a school’s budget goes on its teaching and support staff? The reduction in budget can only come from what is left. Schools have now got to the point where they can cut no more without affecting frontline staff, and that will lead to a drop in the quality of service that we can give children and parents across the country.

[Stephen Lloyd]

My hon. Friend is so right. We know that is true. Hon. Members will have spoken to their local headteachers and visited their schools. The number of teaching assistants has been slashed, and support for disabled children is under tremendous pressure. The schools are creaking—there are no two ways about it. I know that the budget is huge and there are thousands and thousands of schools across the country, but having proper funding is such a crucial part of our nation’s future.

I reiterate the point made by my hon. Friend the Member for Bath about grammar school investment. I thought that, after the catastrophic consequence of the snap election in 2017 for the governing party, the whole idea of grammar schools had been kicked into the long grass. Suddenly, out of nowhere, it got into the headlines last week—another £50 million for grammar schools. There really are better ways than grammar schools in a society where we are trying to give everyone the same opportunities to succeed. Without banging on about it, there is so much empirical evidence that shows that they are counterproductive and do not improve outcomes for disadvantaged people. There is so much evidence there that I will not even bore the Minister by outlining it.

I am grateful to my hon. Friend the Member for Bath for securing this really important debate on an issue that affects our future and our children’s future. I had the pleasure of welcoming pupils from a wonderful school in my constituency called Shinewater this morning. I know it well; I have visited it probably one gazillion times over the years that I have been either the MP or the parliamentary candidate. It is in a more disadvantaged part of my wonderful constituency of Eastbourne, in Langney. It is a great school with passionate teachers, and the sort of school where the Liberal Democrat policy of the pupil premium, which we delivered when we were in coalition, makes such a difference. That additional funding and support means that children who may not have the obvious advantages that I and many other Members of Parliament have had have an equal chance to have a very successful life in their jobs and relationships.

It was wonderful to welcome the children here. They were all about six or seven years old. Many of them had never even been on a train, let alone an underground. It is so long ago that I was that young that I can barely remember, but it was a pleasure to welcome them. I know the pressure that school is under. It is a good school, and it is doing its best and doing well, but it does not have anywhere near the number of TAs that it used to have. Its funding for special educational needs is severely stretched, and likewise its funding from the county council. It is the sort of school where the teachers go the extra mile, beyond anything that any teachers would have even contemplated 30, 40 or 50 years ago. They do it because they are passionate about the children and the school. I urge the Minister to help us to help schools such as Shinewater around the country—to give them the budget they deserve, to give the teachers the salary rise they deserve and to secure our schools’ funding and future for many years to come.

15:00

[Jeremy Quin (Horsham) (Con)]

I am most grateful to be called to speak, Mr Walker, in particular because, only about five minutes ago, I intimated to you that I had not prepared a speech and did not intend to deliver one. I am most grateful that you have found time for me. This is an important subject, which it was important to raise, and I thought it deserved a longer airing in the House than would otherwise have been the case.

I congratulate the hon. Member for Bath (Wera Hobhouse) on securing the debate. My colleagues in West Sussex and I campaigned long and hard for a national funding formula. We were pleased to get a 5% increase in overall funding for the county, so I suppose I should congratulate the hon. Lady on doing better than that—the hon. Lady or, if I may be so bold, her predecessor. A 7% increase is possibly one of the highest increases achieved by any area of the country as a result of the NFF reallocation.

The hon. Lady is right that one can do a lot with statistics, but those I have seen show that we have, as a country, rightly put a huge emphasis on education. I think we have more than doubled our per pupil funding since the early 1990s, and we needed to: we expect a lot more from schools and teachers than we ever did before, and I pay credit to their huge commitment. Perhaps the Minister will correct me if I am wrong, but I believe we spend more per pupil on education than France or Germany. We need to—it is an investment in our future, and I am delighted that we make that commitment as a country. We owe it to our children and to our country to ensure that we have a fantastic cohort of children coming through.

[Fiona Onasanya (Peterborough) (Lab)]

In my constituency, we get £171 less per pupil, so when we talk about funding increases, it is important to bear in mind that, outside London, the situation is not the same for every constituency—the funding formula may not be fair for areas that are deprived.

[Jeremy Quin]

I am most grateful to the hon. Lady for her intervention. [Interruption.] I hear whispers from the direction of the Minister, so I am certain there will be an answer about per pupil funding of schools in Peterborough. I hope there shall be.

We have to look at where we were before the NFF came in and at what brought me and my colleagues here. The first meeting I had in this place as an MP was with the then Secretary of State for Education to insist that we push through the NFF, because we needed it. Historically, the allocations were all over the place, but data from about 2000 to 2005 revealed genuine demographic changes, meaning that funding should be better allocated.

Disparities between parts of the country remain—the Minister knows I think this—and over time they need to be addressed, but the NFF was a proper step in the right direction of allocating funds according to the need of individual pupils. We need to have a basic amount of funding per pupil, and we need to make certain that we get that right. Beyond that we also need to allocate according to the need or characteristics of individual pupils.

[Wera Hobhouse]

Will the hon. Gentleman not acknowledge that if we simply say, “We will increase per pupil funding,” but do not take into consideration inflation and other pressures on school budgets, such as teachers’ pay rises and so forth, that does not give the proper picture?

[Jeremy Quin]

I totally accept the hon. Lady’s point about significant cost pressures. Some of those have been through the system—we have gone over a hump in cost pressures in relation to pensions in particular—but she makes a valuable point about staff pay. That will need to be addressed, but I am sure we shall hear wise words on funding teachers’ pay rises as they come through.

I recognise the issue of costs, but the debate is about funding and the NFF, and my county will get an extra £28 million as a result of the fully implemented national funding formula. West Sussex needed that funding, and that it received it was right. My secondary schools will get an increase of between 7% and 12%. There are increased costs, and I recognise those pressures, but the NFF is a fairer way of allocating funds than was previously the case.

Similarly to the hon. Lady, I have schools that have not done as well out of the NFF. Some of my primary schools are experiencing significant cost pressures, and I have talked to them and to the county about how to mitigate the impact of cost increases as they affect primary schools. I also have other issues, as the Minister knows. I would like more focus on the high-needs bloc, and I think the ASHE—the annual survey of hours and earnings—formula for allocating local costs of living in different areas could be improved. If I find a better way of doing it, I shall beat a path to the Minister’s door, because areas such as Horsham have very high costs of living, and I am not sure that that is properly reflected in the ASHE formula, which may need some attention.

The motion, however, was about the national funding formula and social mobility. At core, yes, we must make certain to have the right level of per pupil funding throughout the country to ensure that our excellent teachers can deliver the curriculum to the best of their ability and give our kids the head start in life that they need and that we all want for them. However, the NFF is right to go beyond that: we also need to allocate according to the characteristics of the pupils, be that speaking English as a second language, being in receipt of free school meals or having low prior attainment.

Education is part of the answer to help the country achieve better social mobility—it is only part of the answer, but it is an important part. Surely an NFF approach through which we recognise the individual characteristics of pupils is the right approach. The NFF is not the perfect answer, and I shall continue to work on it and to bend the ear of the Minister, but it is a step in the right direction, and the Government were right to introduce it.

15:05

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Walker.

I thank the hon. Member for Bath (Wera Hobhouse) for securing the debate and for her eloquent and detailed speech outlining the key issues facing our schools and the negative impact that some of the Government’s decisions are having on our children. I also thank the hon. Members for Eastbourne (Stephen Lloyd) and for Horsham (Jeremy Quin) for their contributions, and other Members for their interventions.

It is safe to say that there is a consensus in the Chamber: we all agree that our system of school funding should be designed to improve social mobility. Sadly, that is probably where the agreement ends, because everything the Government do flies in the face of improving social mobility—from their inaction on low pay and insecure work to their punitive welfare reform measures, which led the Joseph Rowntree Foundation to conclude that almost 400,000 more children have been plunged into poverty in the past four years and that the number of children in poverty is due to soar over the next few years to a record 5.2 million. The new schools funding system is no different: it will not achieve social mobility.

Children should never be denied the same opportunities in life just because of the place they were born. Yet in the north, two to three-year-olds are less likely than their London counterparts to reach the expected standard of development when starting school, and the National Education Union has said schools in my part of the world—the north-east—face the biggest cuts, with one school due to lose nearly £8,000 per pupil. Success in life should not be the result of a postcode lottery, but under this Government it is.

I think I can pre-empt what the Minister will say. He will tell us that there is funding for children in disadvantaged areas, for children with low prior attainment and for children eligible for free school meals. That is correct, and it is welcome, but it is simply not good enough. It is not good enough, because it ignores the wider issues facing schools in terms of the implementation of the funding formula and the impact of the first cuts to school budgets in a generation.

[Wera Hobhouse]

Does the hon. Lady agree that headteachers are not just making that up? For example, a headteacher in a deprived area in my constituency is not laying off support staff because he enjoys doing that; he is laying off support staff and those who help vulnerable children because he does not have the money.

[Mrs Lewell-Buck]

I agree. I have had representations from headteachers, staff and support assistants in my constituency as well. That problem faces schools throughout our country—they are put in an intolerable position because their funding has been cut and cut.

The Education Secretary and the Chancellor of the Exchequer have both said that every school in the country will receive a cash-terms increase to their funding. We know, however, that that is simply not the case, as do the independent Institute for Fiscal Studies and the UK Statistics Authority, which has repeatedly told the Government that that claim is not accurate. Perhaps the Minister will get it right this time. I am sure that by now his Department has received the local funding formula for every local authority in the country. Can he tell us how many schools will face a real-terms cut to their budgets, and is he able to tell us where those schools are?

The Minister has told us of the local authorities that have written to his Department to seek permission to top-slice their budgets to fund additional high-needs support. How many schools across the country will see their block funding cut as a result of those decisions? Such cuts should not be necessary. Schools and councils should never be forced to choose between funding the day-to-day expenses of their schools and getting the high-needs funding that is vital to so many of their pupils’ needs.

[Layla Moran]

I am grateful to the hon. Lady for giving way and for raising the issue of special educational needs provision. The education, health and care plan system is not working in places such as Oxfordshire because the county does not have the resources to deliver it. Although the schools are able to come up with the plans, they and the county do not have the money. Is this a picture that she has seen, because it is inundating my inbox?

[Mrs Lewell-Buck]

I thank the hon. Lady for that intervention. A recent local ombudsman report said that the picture of ECHP plans across the country is dire, and local authorities are often spending more money on tribunals to rectify decisions they made in the face of cuts, rather than actually implementing the plans in the way they should be implemented in the first place.

The fact is that school budgets have been slashed for the first time in a generation. The National Audit Office found that, since 2015, £2.7 billion has been lost from school budgets in real terms. If the Government were not making cuts to school budgets, it would be possible to introduce a new funding formula in a way that was equitable and sustainable and that could actually improve social mobility, but the Government are failing to do that. When the revised funding formula was put forward after the snap general election, one of the major changes was the introduction of a minimum funding level per pupil in secondary schools. Given the way that the formula allocates funding and the extent to which it allocates more funding to disadvantaged pupils, a minimum funding level would be particularly helpful to schools that take a very small number of pupils from disadvantaged backgrounds—in other words, grammar schools.

When the £4,600 minimum per secondary school pupil was announced, the Government committed an extra £1.3 billion to schools over two years. How much of that additional funding will find its way to grammar schools? It seems to us in the Labour party that finding extra funding to go to grammar schools—most of them in areas represented by the Minister’s colleagues on the Conservative Back Benches—is not a policy that will increase social mobility. In fact, it will do the opposite and focus resources more and more on the pupils who need it least, while those who need the additional support and additional funding will simply not have access to it.

We do not object to the principle of a minimum level of funding per pupil. However, it is worth remembering how the Conservative party arrived at that policy. When the funding formula was first devised, the Government did not believe that there should be a minimum funding level. Only after their Back Benchers—particularly those representing schools with more affluent intakes—raised concerns that they did not see enough extra funding in the formula did the Minister come to believe in the policy.

Although we welcome the belief in the minimum amount to which every single pupil should be entitled, I wish the Government would do this properly. Instead of finding a fraction of the funding that our schools need by making cuts elsewhere in an effort to buy off their own Back Benchers, why did the Minister not push to end the cuts to school budgets and increase per pupil funding in real terms for every single child, not just a minority of children?

Despite there being some elements of the funding formula that we welcome, the funding that goes to the most disadvantaged pupils is being cut in real terms year after year. Despite the rhetoric from the Government, the pupil premium has been falling in real terms every year since 2015. They have failed to increase the funding in line with inflation, which has led to the funding falling in real terms. In fact, it has fallen by £140 million.

A recent article in the press noted:

“A Department for Education source confirmed that in real terms the amount per pupil spent on the pupil premium specifically has fallen.”

Will the Minister confirm today that the per pupil spending on the pupil premium has fallen in real terms? Will he also tell us why, in reducing the funding formula, the Government have not ensured that that vital funding is protected?

[Wera Hobhouse]

The hon. Lady is very generous for allowing me to intervene again. Does she agree that the pupil premium introduced by the coalition Government was a powerful thing because it followed every single pupil around? The fact that funding per pupil is now being cut is a tragedy and is counter to what was radically introduced during the coalition Government.

[Mrs Lewell-Buck]

I thank the hon. Lady for that intervention. It will come as no surprise to her that I am a big advocate of the pupil premium and pupil premium plus.

Does the Minister really believe that the funding formula can truly support social mobility when it has not included meaningful protection of funding for the most disadvantaged students in our schools? He might say that the funding formula does not distribute pupil premium funding, but it would be disingenuous to act as though the two issues could be meaningfully separated. The issue of school funding and how it is allocated includes the pupil premium, whether the Minister considers them to be the same issue or not.

I sincerely hope that, in answering our questions and after listening to today’s debate, the Minister will show some appreciation of the fact that it is simply not possible to really improve social mobility when the Government have cut school budgets for the first time in a generation and are slashing the funding that goes to the most disadvantaged pupils year after year. Frankly, Minister, our children deserve better.

15:17

[The Minister for School Standards (Nick Gibb)]

I congratulate the hon. Member for Bath (Wera Hobhouse) on securing this debate. I will start by saying that standards are rising significantly in our schools: 1.9 million more pupils are in schools now rated good or outstanding compared with 2010. Children are reading better thanks to our reforms and we secured the highest ever scores in the PIRLS—the progress in international reading literacy study—of nine-year-olds’ reading ability when that was published last year. The proportion of young people taking at least two science subjects at GCSE has risen from 63% to 91%. Nine out of 10 young people now take at least two science subjects at GCSE.

The attainment gap between those from disadvantaged and advantaged backgrounds has closed by 10% both at primary and secondary level. We are spending record amounts of money on our schools: £42.4 billion this year, rising to £43.5 billion from next year. We are spending £2.5 billion on the pupil premium: £13 billion since 2010. None of that could have been afforded had we not made careful decisions about public spending across Whitehall when we came into office in 2010, tackling a historic budget deficit of £150 billion, equal to 10% of our GDP. The country was on the verge of bankruptcy owing to the banking crisis of 2008-09 and because of decisions taken by the previous Government. We brought that down to about 2% of GDP. We have the highest level of employment in our history and the lowest level of unemployment for 40 years, and that has enabled us to maintain spending in real terms per pupil in our schools.

Of course, there have been cost pressures, particularly in the three years leading up to last year: higher national insurance contributions, which help to deal with the deficit, and higher employer’s pension contributions to the teachers’ pension scheme are costs that schools have had to absorb. We are helping schools with our school resource management advice on how they can manage those costs.

[Nick Gibb]

Under the national funding formula no school will see a cut in funding this year or next year. They will all receive, through the national funding formula, the money that is allocated to local authorities, which will be a rise of at least 0.5% for every school in the country and up to 3% this year for the lower-funded schools. How those local authorities allocate the funding to the schools this year and next year—we are allowing local discretion as we transition towards the national funding formula—will be for them to decide, but every local authority is receiving sufficient cash to pay at least a 0.5% increase to every single school in their area.

[Wera Hobhouse]

Can the Minister explain to me how advice increases funding? Advice is not the money that the schools need. In Bath, which has definitely not had a particular drop in population, 58 schools are losing and 17 are gaining. Almost three out of four schools are losing funding. How can the Minister explain that loss in funding?

[Nick Gibb]

Perhaps I may turn to schools in the hon. Lady’s constituency. Funding for Bath and North East Somerset will rise by 8.8% once the national funding formula is fully implemented. That is an increase of £8.4 million under the national funding formula. As my hon. Friend the Member for Horsham (Jeremy Quin) said, it is one of the largest increases for any area. To take some individual examples of schools in the hon. Lady’s constituency, Bathwick St Mary Church of England Primary School will have a rise of 9.5% once the national funding formula is fully implemented, and there are large increases for other schools in the constituency. She cited Twerton Infant School, whose funding level is £5,457 once the funding formula is fully implemented. That is significantly higher than the national average for a primary school of £4,189. In the move to a national funding formula, there will be schools that do not get as big an increase as schools in, for example, Horsham, or, indeed, other schools in her constituency that were underfunded, according to the formula. She happened to pick the one that was receiving a smaller increase than others, but that is because its per pupil funding of £5,457 under the formula is significantly higher than the national average.

[Wera Hobhouse]

Figures are figures, and can be turned one way or the other. I said in my speech that the funding increase received per pupil is 0.5%, but the extra pressures, which have been acknowledged, are mounting up to 4.5%. That is a lot of pressure—more than the extra funding. I worry about schools that are getting even less, because the head teachers in Bath do not lay people off for the fun of it. They do it because they do not have the necessary resources any more. Figures and percentages will not take that away. Will the Minister explain why headteachers have to lay off staff?

[Nick Gibb]

In circumstances where headteachers feel they have to do that, it is because they need to manage their funding within their budget. Funding for schools goes up and down depending on the number of pupils. If they have fewer pupils, they will of course receive less money per pupil and the overall budget will be less. That sometimes means planning for staff not to be replaced.

[Stephen Lloyd]

On that basis, how does the Minister explain the fact that in the past 18 months or so the number of schools releasing teaching assistants has grown faster than in the previous few years? Does he accept that that must be because of budgetary pressures and that, if it happens across the piece, it could lead to severe challenges down the line?

[Nick Gibb]

We have a benchmarking website where schools can look at their pupil-staff ratios. We have a tool that schools are using, called the curriculum-led financial planning tool. Schools can examine their curriculum using the tool, which was developed by some schools in the north of England—the Outwood Grange multi-academy trust—to ensure that over a three to five-year time span they are planning their staffing to reflect their curriculum. I think that a lot of schools are applying that tool and becoming more efficient. We are helping schools to manage their resources in a way that ensures they can balance the budget.

Every school will, according to the national funding formula, receive an increase in funding of at least 0.5%, but the Secretary of State has acknowledged on many occasions, as I have today, that there have been cost pressures: employers’ national insurance contributions have risen, as they have across the public and private sectors, and there are higher employer’s contributions to the teachers’ pension scheme. We think that is the right thing to do, to get the balance of the cost of those things spread between the schools and the taxpayer and to help to deal with the deficit. We are helping schools to tackle those cost pressures, but the hon. Gentleman should remember that we are spending record amounts of money on schools—£42.4 billion this year rising to £43.5 billion next year. We have been able to do that and maintain per pupil funding in real terms because we have a strong economy and have managed the public finances in a sensible way, bringing down the deficit and keeping public spending under control.

[Layla Moran]

I am grateful to the Minister for giving way and for his acknowledgement of the increased cost pressures. Another cost pressure—welcome, in a sense—is the rise in pay, particularly for teachers on the main pay scale. I want that to continue, because as the Minister knows teacher retention and recruitment is a major issue in the sector, but does he agree that if it does continue we will at some point need new money in the system, so that we do not keep eating away at the tiny amounts left until it is necessary to cut the number of teachers to make the numbers work?

[Nick Gibb]

The hon. Lady will know that the School Teachers Review Body, the independent pay body that makes recommendations about teachers’ pay, has reported to the Department, and we are looking at that report. We will respond to it, and I hope that that will be before the summer recess; that is our intention.

[Mrs Lewell-Buck]

I have been following the Minister’s remarks on overall funding. Does he seriously think that what the Government are now implementing makes up for the £2.7 billion lost since 2015 in the first cuts to school budgets in a generation and for all the neglect since 2010?

[Nick Gibb]

I remind the hon. Lady that last year schools funding was £41 billion. This year—2018-19—it is £42.4 billion, and in 2019-20 it will be £43.5 billion. As the independent Institute for Fiscal Studies has confirmed, that will allow us to maintain school and high-needs funding in real terms per pupil for the next two years. The IFS also pointed out that by 2020 real-terms per pupil funding will be some 70% higher than it was in 1990 and 50% higher than it was in 2000.

The hon. Member for Oxford West and Abingdon (Layla Moran) acknowledged the extra £1.3 billion brought in, which we were able to identify last summer. We have been able to ensure that all schools, and all areas, will attract some additional funding over the next two years and have provided for up to 6% gains per pupil for underfunded schools by 2019-20. We have therefore, Mr Walker, gone further than our manifesto pledge—and I should have mentioned at the outset what a pleasure it is to serve under your chairmanship; I was keen to get stuck into the debate. Now every school in every area will, under the national funding formula, receive at least 0.5% more per pupil this year than it received in 2017-18 and 1% more in 2019-20. The significant extra investment in schools demonstrates our commitment to ensuring that every child, regardless of their background, receives an excellent education.

During consultation on the formula, we heard that we could do more to support the schools that attract the lowest per pupil funding, something that the hon. Member for South Shields (Mrs Lewell-Buck) mentioned in her remarks. We listened to those concerns—something that I am criticised for, but I thought it was important to do so—and our formula will rightly direct significant increases towards those schools. In 2019-20, the formula will provide a minimum per pupil funding of £4,800 in respect of every secondary school and £3,500 in respect of every primary. That ensures that every school will attract a minimum level of funding through the formula, no matter what its pupil characteristics are. In addition, those schools will be able to attract even larger increases, as we have not limited their year-on-year gains to the 3%. Some of the lowest-funded schools in the country will therefore attract gains of more than 10% per pupil by 2019-20—something that I now understand the Labour party opposes. It therefore opposes, for example, the increase under the national funding formula of 10.1%—some £145,000—for Newbridge Primary School in the constituency of the hon. Member for Bath. That minimum funding also applies to St Stephen’s Church School, which, under this system, will receive a funding increase of 17.5%, or £214,000. Beechen Cliff School will receive a 10.9% increase in funding, equal to £427,000, once the national funding formula is fully implemented.

[Mrs Lewell-Buck]

Will the Minister give way?

[Nick Gibb]

I will give way once I have finished this list, which I have to say is rather long. Hayesfield Girls’ School in the constituency of the hon. Member for Bath will receive an 8% increase, equal to £335,000, once the national funding formula is fully implemented, and Oldfield Secondary School will receive a 9.4% increase of £414,000. Saint Gregory’s Catholic College will receive an 8.2% increase once the funding formula is fully implemented, equal to £293,000.

With the national funding formula, we have been able to allocate funding to schools that historically have been underfunded. We listened carefully to the f40 campaign, of which my hon. Friend the Member for Horsham was part, and we want to deal with the historical unfairness of schools that have been underfunded year after year. We are addressing that, and the examples I have given show that we have a national funding formula from which schools in the constituency of the hon. Member for Bath are benefiting. Bath is getting one of the biggest increases of any local authority in the country, and I had hoped that she would come to this debate to congratulate the Government on taking a brave stance in implementing that funding formula.

[Wera Hobhouse]

rose—

[Mrs Lewell-Buck]

rose—

[Nick Gibb]

I will give way to the hon. Member for Bath since I mentioned her, and then to the shadow Minister.

[Wera Hobhouse]

The Minister is generous in giving way. I am grateful on behalf of any school that receives extra funding, but that extra funding should not come at the expense of other schools that most need more funding. To me, a fair funding formula should be based on the biggest need. As I said earlier, every child from whatever background should receive the education they deserve, but if we are to address social mobility, we must focus on those who need the most support. In Bath, schools in the most deprived areas are losing out, which is not acceptable.

[Nick Gibb]

But those schools are funded at significantly above the national average for schools, and if we are moving towards a national funding formula, that will be the consequence. We addressed that in our 2017 manifesto when we said that no school would have a cut in funding to get to the national funding formula position, but we changed that when we came back after 2017 and secured extra funding of £1.3 billion. That enabled us to introduce this minimum funding from which many schools in the hon. Lady’s constituency have benefited and to ensure that no school will have a cut in funding, since the worst that can happen is a 0.5% increase in each of those two years.

[Mrs Lewell-Buck]

The Minister is talking about fairness and equity in the system, but what does he say to a school in the north-east that, according to the National Education Union, is set to lose £8,000 per pupil? How is that fair?

[Nick Gibb]

What the NEU is doing with its school cuts campaign is misleading. It is taking the cost pressures that we have acknowledged and telling the public that those are funding cuts. I have been clear that no school has had a funding cut. School funding went up in real terms per pupil in the last Parliament, and that increase has been maintained in real terms.[Official Report, 19 Jun 2018, Vol. 643, c. 1MC.] The NEU is talking about cost pressures that have had to be absorbed, not just by the school system but by other parts of the public sector and the private sector. The hon. Lady will know that once the national funding formula is fully implemented, funding in South Tyneside will increase by 4.5%, which is equal to £3.9 million more going into schools in that area.

[Mrs Lewell-Buck]

I was not going to intervene again, but the Minister mentioned my area, and I will not take any lessons from him about what is happening to schools on my patch. Teachers come to see me on a regular basis saying that they are at breaking point because the cuts are damaging their ability to continue. Some schools are saying that they will have to go down to teaching just four days a week. I am sorry, but the Minister is wrong when he talks about how great things are for school funding in south Tyneside .

[Nick Gibb]

I am saying that thanks to the £1.3 billion extra funding that we secured, schools in south Tyneside will receive an extra 4.5% once the funding formula is fully implemented, which is equal to £3.9 million. [Interruption.] I have acknowledged that over the last three years, up to 2017-18, there have been cost pressures. Higher employer national insurance contributions have had to be absorbed not just in the school sector but across the public and private sectors, and there have been higher teachers’ pensions contributions, which was the right thing to do.

[Jeremy Quin]

I am slightly frustrated, so I will share my frustration with the Minister. I would like more money to be spent on schools—I think everyone in the Chamber would like more money to be spent on pupils, and we would like better standards even more. I know that standards are rising, and what is being achieved on the attainment gap is great. However, I am frustrated because when the Conservative party came into office with its coalition partner, there was a £145 billion deficit that the kids of today were going to have to pay back. It is all very well wanting more and more money spent on things, but that money has to be raised. In the past, billions and billions of pounds were being left for the schoolchildren of today to repay, and that is not fair either.

[Nick Gibb]

My hon. Friend makes a good point, because that debt also carries an interest charge, which is similar to the overall amount of money we spend on schools each year. If we were to go down the Labour party’s route of promising even more expenditure and borrowing tens of billions of pounds to renationalise whole swathes of the private sector, as was promised during the general election and has been promised since, we would add even more to the interest that we have to pay each year. Indeed, we would have to pay something like £9 billion more in interest charges than we pay already.

When fully implemented, the national funding formula will lead to a 4%—£3.4 million—increase in the constituency of the hon. Member for Peterborough (Fiona Onasanya), and in Oxford West and Abingdon the increase will be 2.4%, which is £1.2 million extra for schools. Once the funding formula has been implemented in full, there will be a 3% increase in funding for schools in Oxfordshire as a whole, which is £10.5 million. The hon. Member for Oxford West and Abingdon referred to high-needs schools, and those schools will get an increase of 3.7% to £60.6 million. That important money is being spent on the most vulnerable children in our society, which is why there has been a 3.8% increase in funding in her area.

[Layla Moran]

Does the Minister understand the frustration not just of the teaching profession but of parents? I am a governor at one of the schools in Oxfordshire that he mentioned. Perhaps he is suggesting that the board of governors and I are not managing our money or resources properly. I assure him that we are doing everything we can for this issue not to affect frontline services, but it does. My question is simple: does the Minister accept that although he can spout numbers—it is true; these are facts—the reality on the ground in schools such as Botley Primary School in my constituency is that teachers are at breaking point, and parents are beginning to see the real effects of the cost pressures that are played off against the increases in funding that the Minister lists?

[Nick Gibb]

We have to live within our budget, and the Treasury has to work with the tax receipts it receives and deal with the historic budget deficit it inherited. Somebody has to lend the state that money, and they would not lend us £150 billion every year if we showed no sign of reducing that figure to something more manageable and did not plan ultimately to eliminate it altogether. That is what is happening. That is why we have a strong economy and the lowest level of unemployment for 40 years, why there are opportunities for young people to have a job once they leave our school system, and why fewer children are living in workless households. That is all part of how to manage the public sector in a serious way, which is what the Government have been doing since 2010. That is why we have been able to maintain school funding in real terms over that period, spend £23 billion on capital funding for schools, and fund an increase of 825,000 school places to deal with the increasing pupil population.[Official Report, 19 June 2018, Vol. 643, c. 2MC.]

When we came into office in 2010, we discovered that the previous Government had cut 100,000 school places, despite the increase in the birth rate at the turn of the millennium. We were very sensible in how we managed the capital budget and the revenue budget at a time when we had to tackle a very serious budget deficit as a consequence of the banking crash in 2008.

[Stephen Lloyd]

The Minister has been talking a lot about the national fair funding formula and the additional money in the constituencies of the hon. Member for South Shields (Mrs Lewell-Buck) and of my hon. Friends the Members for Bath and for Oxford West and Abingdon. When exactly will that national funding formula come in? Does the Minister acknowledge that when it comes in, it will be taking over from cuts of upwards of 20%? There is an awful lot for it to make up for.

[Nick Gibb]

It came in this year, for 2018-19. In the first two years, because of the transition, we want to allow local authorities to have some discretion over how they implement it on a school by school basis. Most authorities are moving quite close to the national funding formula if not moving to it fully, but some want to tweak it for the two years of the transition, and we have allowed that. As I said, we acknowledge that there have been cost pressures, and are helping schools to manage those cost pressures. Going forward, as the IFS said, we are maintaining funding in real terms per pupil for the next two years, because we have managed to secure an extra £1.3 billion.

We are absolutely committed to providing the greatest support to the children who face the greatest barriers to success. That is why we have reformed not just the schools formula but high needs provision, by introducing a high needs national funding formula. It will distribute funding for children and young people with high needs more fairly, based on accepted indicators of need in each area. The extra money that we are making available means that every local authority will see a minimum increase in high needs funding of 0.5% in 2018 and 1% in 2019-20. Underfunded local authorities will receive gains of up to 3% a year per head for the next two years. Overall, local authorities will receive £6 billion to support those with high needs in 2018-19, up by more than £1 billion since 2013-14.

I will draw my remarks to a close, to allow the hon. Member for Bath to make a final contribution to the debate. I thank all Members who have contributed to the debate. Our prime concern is the investment we are making in schools and the steps we are taking to ensure that that money reaches the schools that need it most. That is why we have introduced the national funding formula.

We have been reforming our schools system since 2010, by changing the curriculum to improve the way children are taught to read and the way that maths is taught in our schools. We have reformed our GCSEs so that they are on a par with some of the qualifications taken in higher education institutions around the country. We have been improving behaviour; we have given teachers more powers to deal with bad behaviour in our schools. Standards are rising in our primary and secondary schools, and the attainment gap between children from wealthier and poorer families is closing by 10% in both. Clearly there is more to do, but we are on the right track. Our funding formula is a fairer and more transparent way of distributing funding to our schools.

15:45

[Wera Hobhouse]

It has been a pleasure to serve under your chairmanship, Mr Walker. I thank everybody who has contributed to the debate, including my hon. Friends the Member for Eastbourne (Stephen Lloyd) and for Oxford West and Abingdon (Layla Moran) and the hon. Members for Peterborough (Fiona Onasanya) and for South Shields (Mrs Lewell-Buck).

I thank the Minister for his response. He has been eloquent in telling me how much funding the schools in my constituency have received, and I am sure that on an individual basis, some schools have increased their funding. But the overall picture is that of a funding crisis. I would not have been on the march that I mentioned at the beginning of the debate if headteachers were not so very desperate about the situation they are in. I agree with my hon. Friend the Member for Eastbourne that this is the first time that people from the profession have gone directly on to the streets to shout about that. I urge the Minister to listen to the professionals—to the headteachers and the teachers across the country—who say that they are in crisis. I urge him to listen to the trust of which I am a trustee. We are very worried, because our reserves are running low and we cannot support schools, particularly in our more deprived areas in our multi-academy trust, because the funding is not there.

If we really are committed to social mobility, it is important that we look particularly at the schools in our more deprived areas and make sure that they receive extra support, rather than support being taken away from them. I will take him up on what he said about extra funding for high needs areas, and I will scrutinise that. I am not quite certain whether that is new money. I agree fully with Members who have said today that we need new money. The 0.5% extra money per pupil that has been put into the system does not make up for the pressures from extra pension contributions, inflation and pay rises. Whatever figures we are bandying around, I believe what I see on the ground. I listen to the parents and the teachers, and I look at the young people in my constituency. We should do so across the country, and make sure that young people do not lose out.

Question put and agreed to.

Resolved,

That this House has considered the effect of the national funding formula on social mobility.

15:46

Sitting suspended.