School Funding (Worcestershire)

David Laws Excerpts

Tuesday 23rd October 2012 Westminster Hall

[The Minister for Schools (Mr David Laws)]

Thank you very much, Mr Weir, for calling me to speak.

I congratulate my hon. Friend the Member for West Worcestershire (Harriett Baldwin) on securing this debate on an issue that is extremely important for her constituency and that is obviously also important throughout the country. Once again, she is proving to be a most effective champion of her constituency interests.

My hon. Friend warned me before the debate started that the MPs from Worcestershire have a tendency to hunt in packs and her pack is behind her today, if I may say so, in the form of my hon. Friends the Members for Mid Worcestershire (Peter Luff), for Redditch (Karen Lumley), for Worcester (Mr Walker) and for Wyre Forest (Mark Garnier), who have all backed up the points that she made in a very effective way. We have other Members from Gloucestershire and Devon, who are clearly also taking an interest in this debate.

As the Minister for Schools, I am very well aware of the strength of feeling in Worcestershire schools and in schools in some other parts of the country. There is concern about some of the changes that we are seeking to make to the school funding system, and my hon. Friend the Member for West Worcestershire has set out some of those concerns very clearly today. I have received a number of representations from other hon. Friends, and from concerned local head teachers and governors throughout Worcestershire.

Therefore, I am grateful for this opportunity to address some of those concerns and to offer a reassurance that, as we move to a fairer funding system, we will do so very carefully and at a pace that enables proper consideration, consultation and sensitivity about the issues that are being rightly raised today by local MPs.

Our aim is for every child to succeed in school, regardless of their background. That is why the Government, despite having to make difficult decisions elsewhere in public spending, have made school spending a priority and protected school funding over the course of the spending review period, as my hon. Friends will be aware.

We have also introduced, as my hon. Friend mentioned, the pupil premium which, by the end of the Parliament, will have targeted an additional £2.5 billion to disadvantaged pupils. My hon. Friend mentioned that sometimes the take-up of the pupil premium is a concern in rural areas. She might be interested to know that the Department will publish in a few weeks’ time some interesting national figures showing the take-up of the pupil premium and free school meals in different parts of the country, and highlighting the challenge there is in some of the more rural areas to ensure that take-up is as high as it should be.

The Government need to work with local councils, schools and MPs to ensure that in some of the areas where there is a low take-up we address that, to ensure not only that youngsters get the free school meals to which they are entitled but that the extra funding we are making available gets through to the schools that need it.

We also need a system to support the investment that we are putting in through the pupil premium and to ensure that pupils are not disadvantaged as a result of a school funding system that, as my hon. Friends have indicated, does not distribute funding fairly. Sadly, under the previous Government, when there was a much bigger opportunity to increase education spending, the opportunity was missed to bring in a more rational formula. The current system for funding schools is in need of reform. It is based on an assessment of need that dates back to at least 2005-06, and that has not kept pace with changing demographics and the needs of pupils across the country. It is very complicated, meaning that head teachers, governors and parents are often unable to understand how their school budgets have been calculated and why.

That outdated funding system has meant that Worcestershire, as hon. Friends have already mentioned, is one of the relatively lowest funded authorities in England, ranking at 147 out of the 152 authorities. It is not right that schools with very similar circumstances can receive, without good cause, vastly different levels of funding for no clearly identifiable reason. Data taken from the 2010-11 section 251 returns, which set out local authority budgets, show that funding between similar secondary schools can vary by up to £1,800 per pupil, which is an enormous amount and clearly not fair.

It is also not right that the system is so complex that school leaders are often unable to understand how their budgets have been calculated. My right hon. Friend the Secretary of State for Education made a statement on 26 March 2012 announcing the Government’s clear intention to introduce a new national funding formula during the next spending review period. I appreciate that hon. Friends would like that to be as soon as possible, but there are obviously a lot of constraints that I will discuss in a moment on the introduction. However, the commitment is clear and is something I feel strongly about, as does the Secretary of State.

A new national funding formula would distribute money fairly across the country, targeting need properly and getting rid of some of the anomalies that make the current system so opaque. However, dismantling a system that is so entrenched and complicated is far from easy. It is important that we introduce full-scale reform at a pace that schools can manage. The last thing that we want, as my hon. Friend the Member for West Worcestershire said, is to cause destabilising changes to school budgets that cause anxiety in schools and among parents and distract schools from delivering high educational standards for their pupils.

That is why we are trying to move gradually towards introducing a new funding system, at a pace that gives us sufficient time to agree the construction of a new formula and to allow schools enough time to adjust to changes in their funding arrangements. Making the local system simpler and more transparent will mean that, when we do come to address the national system, there is far less complexity for us to untangle.

The first step we are taking is to ensure that within local areas pupils begin to attract similar levels of funding regardless of where they go to school. At present, local authorities can use up to 37 factors and countless sub-factors when distributing money to schools. I understand that in the past there has been a tradition of funding schools based on the facilities that they offer, the pay scales of their teachers, the size of their buildings and, even in some cases, the number of trees and ditches on their estate.

Our view is that the majority of money that we spend on education should be based on the pupil, not on the school characteristics. If a pupil chooses to go to a particular school then the funding is available to fulfil that choice, and it is not locked in to the school down the road because it happens to have more expensive teachers or a swimming pool to maintain. Rather than giving money to schools based on their size or other circumstances, local authorities will now have to distribute the majority of funds based on pupil numbers and characteristics. That is very much in keeping with the aims of a funding system that is pupil led and that is fair and transparent.

The new arrangements will mean that funding will be distributed differently, and there will be some shifts between school budgets as we move towards a more consistent way of funding schools. Our aim is to start to iron out inconsistencies and unfairness, which pupils in schools are currently experiencing, to create a fairer system. We remain committed to ensuring that good, small schools are able to thrive under the new arrangements.

We know that small schools often play a vital role in communities, not least in rural areas, and it is not our intention that any good school should be forced to close as a result of these reforms. That is a commitment that my hon. Friend asked for in her speech, and I hope that she will take that as a commitment from the Government. There is no secret agenda to close small, successful schools. I hope that she and her hon. Friends will take that message back to their constituencies.

We are allowing local authorities to allocate a lump sum of up to £200,000 in their formula. The intention of the lump sum is to cover the fixed cost of a small school—for example, a head teacher, a caretaker and some administrative support—and no more. It is not intended to protect the historic grants that were given to some schools and not others to pay for things such as floor space, specialist teachers and so forth.

We have heard a number of concerns—we heard them from my hon. Friend today—about the requirement to have a single lump sum for primary, middle and secondary schools. Although I recognise that the curriculum costs are different in each phase, I reiterate the point that the lump sum is not intended to pay for the curriculum costs. The lump sum should pay for fixed costs, and the per-pupil funding should pay for the curriculum costs. We will, however, review those arrangements, and I will explain more about that review shortly.

The reforms will require local authorities and school forums to break out of historic approaches and to think radically about the way in which money is distributed to schools in their areas. I realise that it is the implementation of the new simplified arrangements that is causing anxiety among schools in Worcestershire, and that there are particular concerns about the impact the changes will have on small and middle schools in rural areas such as Evesham, Pershore and Upton.

Officials in the Department have been in contact with staff at Worcestershire county council to understand why the concerns have arisen and to offer advice. I understand that Worcestershire county council has already agreed to the new funding formula—it did so on 18 October —but it has done so for one year only. I am informed that Worcestershire county council will review its local formula in light of the issues raised during its recent consultation, and in line with any changes made by the Department for 2014-15.

As I said, our main priority is stability and certainty for schools, which is why these reforms will be implemented carefully and with great consideration, as my hon. Friends have requested. The Secretary of State already announced in June that schools will continue to have planning certainty through the minimum funding guarantee, which means that, in most cases, no school will lose more than 1.5% of its budget per pupil in 2013-14 and 2014-15.

In addition to that and in response to concerns raised by my hon. Friend, her colleagues and other hon. Friends, the Department has confirmed within the past few days that a minimum funding guarantee will continue to operate beyond 2014-15. We cannot confirm the exact value of that guarantee as it covers the next spending review period; we need to know our budget for that period and to have Treasury approval before giving any such guarantees. None the less, we are absolutely committed to protecting school budgets from unmanageable falls, and I hope that that will also be an assurance for my hon. Friend.

[Peter Luff]

Is that an extension for one year or for longer than one year?

[Mr Laws]

At the moment, we have made it clear that we will continue it beyond the period of 2014-15. Although we are not in a position to make an announcement yet, given that we are seeking to move to a national funding formula, it is highly likely that we will need some form of protection for a considerable period. I will be happy to update my hon. Friend when we are in a position to say more.

[Mr Robin Walker]

The minimum funding guarantee is excellent, and I am sure we all welcome its extension, but is it not the obvious answer to the turbulence of moving towards a national formula? Therefore, is there any reason for the Government not to move towards a national formula, using the minimum funding guarantee, before 2015?

[Mr Laws]

Moving straight to a national funding formula without the transitional arrangements would be even more challenging and would create an even larger departmental postbag. I understand my hon. Friend is doing his best to push Worcestershire’s case, but the Secretary of State is right to be going about this in a measured way as we are seeking to bring about a complex change.

In any case, the extension of the minimum funding guarantee beyond 2015 should reassure the several Worcestershire schools—including the Hanley Castle pyramid, Prince Henry’s high school and Evesham high school—that have contacted me to express concerns about a potential cliff edge in funding from 2014-15 if the minimum funding guarantee were to end. I have no doubt that my hon. Friends will take that message back to other schools concerned about a cliff edge. The last thing we want is for parents not to send their children to those schools because of fears that are not well grounded.

I also reassure my hon. Friends that we have decided to carry out a thorough review in early 2013, starting now effectively, of the impact of simpler formula factors. We will work with local authorities to explore the effect of the different factors that we have, including the lump sum, which is a key element of Worcestershire’s formula, as well as those that we have eliminated.

We have made it clear that we want to prevent the changes from having unacceptable consequences for good schools. That is why a review will be so important in evaluating the effects and will enable us to make any necessary adjustments in the following year, 2014-15. As a consequence of the representations that have been made today by my hon. Friend the Member for West Worcestershire and her colleagues, I will ask officials to add Worcestershire to the shortlist of authorities that have been particularly assiduous in making representations to the Department and that I would like officials to talk to over the period of the review, which we hope will report back in the springtime—spring being a slightly flexible season.

I am enormously grateful to my hon. Friends for drawing attention to the concerns of Worcestershire schools about our school funding reforms. I hope I have been able to provide some reassurance that our aim in making the reforms is ultimately to ensure that England has a fair and transparent funding system in which funding follows pupils and there is consistency within and between different areas of the country. I know that Worcestershire shares that ultimate aim with the Department. I also hope that my hon. Friends understand that we are listening carefully to their concerns and, where necessary, are responding to them.

I commend my hon. Friends for making their representations so effectively to the Department that the Worcestershire file is probably the largest of any county. I look forward to maintaining contact with Worcestershire in the run-up to the decisions, which we will make and announce next year.

Question put and agreed to.