School and Early Years Finance (England) Regulations 2018

Naz Shah Excerpts

Wednesday 21st March 2018 General Committees

[Mike Kane]

I am grateful to my hon. Friend for that extraordinarily valid point. We know from our postbags that a rising number of parents cannot get special educational needs and disability provision for their children because schools are having to cut that and less specialist services back at local authority level. Local authorities have been cut—they have lost around 30% to 40% of their budgets—which has had a direct impact on the services that schools can buy in.

The number of local authority maintained secondary schools in deficit has nearly trebled, which means that more than a quarter of all such schools are now in deficit. In 2016-17, the proportion of primary schools in deficit increased significantly, to 7.1%. The average primary school deficit also notably increased, from £72,000 in 2010-11 to £107,000 in 2016-17.

Perhaps the most worrying finding was that a large proportion of local authority maintained schools are now spending more than their income, and 40% of those secondaries have had balances in decline for at least two years in a row. Similar figures are found for local authority maintained primaries; in 2016-17 more than 60% were spending more than their income. A quarter had had a falling balance for two years or more.

The Education Policy Institute report points to the inevitable outcome of the growing budget pressures. Staff account for the majority of spending by schools, at around two thirds. It is therefore likely that schools will find it difficult to achieve the scale of savings necessary without cutting back on staff. What is the Government response? Only last week we found that the new Education Secretary had been forced into an embarrassing U-turn after he claimed wrongly that school spending is going up. That is the message they would like to put out. The constant delay of the fair funding formula led to constant Conservative press releases about fixing funding in our schools, but that has been far from the case.

[Naz Shah (Bradford West) (Lab)]

Does my hon. Friend agree with me that in places such as Bradford West, where we have an excellent cluster of maintained nurseries, we are still not sure where the funding is coming from? If it is coming, will it be to meet the existing deficit—from special needs, early years and so on—or will it be new money?

[Mike Kane]

The biggest impact we can have as civil society and government on the social mobility and educational attainment of our young people is in the early years, but our Sure Start centres have been decimated over the past few years, with no guarantee—absolutely none—of what their future will be. My hon. Friend makes a very valid point.

The Secretary of State originally said:

“We know that real-terms funding per pupil is increasing across the system, and with the national funding formula, each school will see at least a small cash increase.”—[Official Report, 29 January 2018; Vol. 635, c. 536.]

Last week, however, he had to respond to the House on that. What had Sir David Norgrove, head of the UK Statistics Authority, pointed out? He had said that funding was being frozen in real terms until 2020, not increased. The Secretary of State therefore had to write to correct the record.

I have a few questions for the Minister. One of the major issues is whether he will confirm that the regulations allow for a 1.5% cut in funding per pupil in cash terms. Our evidence suggests that they do, so that is a fair funding formula that allows for a 1.5% cut in funding in cash terms. Will he confirm that the Government will not increase overall pupil funding? As the Institute for Fiscal Studies has said, the additional £1.3 billion announced after the election last year keeps funding basically flat in real terms over the next two-year period. Will he confirm that? Will he also confirm that funding has fallen in real terms since 2015? For example, the National Audit Office reports an accumulated £2.7 billion cut from school budgets since 2015, despite the regulations before us.

The national funding formula consultation has been delayed and delayed, and pushed back and pushed back after the election. Looking at the regulations, the formula has been a colossal waste of time, effort and money, and has come with that delay. The Government have come to a conclusion that only tinkers with the edges of the funding crisis in our schools. For now, I will leave it there.

[Sarah Champion]

It is a real pleasure to serve under your chairmanship once again, Mr Owen.

I want to put some real figures into our debate. We keep hearing about “real terms” funding and savings, so let us put some real figures in there. Rotherham has 88 primary schools and 14 secondary schools, and there have been real cuts to their funding in the past couple of years. In 2015-16, income was £4,150 per primary school child and £5,876 per secondary school child. However, by 2017-18, funding had dropped to £3,954 for that same primary school child and to £5,587 per secondary school pupil. Looking forward to 2019-20, under this funding formula, schools will receive £3,965 per primary school child and £5,518 per secondary school child. Collectively, the primary schools in Rotherham are losing £4,404,897, and the secondary schools are losing just over £5 million. The hon. Member for Faversham and Mid Kent said there had been a real-terms increase. I am sorry, but funding has fallen in real terms since 2015.

[Naz Shah]

Does my hon. Friend agree that those cuts are landing in places with the most deprivation, such as her constituency and mine?

[Sarah Champion]

My hon. Friend is absolutely right. We were hoping for a funding formula that recognised the different pressures in different areas. A blanket funding formula does not recognise the real issues we have in the north of England in particular.

The IFS states that overall, school funding will have fallen by 4.6% in real terms between 2015 and 2019. We do not know the real impact of the next round of cuts, but perhaps the Committee can make an informed assessment by looking at what happened in the previous two years. Between 2014-15 and 2016-17, class sizes rose by 54% in primary schools and by 50% in secondary schools. In the same period, the ratio of pupils to teachers rose by 61% in primary schools and by 71% in secondary schools. The ratio of pupils to teaching assistants rose by 58% in primary schools and by 79% in secondary schools.

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[Nick Gibb]

I am coming to the hon. Lady’s question. Given that schools in Hornsey and Wood Green are being funded at significantly more than the national average, and given that the vast majority of schools are not doing the things she talks about, there is no reason for schools in her constituency to take that action.

Across the country, schools with similar pupil characteristics have received markedly different levels of funding. That is why our promise to reform this unfair, opaque and outdated school and high needs funding system and introduce a national funding formula has been so important, and I am particularly pleased that this Government were able to deliver on that.

This reform represents the biggest improvement in the school funding system for more than a decade. From April 2018, the introduction of the national funding formula will put the funding system firmly on track to deliver resources on a consistent and transparent basis, based on the individual circumstances of every school in the country. Following extensive consultation, in which we carefully considered more than 25,000 individual responses to our proposals, last September we were able to publish full details of the school and high needs national funding formulae and the impact they will have on every local authority.

Those proposals were underpinned by an additional £1.3 billion for schools and high needs across 2018-19 and 2019-20, over and above the funding confirmed at the 2015 spending review. School funding is at a record high because of the choices we have made to prioritise school funding, even as we faced difficult decisions elsewhere to restore our country’s finances.

[Naz Shah]

I visited the launch of the Bradford for Teaching initiative, trying to get teachers in. The truth is that when I talk to teachers, and those amazing people who want to teach, I hear that the funding formula does not allow the schools to get the best teachers in. It is not just about the children; the impact on the level of teaching in places such as Bradford West really needs to be looked at. These solutions are just not good enough.

[Nick Gibb]

There are two points. First, we have only been able to deliver these high levels of spending on schools, rising from £41 billion this year to £42.4 billion next year and £43.5 billion the year after, because the way in which we have managed the economy means we can afford to do so. A Labour Government, particularly a Labour Government under the current leadership—any future Government led by the party opposite—would bankrupt our economy and there would be no chance of any of these increases in funding coming into our public services. We have to have a strong economy first of all. Secondly, responding to the hon. Lady’s point, schools in Bradford West, as she should know, would attract 1.3% more funding if the national funding formula were implemented in full, based on the 2017-18 data. That is equivalent to £1.4 million more funding for those schools.

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[Nick Gibb]

I would be delighted to go to Rotherham again. I was the candidate there in 1994 in a by-election. I thoroughly enjoyed my stay, and I was delighted narrowly to beat Screaming Lord Sutch. The hon. Lady raises an important point, and the £2.9 million extra funding is equivalent to about £214 per pupil in Rotherham. I would be delighted to come and see some schools in Rotherham soon.

[Naz Shah]

Given that the Minister is in the mood to travel to Yorkshire, perhaps he could come to West Yorkshire and visit my constituency of Bradford West. We have had this discussion previously, but the real-term cuts to SEN, and the immense pressures on local authorities to deliver on education have had a real impact in my community. I would appreciate the Minister coming a few miles up the road to West Yorkshire so that I can introduce him to headteachers of schools in my constituency.

[Nick Gibb]

I would be delighted. The hon. Lady and I have discussed education in her area, and I know how passionate she is about improving academic standards in schools in her constituency. I would, of course, be delighted to visit some schools in her constituency with her in the very near future.

Under these regulations, the national funding formula will allocate the schools, high needs and central school services blocks of the dedicated schools grant fairly to local authorities. The school and early years financial regulations govern how local authorities can distribute that funding between schools and early years providers, and they apply for the coming financial year. Regulations that have recently been made will replace those for 2017-18.

In 2018-19 and 2019-20, local authorities will continue to set their own local funding formulae for schools, which will determine individual schools’ budgets in their areas. Those formulae are set following consultation with local schools. It remains the Government’s clear intention to move, in time, to a system in which each school’s individual budget is set directly by the national funding formula without local variation. That will ultimately ensure that similar schools will receive similar funding, regardless of where they are situated.

However, by continuing to allow a small but important element of flexibility for local authorities over the next couple of years, the regulations will be able to help to smooth the transition to the national funding formula at a local level. They set the rules within which local authorities must operate as they set their local formulae. The changes we have made to the regulations for 2018-19, compared with 2017-18, enable local authorities to mirror the national funding formula for schools in their local formulae. Unless we make these regulatory changes, they would not be allowed to do that. Many local councils have decided that they should replicate the national funding formula in their local formulae. We support that decision, which is a strong vote of confidence in the principles behind our national funding formula.

The regulations need to be made each year, and for the most part, the 2018 regulations simply ensure that the rules set in the 2017 regulations will continue in place. The changes we have made are intended to enable local authorities to mirror the national funding formula.

The changes on school funding are, first, the introduction of an optional minimum per-pupil funding level—the £4,600 I mentioned—which local authorities can now use as a factor in their local funding formulae to ensure that every school receives a minimum amount of funding for each pupil. Unless we pass the regulations, local authorities would not have the discretion to do that.

I do not understand why the Opposition prayed against the regulations. The hon. Member for Wythenshawe and Sale East raised the -1.5% minimum funding guarantee. That is the current position. Currently, if a local authority wants a minimum funding guarantee to smooth the effect of any changes to the local formula, to ensure that no school can lose more than -1.5% per pupil when a local formula changes, it can introduce that minimum funding guarantee. We have changed that in the regulations to give local authorities more flexibility, so that, instead of the option of -1.5%, they can now also vary the amount, up to +0.5%, which is the minimum funding guarantee in the national funding formula.

By praying against the regulations, the hon. Gentleman is entrenching in the rules for the local funding formula a minimum funding guarantee of -1.5% and preventing local authorities from having a +0.5% minimum funding guarantee, which we have introduced into the national funding formula. Secondly, the regulations on indicators of deprivation have also changed. Local authorities can choose to use a combination of the free school meals, Ever 6 free school meals and income deprivation affecting children index—IDACI—formulae. Thirdly, there are also some technical changes regarding looked-after children and the scaling factor used to set funding for pupils with low prior attainment.

The hon. Member for Rotherham also raised issues about significant growth in pupil numbers in constituencies. She cited regulation 13, which is designed to tackle precisely the problem she refers to. Regulation 13(4) states:

“Where (a) there is or may be an increase to the published admission number at the school; or (b) the school is subject to a prescribed alteration that may lead to an increase in the number of pupils at the school, the authority may, instead of ascertaining pupil numbers on 5th October 2017, include an estimate of pupil numbers.”

That will help schools to ensure that they have the proper funding as a consequence of a growth in their numbers.

The change to the high needs regulations removes an adjustment that was previously made to schools’ five to 16-year-old pupil numbers to reflect the number of places that the local authority has reserved for children with special educational needs. From 2018-19, five to 16 year-old pupils in such places will attract funding to their school through the local formula on the same basis as all other pupils at the school. Local authorities will have additional funding of £6,000 for each place from the high needs budget.

We introduced a new early years funding formula in April 2017; therefore, the regulations for 2018-19 are largely unchanged from 2017-18. The changes we have made in these regulations implement previously announced policy or are amendments intended to bring greater clarity to existing policies. For example, when we introduced our new funding formula, we announced that from 1 April this year, local authorities must pass on 95% of the national funding formula funding allocation to providers. That is up from 93% in the previous year, and it is an important change in these regulations.

How funding is used in practice is just as important as its fair distribution. We are committed to helping schools to improve pupil outcomes and promote social mobility by getting the best value from all their resources. School efficiency must start with, and be led by, schools and school leaders, but the Department provides practical support, deals and tools that will help all schools improve their efficiency. We will continue our commitment to securing national deals that procure better value goods and services in areas that all schools purchase. Schools can already save an average of 10% on their energy bills and around 40% on printers, photocopiers and scanners. Those deals have already saved schools over £46 million.

Across school spending as a whole, we are improving the transparency and usability of data, so that parents and governors can more easily see how funding is being spent and understand not just educational standards, but financial effectiveness. We will continue to expand our package of support for schools so they can ensure every pound is achieving the best outcome for pupils.

The hon. Member for Wythenshawe and Sale East raised the question of teacher numbers. We have record numbers of teachers in our schools: we have 457,000, up 15,500 since 2010. Last year we achieved 89% of our secondary target for graduate recruitment and 100% of our primary target. Returners are rising, from 13,000 in 2011 to 14,200 in 2016. We have tax-free bursaries of up to £26,000 for priority subjects. People often talk about retention; 70% of teachers are still in teaching after five years and 60% are still in teaching after 10 years, but the important point is that that figure has remained broadly constant for the last 20 years.

Class sizes have not shifted very much: they are about 27.1 in primary and 20.5 in secondary schools, on average.