National Funding Formula: Social Mobility

Layla Moran Excerpts

Tuesday 22nd May 2018 Westminster Hall

[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.

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[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.

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[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?

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[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.

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[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.