Free Schools and Academies

Mark Hoban Excerpts

Tuesday 4th February 2014 Westminster Hall

[Mr Mark Hoban (Fareham) (Con)]

It is a pleasure to serve under your chairmanship this morning, Mrs Riordan.

My interest in school choice is a long-standing one. On my bookshelf at home are pamphlets and books dating back to the ’80s and ’90s about the links between diversity, choice and standards. I helped to draft our education policy for the 2005 election, which had as one of its key tenets parents’ right to choose a school for their child. However, my interest is not purely political; it is personal, too—predating my interest in politics. My parents did not choose the nearest school to our home for me or my sisters. They chose state Catholic primary and secondary schools for us, which required a bus or car journey to get there. My nieces and nephew go to the same schools in Durham today.

I am proud of the Government’s work to expand the diversity of schools through the academy and free school programme, thereby creating choice for parents, but two things have been clear to me throughout. Choice is a reality only when there is diversity and capacity. It is real only when there are different types of school for parents to choose between; and there must be enough capacity in the system to enable parents to get their child into the school of their choice.

I want to highlight two barriers to choice: one that limits diversity and one that limits capacity. I am committed, as a matter of my political beliefs, to school choice, and I find it hard when a policy of the Government whom I support effectively prevents the next generation of Catholics from attending a Catholic school, in areas where there is neither a Catholic school nor adequate capacity. Our current policy encourages all new schools to be either academies or free schools, and that route should add to 243 existing Catholic academy schools. Unfortunately, there is a cap on faith-based admissions that inhibits the willingness of Catholics to sponsor a new academy or free school, and therefore limits the diversity of academies and free schools.

The current policy requires, in the interest of inclusion, that oversubscribed denominational schools be able to reserve only 50% of their places for children of the relevant faith. That flows from the coalition agreement:

“We will ensure that all new Academies follow an inclusive admissions policy. We will work with faith groups to enable more faith schools and facilitate inclusive admissions policies in as many of these schools as possible.”

That is a one-dimensional view of inclusivity; 34.5% of children in Catholic primaries are from an ethnic minority background, compared with 28.5 % nationally, and 17.3% of children in Catholic secondary schools live in deprived areas, compared with 12.2% nationally. Of course, Catholic schools are also popular with non-Catholics.

Why does the cap matter? A Catholic free school or academy is likely to open only in an area with a large Catholic community, where there is no—or limited—provision; given the popularity of Catholic schools with Catholics and non-Catholics alike, many will be forced, in practice, to turn away Catholic pupils to meet the 50% cap. The Church is concerned because, first, Bishops are required to ensure that where there is a demand for Catholic education it is satisfied; they feel that it would be a breach of canon law to support a school that turned away Catholic children. Secondly, there is a broader point about ethos. There is something different about a Catholic school and its values. There are aspects of school life that are bound up in the sacramental life of the school—participation in mass, a set of shared values, and reference points that relate to the Church and its teaching. It is hard to see how those shared values and ethos can be maintained if half the pupils cannot relate to the practice of the Catholic faith.

That is not to say that the schools in question should be exclusively Catholic. Indeed, three in 10 children in Catholic schools are non-Catholics. However, a point comes where the dilution of a school’s Catholicity means it loses its ethos, and it loses parental support. I will give two examples of that. In Oxford, St Augustine’s was a joint Catholic and Church of England school, but parents did not perceive it as Catholic from its admissions arrangements and therefore saw no discernible difference between it and other state schools in the area; they viewed them all as non-Catholic. Parents voted with their feet, and chose not to send their children to St. Augustine’s. The archdiocese closed the school owing to the lack of demand from local Catholics, and then founded a Catholic school called St Gregory the Great, with Catholic admissions arrangements, which remains successful and oversubscribed.

In Bromley, there is a gap in provision owing to the closure of an existing Catholic school, which Catholic parents did not recognise. St John Rigby was a small Catholic secondary school serving the local Catholic community. It became a grant-maintained school and, without the consent of the archdiocese, doubled in size, despite the fact that there was no additional demand for Catholic places. That meant that the percentage of Catholics in the school decreased massively and Catholic parents stopped sending their children there. Without support from the Catholic community the school entered special measures and was later closed by the local authority.

The faith-based admissions cap is a disincentive to the Catholic Church to set up faith schools, because it dilutes their ethos. I am sure the Minister will say that other faiths are less concerned about that. However, if a faith group establishes a school that is not oversubscribed by parents of the relevant faith or, indeed, other faiths, then the cap does not apply. Some people might be content with the working of the dilutive effect that I have described, but the experience of the Catholic Church has not been positive. The Minister might point out that the voluntary-aided route is still available, and he could give the example of the new Catholic school in Richmond, but councils are required to meet unmet demand through academies and free schools first, and funding is biased towards them. We would have a richer and more diverse set of free schools and academies if the cap were removed. It would give more parents the chance to give their children the education in values that they support.

As I said at the outset, to make choice real, we need some capacity in the system to accommodate parental demand; otherwise, we will need to turn children away. So, schools need to be able to expand. However, limited capital resources mean that only 142 of the 518 academies that applied for money from the Education Funding Agency to expand in the period June 2012 to October 2013 were accepted. In other words, almost 400 schools turned away children and their parents because of lack of capacity. I know we cannot write a blank cheque to fund the expansion of schools, but there must be something we can do to stop seven out of every 10 applications being turned down. I believe that the solution is to allow our best schools to build on their success and borrow to satisfy demand.

Schools used to be able to borrow. Cams Hill school in my constituency is a popular academy. It increased its intake last September from 210 to 240 and will take another 240 pupils this September, turning down applications from a further 30 pupils. However, in 2015, because of space constraints, it will have to revert to an intake of 210 pupils. Demand from parents will not diminish, but the school’s ability to meet that demand will. It has paid off its mortgage and in the past has borrowed money, to fund a new sports hall. It would like to do so again, so that it can permanently increase its intake to 240, but that route is now closed. The school cannot borrow.

However, things are actually not as clear-cut as that. In a written answer on 25 October 2013, the Under-Secretary of State for Education, my hon. Friend the Member for Crewe and Nantwich (Mr Timpson), said at columns 300W to 301W that, in the 12 months to 22 October 2013, 44 schools were given permission to borrow. Of those instances, 39 were for energy efficiency projects; none were to make it possible to expand. Schools can borrow, therefore—but not for expansion. Sixth-form colleges and further education colleges can and do borrow. The principal of one sixth-form college said to me that it was a vital freedom and that it enabled him to modernise and expand his provision to meet local needs.

Why, then, cannot academies and free schools borrow? According to parliamentary answers and correspondence I have had it is because the borrowing of academies and free schools would count towards Government debt and the deficit. The Secretary of State would therefore have to approve borrowing to fund expansion and, because he does not want to add to the debt, he will not do so. So how is it that sixth-form and FE colleges borrow? The explanation is that the Education Act 2011 scrapped the Secretary of State’s controls over their borrowing, and consequently the Office for National Statistics decided to take FE and sixth-form college debt off the Government balance sheet. There is a simple solution. If the Secretary of State scrapped his control over borrowing by academies and free schools, their borrowings would not count towards Government debt. Academies and free schools are already entrusted to make decisions about the terms and conditions of staff, curriculum delivery, term times and length of school day. The measure I suggest would give them another freedom: the freedom to borrow and to expand.

As the record of Cams Hill shows, schools can borrow and pay back without a problem. The record of sixth-form and FE colleges shows that they can manage their finances well. They do not fail due to financial pressures. They are subject to proper financial controls and scrutiny, as are academies and free schools. If we can trust our academies and free schools with our children’s future, why can we not trust them to borrow, so that choice becomes a reality for more parents?

I believe, as a Conservative, that we should support parents who have a clear vision of their children’s education. Parents who want to send their child to a particular school should not be held back when it is possible for their wishes to be accommodated. Popular schools should be allowed to expand, even if they have to borrow money to do so. Parents who want to send their child to a faith school should be permitted to do so, but our policy on faith-based admissions is a block on Catholics opening new schools to give parents that choice. Two simple changes could deepen the revolution in choice and standards that this Government have championed.

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

I congratulate my hon. Friend the Member for Fareham (Mr Hoban) on securing the debate. I completely agree with him about the need for diversity and choice in our school system and how they lead to a raising of standards. Certainly, that was the outcome of a programme for international student assessment study, which shows that schools with a high degree of autonomy and accountability generally succeed in raising standards throughout the system.

As a Government, we recognise the important contribution made by Church and faith schools to the education system. Around a third of schools are Church or faith schools, and an increasing number are converting to academy status to take advantage of the freedoms offered by the academies programme. Church and faith schools are popular with parents—many are oversubscribed—and they are some of the highest-performing schools in the country.

The free schools programme represents a new approach to how schools are established and it is offering new opportunities, to groups of all faiths and none, to set up new schools in the community; 37 of the 182 open free schools are faith schools. Faith free schools and new-provision academies must be open and welcoming to the communities around them. Unlike voluntary aided schools or converted faith academies, they may only prioritise a maximum of 50% of places by reference to faith when the school is oversubscribed. Of course, if the school is not oversubscribed, more children of that faith may be admitted.

Catholic schools in particular have a long and proud history of championing high standards and extending opportunities. They consistently outperform other kinds of state schools. As my hon. Friend the Member for Fareham is aware, the Education Act 1944 brought many Church schools into the state education system, including from the Catholic sector, and we continue to benefit from that settlement today. The education landscape, however, has changed since 1944. Academies and free schools represent a new approach to creating new schools, including faith schools, and new faith free schools and new faith academies, when oversubscribed, may admit only up to 50% of their pupils according to faith.

If the Government fund new faith-school provision, it is right that a proportion of the places be available to the whole community, including those of other faiths and none. That does not mean that other places must be allocated to pupils who are not of the faith; as I mentioned earlier, they must rather be allocated according to other oversubscription criteria.

I acknowledge, as my hon. Friend pointed out, that the Catholic sector has objections to our policy on admissions to faith free schools. I know that the Catholic Education Service has been in discussion with Department officials. We remain committed to continuing our engagement with the CES, although I point out that we have no intention of changing or removing the 50% limit.

[Mr Hoban]

Why has a quota been set for admissions based on faith, but not for other characteristics such as social class, gender or ethnicity? Why has faith been singled out?

[Elizabeth Truss]

The quota was set so that we are able to ensure that a broad range of the community may attend those community-based schools.

On the point made by my hon. Friend about voluntary aided schools, I should say that local councils have an option, where there is oversubscription or high demand for faith schools, to set up new voluntary aided schools. The academy route does not have to be looked at first; if there is demand for faith-based education in a local area, a diocese, for example, may propose a new school outside the academy route. High demand for faith places therefore provides a diocese with the opportunity to propose a non-academy route. On funding, we ensure that funding to all schools is fair within each local area. Funding is not biased towards academies or free schools, as my hon. Friend suggested.

The point of the new academies and free schools is that they should have a broad base in the community, hence the limit of 50% on children from a particular faith when there is oversubscription. When there is strong demand for a faith school in a local area, however, the diocese can propose a new school not through the academy route; there is that option for such schools.

The second point made by my hon. Friend was about borrowing by academies and free schools. He made a good case and I acknowledge his point about further education, for example, and other types of public institution being able to borrow, but academies are restricted from borrowing without the express prior permission of the Secretary of State. The restriction is set out in the funding agreements and in the academies financial handbook.

The Department’s general position is that commercial borrowing is rarely considered to be good value for money, as the interest and finance charges are normally higher than rates available to the Government. I acknowledge, however, my hon. Friend’s point about the autonomy of schools and about the degree of freedom given to make such decisions. The result of that presumption by the Department is that permission to borrow is given only exceptionally, in part because academies are classified by the Office for National Statistics as public sector bodies. That is different from the classification of further education colleges. Any borrowing undertaken by academies therefore is also counted in measures used to calculate public sector debt.

[Mr Hoban]

FE colleges’ debt used to be on the Government balance sheet; once the Secretary of State scrapped his controls over their borrowing, their debt moved away from the Government balance sheet and did not count towards Government debt and the deficit. The Department can make a simple change to remove the debt from the Government balance sheet and put it into the private sector.

[Elizabeth Truss]

The issue is the way in which the Office for National Statistics carries out the classification, rather than the Department for Education.

[Mr Hoban]

I am sorry to be persistent, but having looked at the note from the ONS on the reclassification of FE colleges, it appears that one of the things that changed its view on whether the colleges’ debt should sit on the public sector balance sheet or a non-government sector balance sheet was control. When control in the FE sector was scrapped under the Education Act 2011, the ONS changed the classification and took that debt off the Government’s balance sheet.

[Elizabeth Truss]

My hon. Friend makes a good point, but that would require a change in our policy on academies and free schools, not specifically on borrowing, but more generally on autonomy. As I discussed earlier and as the PISA study demonstrates, there is always a balance to be struck between autonomy and accountability in the school system. The ONS says that the balance between autonomy and accountability dictates that academies are classified as public sector bodies, so any change would require amendment to the Department for Education’s legislation on the structure of academies.

The Government are committed to the careful control of public spending to bring down the national deficit and retain economic confidence. Under the status quo, in the 12 months to October 2013 five formal requests were received from academies, all of which were approved. Formal requests tend to follow an informal discussion with academies, which is the point at which most proposals are terminated.

We want good schools to have the flexibility to expand, and have taken big strides to allow academies greater financial freedoms—for example, the ability to carry forward surpluses—but we understand that academies would like to have more, particularly on borrowing. As my hon. Friend pointed out, the Office for National Statistics determines the classification of all bodies, and all academies are currently classified as central Government public sector bodies. The ONS makes decisions independent of Government, subject to international accounting standards.

My hon. Friend made the case that we should change the regulations for academies to give them more financial freedom. That debate is about the level of freedom and autonomy that academies are given and is separate from the question whether academies should be able to borrow.

This has been an extremely helpful debate. There are routes by which new faith schools can be set up with 100% admission from faith-based communities. However, new academies and free schools have a cap of 50% in cases where there is over-subscription, and we do not have any plans to change that at the moment. I am interested in my hon. Friend’s points about borrowing, and I will ask officials to look at the details of that, to see what would be required for the ONS to change the classification.

--- Later in debate ---

[Mr Hoban]

I asked the Minister earlier why the Government had not set quotas on ethnicity, gender and social class but had chosen to single out faith. Will she clarify why that is the case?

[Elizabeth Truss]

Obviously, we do not have schools based on social class. The question of gender is interesting. The cap is a specific measure to make sure that, as widely as possible, members of all the community are represented in new schools. There are routes by which faith-based schools can expand and new faith-based schools can be established, but the 100% route is not part of the academies and free schools programme.