Schools: Funding

Lord Watson of Invergowrie Excerpts

Thursday 29th November 2018 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, I thank my noble friend Lady Morris for opening the debate with all the passion and authority of a former Secretary of State. I thank noble Lords for their contributions.

As noble Lords have mentioned, it has to be said that on school funding, the Government seem to enjoy less-than-full support from their Back Benches—and not only in your Lordships’ House. In a debate on this subject in another place two weeks ago, many people expressed concerns. Today, only the noble Baroness, Lady Eaton, was willing to put her head above the parapet, although she was hardly fulsome in her praise of the new funding formula. Indeed, I am indebted to her because by quoting in detail the shocking figures on school deficits contained in the Education Policy Institute report from earlier this year, she saved me from doing so.

Given his hands-on experience, I suspect that I am not the only noble Lord who regrets that the noble Lord, Lord Harris of Peckham, was not able to take part in the debate. However, I doubt that the Minister will feel the same way because the noble Lord clearly called the Government out on funding. He said that schools in his multi-academy trust had already made £12 million of savings but were facing a further 20% real- terms cut in funding over the next five years. He also criticised the Government’s free schools policy as an expensive drain on limited resources. He is only too aware of the impact on schools of the Government’s approach to school funding.

Recently, the Prime Minister promised us that austerity is over but the Budget made it clear that it will continue for years in our schools, colleges and early years providers. All the Chancellor offered schools during the Budget was what were patronisingly labelled “little extras”: £400 million in capital funding after the Government cut the capital budget by £3.5 billion in real terms. That reverses barely one-tenth of the cuts in this area. The Budget did nothing to provide additional revenue funding to schools that are struggling to afford the essentials; per-pupil funding will fall again next year as a result. Further and adult education once again received no support, and no action was taken to reverse the £3 billion-plus of cuts they have suffered since 2010. My noble friend Lady Massey outlined very effectively the impact of that on early years provision.

The Secretary of State should have fought much more vigorously for a share of the Budget that properly recognises the real needs of schools. Ministers may choose to ignore what they regard as politically motivated criticism from opposition parties but they should take note of impartial and respected research organisations, which have highlighted underfunding in schools. I mentioned the Education Policy Institute, for example, and many noble Lords, not least my noble friend Lady Morris, highlighted the Institute for Fiscal Studies report that identified the 8% cut in real terms between 2010 and this year. Of course, that was driven mainly by a 55% cut to local authority spending on services and cuts of more than 20% to sixth-form funding. These figures are alarming. I take no pleasure in repeating them but it is clearly necessary to do so because the DfE and its Ministers are simply not listening. Ignoring a problem does not make it disappear.

The reality is worse than what was outlined by the IFS because it did not take account of future additional burdens that will be loaded on to school budgets—additional national insurance and pension costs that the DfE will not fund, most notably. The Minister needs to tell noble Lords whether he accepts those figures because it seems that only those in the citadel of the DfE refuse to believe that the IFS report reflects the all-too-real difficulties experienced daily by our schools.

As I am sure the Minister has done, I read the Secretary of State’s speech when school funding was debated in another place two weeks ago. As usual, Mr Hinds concentrated on overall spending, ignoring the rise in pupil numbers. He compared current funding with that in 1990 or 2000, rather than 2010—a point made by my noble friend Lord Bassam. Education was not in a good place after 18 years of a Tory Government; being a bit better than that is hardly something to be proud of. I plead with the Minister to spare me the mantra that none of this matters much because standards are rising and since 2010, 1.8 million more pupils are now in “good” or “outstanding” schools. Many of us regard that as code for, “Academies, good; maintained schools, bad”. That figure has little to do with government policy; it is more a reflection of increases in pupil numbers and the result of changes to the inspection system.

Equally, schools that have been rated “outstanding” often do not see an Ofsted inspector for 10 years or more, with those performing less well naturally receiving the most attention. Before I leave this issue, let it be noted that Ofsted’s statistics on outstanding schools have improved much more sharply in the primary sector, where only 25% are academies, compared to secondary schools, 75% of which are academies. So, are academies good and maintained schools bad? The figures tell a different story.

There is an existential funding crisis in schools, which manifests itself in many ways. One way is the growing teacher shortage, which is partly, but not exclusively, a result of pay; workload is certainly an issue too. My noble friend Lord Knight powerfully outlined the spiral of decline that often follows the departure of teachers from their classroom. The Minister should take note of that. Another product of underfunding is the narrowing of the curriculum mentioned by the noble Lord, Lord Storey, and my noble friend Lady McIntosh. Although the EBacc is a factor, cost pressures are also responsible for schools ending or reducing the provision of subjects such as music, art, drama, design and technology and other creative subjects.

Then, there is the crisis within a crisis: provision of support to children with special educational needs and disabilities. That was mentioned by many noble Lords, not least the noble Lord, Lord Addington, and the right reverend Prelate the Bishop of Worcester, who spoke passionately about the effect of funding cuts on vulnerable children. Yet the Government expect local authorities to find the first £6,000 of SEND funding per child from within their existing budgets. I often wonder what world DfE Ministers inhabit. Noble Lords will have noted from the briefing provided by the Local Government Association that councils are reporting huge pressures on the high needs funding block; indeed, they say it is one of the most serious financial challenges they are dealing with at present. We all know that they are dealing with a number of such challenges.

If the Minister remains unconvinced, he should study the survey carried out two months ago on SEND provision by the National Association of Head Teachers. Its general secretary stated:

“Schools are left struggling to meet the needs of our most vulnerable pupils. Without sufficient funding and a more coherent approach, the SEN code of practice is nothing more than an empty promise from government to parents and children”.


These dedicated professionals are in charge of our children’s education. That same group felt so concerned about overall school funding levels that, recently, more than 1,000 of them marched on Downing Street to bring their message to the Chancellor of the Exchequer. They are head teachers. Who would have thought that a Government could so comprehensively fail to support the people who run schools and set their budgets that they would be forced into that kind of action? Desperation drove them to it, and the Government should be ashamed that they caused that to happen.

The schools funding crisis even stretches to libraries closing. The School Library Association reports that it has lost 10% of its members since 2015, and recently, one member was told by their head teacher that the library was a “luxury” the school could no longer afford. Many parents regularly receive requests to contribute to the cost of new whiteboards, iPads or playground equipment; in some schools, it is textbooks or stationery. Parental contributions are not always voluntary. Last month, a Guardian report found that 43% of parents have been asked to make contributions in some form, up from 37% two years ago. This should come as no surprise; it is a sign that free education—a right enshrined in the 1944 Education Act—is being eroded.

Of course, there is another side to cuts to school budgets: the scale of the Government’s waste of resources. I have no time to go into the details, but 91 academy trusts have now closed, as reported by Schools Week recently, which used Companies House records to get that information due to the lack of transparency in the DfE and academy trusts. Nominally the DfE bears the costs when an academy fails, but of course it is other schools that do so because they are denied the cash they desperately need. Directors of education in England’s largest local authorities are being paid much less than the chief executives of the largest academy chains, even though the latter are running far smaller organisations.

These skewed statistics might be merely irritating were there adequate funding for all schools, but when schools have had their budgets squeezed to the point where they often cannot afford to replace staff, they become a scandal in which the Government are complicit. I could also talk about written-off debts for free schools before we even get to grammar schools— £50 million was miraculously found earlier this year to pave the way for their damaging expansion. It is one law of funding for the Government’s pet projects and another for the hard-pressed maintained school sector. That is completely unacceptable.

We believe in the value of education and its power to foster social mobility and ambition. That is why Labour has worked widely with parents, teachers and many others to plan a national education service. That is why that national education service does not promise “little extras”. I point out to the Minister that last year’s election manifesto was fully costed on this.

As my noble friend Lady Morris said, it is never the right choice not to invest in the future. Education spending is about nothing other than the future of our children and, through them, the country as a whole. Investing in education is an area in which the Government have been found seriously wanting. The next Labour Government will put that right.

--- Later in debate ---

[Lord Watson of Invergowrie]

The Minister has not mentioned the fact that schools are meant to meet the first 1% of the pay rise themselves, so that is not funded. Can he explain that? Can he also answer my earlier question as to whether he accepts the figures in the Institute for Fiscal Studies report?

[Lord Agnew of Oulton]

The noble Lord is correct that the first 1% of the pay rise is expected to be funded by schools. We believe that that is possible within the efficiencies that I have mentioned. As for the Institute for Fiscal Studies, I believe that it includes within its figures the 16 to 19 year-olds sector, which has seen a tougher regime than the mainstream system: I acknowledge that. We are fully funding the teachers’ pay award beyond the 1%. This will be worth £187 million in 2018-19 and £321 million in 2019-20.

On pensions, we propose to fully fund the increase in pension contributions recently announced for state-funded schools. We know that school budgets for the academic year have already been agreed and, in most cases, schools have allocated those budgets. That is why we have worked with the Treasury to get agreement to implement the changes from September 2019, rather than April 2019. We will consult on the best mechanism to distribute funding to individual schools and announce how it will be distributed in good time, before schools experience the pressures in September 2019.

As we distribute this funding, we will be at the same time more fairly in line with the best available evidence. For example, by using a range of indicators to measure deprivation we are able to ensure our funding reaches all those pupils who need it. It is not limited simply to those who qualify for free school meals. Alongside the additional needs funding in the formula, we continue to deliver the pupil premium, with more than £2.4 billion this year. This is above the funding that we provide through the national funding formula. We will have invested over £13 billion in the pupil premium since 2011 to improve the outcomes for less well-off pupils.

I will now try to address specific questions raised by noble Lords. The noble Lord, Lord Bassam, asked about Barnet but I think he has gone. No, he has not—apologies. Under the NFF for 2019-20, schools in Barnet will attract £4,999 per pupil. This is an addition of £68 per pupil, or 1.3% compared to the 2017-18 figure. The total cash funding will increase by 3.2% and an additional £7.7 million, once rises in pupil numbers are taken into account. Just to explain how important that is, the marginal additional cost of educating one more pupil in a school is not the average per pupil amount. Barnet’s local authority received £48.1 million for high needs, an increase of £1.2 million compared to 2017-18.

My noble friend Lady Eaton and the noble Lord, Lord Watson, referred to the EPI report and the rise in deficits. They are rising, which is a concern, and I am having to spend a great deal of time on that. We are offering advice to local authorities on how to deal with this, but to put things in perspective, 91% of maintained schools reported a cumulative surplus, or that they would be breaking even in 2016-17, with total surpluses of more than £4 billion against a total deficit figure of less than £300 million.

The noble Baroness, Lady Morris, mentioned the shortfall in academy accounts. This is a myth that I want to slaughter early before it gathers traction. The figure referred to is driven almost entirely by an increase in impairment charges, which are non-cash changes to the value of land and buildings. Academies do not have to spend money on impairment charges, and a more realistic figure is that of the net cumulative reserves of the academy sector, which has seen an increase from £2.1 billion to £2.3 billion.

I share the concerns that the right reverend Prelate the Bishop of Worcester and the noble Lord, Lord Storey, have about rural schools. That is why I attended the Lambeth Palace address earlier this week and met the right reverend Prelate the Bishop of Ely yesterday, when we specifically discussed rural schools. I again make a pitch for multi-academy trusts, which are a very good solution to the problem. It is complicated in rural areas because of distance and how small many schools can be but, as I said in my address at Lambeth Palace, we are committed to always having a presumption against the closure of a rural primary school. They are the glue of these rural communities. My own son went to one, which faced closure last year. Since it was in Norfolk, the noble Lord, Lord Watson, would have been upset if I had intervened, but I did not. However, I am pleased to say that it has now joined an academy trust—one which I can tell your Lordships I have nothing to do with. It is important that we have sparsity funding, which is allocated to rural schools. The NFF allocates £25 million and we also give every school a lump sum of £110,000. When that lump sum is coupled with the sparsity factor, it provides meaningful support.

The right reverend Prelate made particular reference to a school where he said that the head teacher was struggling because the school had been asked to double the number of pupils. We have allocated a tremendous amount of basic need funding, with £7 billion during the current spending review between 2015 and 2021. Over the course of the Parliaments since 2010, we have increased the number of pupils by some 825,000 and they have all been funded. I want to reassure him on that.

The noble Lord, Lord Knight, asked about teacher recruitment and supply teachers, among other issues. I mentioned that we have just created a teacher recruitment service, which is now being rolled out across the country. It is a much more cost-efficient service than that provided in the market generally. Likewise, with supply teachers we have created another portal which has got the main supply firms in the country together. It has made them cap their fees and stopped the pernicious practice of charging a recruitment fee if the supply teacher becomes a permanent employee after a number of weeks. These may be only small things, but they all add up.

The noble Baroness, Lady Morris, raised issues about capital. We have committed some £23 billion to capital between 2016 and 2021 but, significantly, I should stress that we have also reduced the build costs per square metre by some 30%. This rises to 35% per square metre when improvements in efficiency and design are included, so we are very committed to that.

The noble Lord, Lord Storey, gave an example of a friend who wrote about possible boiler problems in his or her school. I am not sure whether he said it was under a local authority or an academy but, if it was a local authority school, we make an allocation to local authorities every year of the school condition allowance. It is then for schools inside a local authority to bid in for that. If it was an academy and had more than 3,000 pupils, the academy trust is given an amount of capital which it can then choose to spend as it sees fit.

This leads me on to the BBC documentary “School”, which I have not seen all of, although I of course will do so. However, I saw the first part and felt it was a very disappointing piece of journalism, because it was clearly set up to show how bad everything was. There are a number of challenges in that trust, but just on repairs one line from the journalist said that there were terrible, draughty windows and that the classrooms were therefore cold. When I looked up the figures for the school condition allowance, this trust receives over £1 million from that a year. The school in question—I think it is called Marlwood—is the biggest and, although we do not publish individual amounts per school, because the academy trust is free to use it as it sees fit, I can assure the House that there was plenty of money to deal with those windows. If it had a better call on its money than windows that increase heating costs, this is the sort of thing I get frustrated about. It is not all as one-sided as people think.

I am running out of time—my goodness, I apologise—and I had better sum up. On efficiencies in schools, I heard the comment from the noble Lord, Lord Watson, about the Harris Federation. The fact is that the Harris Federation is so efficient that it is able to employ centrally 80 school improvement teachers, who go out into its weaker schools—or ones it has just taken on—and provide the extra resource. That is one of the secrets of it being such a high-performing trust. Outwood Grange, a trust in the north of England, does a similar thing: it has 65 centrally employed school improvement teachers doing exactly the same and raising standards. It already has more than 900 pupils registering year-on-year for the schools that it took over from WCAT—a trust that failed—because of the improvements being seen.

[Lord Watson of Invergowrie]

I apologise for interrupting the Minister. I just want to be clear for the record that I was not criticising the Harris Federation, for which I have a high regard, but I wish that the noble Lord, Lord Harris of Peckham, had the same regard for the Government’s new funding formula.

[Lord Agnew of Oulton]

I had dinner with my noble Friend, Lord Harris, two nights ago and he is always frank in his views. He is a passionate advocate for his schools and what he has achieved is fantastic. I would like that to go on the record.

I would also like to give an example of a relatively small trust, the Thinking Schools Academy Trust in Kent, which has taken the novel approach of paying £2,000 more to its newly qualified teachers when it recruits them. You may say, “There’s no money around, so how has it done that?”. It has done so because its retention rate on teachers is double the national average. It has only a 10% turnover of staff every year, as against a national turnover of 20%. Thinking in ways like that can make such a difference.

I have been told to stop. I am very grateful to the noble Baroness, Lady Morris—