School Funding: Greater London

Nick Gibb Excerpts

Tuesday 31st January 2017 Commons Chamber

[The Minister for School Standards (Mr Nick Gibb)]

I congratulate the hon. Lady on securing this important debate. I hope I can assure her about some of the issues she raises.

Whenever a national funding formula is introduced, no matter what weightings are attached to the factors in the formula, there will be winners and losers. If we apply the formula to the current year, 2016-17, and produce an array of figures for each of the 23,000 schools, there will by definition—mathematically, it has to occur—be winners and losers. In the interests of transparency, we are showing the effect of the new formula, the factors and principles of which were agreed in principle when we consulted last year. We have applied the new formula, with the weightings we discussed in the second consultation, to all 23,000 schools. It shows, of course, that some schools gain and some schools lose. That will happen no matter what national formula anybody in this House produces. If we want a national funding formula—we committed to that in our manifesto—that is the consequence of doing so on the basis of this year’s figures.

We have committed to protecting school funding in real terms over the course of the Parliament. It stands at a record high of £40 billion at the moment, and is projected to grow to £42 billion as pupil numbers grow over the spending review period.

I share the hon. Lady’s view about the success of London’s schools. Their academic standards have soared in recent years, bucking the trend of inner cities throughout the world. The Government are equally ambitious for the rest of the country. All children should have an excellent education that unlocks their talent and creates opportunity regardless of where they live, their background, their ability or their need.

The Government are, because of this ambition, prioritising spending on education. We have protected the core schools budget in real terms, so that as pupil numbers rise so too does the amount of money for our schools. This means that schools are receiving more funding than ever before: a total, as I have said, of over £40 billion this year.

The current funding system prevents this record amount of money from getting to where it is needed most. Underfunded schools do not have access to the same opportunities to do the best for their pupils. It is harder for them to attract the best teachers and to afford the right support. That is why the Government are introducing a national funding formula for mainstream education and for the high-needs support provided for children with special educational needs.

The national funding formula will be the biggest change to schools and high-needs funding for well over a decade. Such change is never easy. That is why previous Governments assiduously avoided doing it. However, it will mean that for the first time we will have a transparent system that matches funding to children’s needs and the schools they attend.

In the current system, schools and local areas receive significantly different levels of funding with little or no justification. For example, a primary school in Westminster teaching a pupil eligible for free school meals, and with English as an additional language, would receive £4,973 for that pupil this year. However, if that same pupil were in a school in Greenwich, the school would receive £6,676 this year, a difference of £1,703. Under our national funding formula, they would receive the same amount.

These anomalies will be ended once we have a national funding formula in place, and that is why introducing fair funding was a key manifesto commitment for the Government. Fair funding will mean that the same child with the same needs will attract the same funding regardless of where they happen to live.

We launched the first stage of our consultation on reforming schools and high-needs funding systems in March last year. We set out the principles for reform and the proposals for the overall design of the funding system. Over 6,000 people responded, with wide support for our proposals. Building on that support, in December we were able to proceed to the second stage of the consultation, covering detailed proposals for the design of both the schools and high-needs funding formula.

Our proposals will target money towards pupils who face the greatest barriers to their education. In particular, our proposals boost the support provided for those from disadvantaged backgrounds and those who live in areas of deprivation but who are not eligible for free school meals, whose families are just about managing. We are putting more money into supporting pupils who have fallen behind, both in primary and secondary school, to ensure that they, too, receive the support they need to catch up.

Overall, 10,740 schools will gain funding, and the formula will allow them to see those gains quickly—54% of schools will gain. There will be increases of up to 3% in per pupil funding in 2018-19 and up to 2.5% in 2019-20. Some 72 local authority areas are due to gain high-needs funding, and they will also do so quickly, with increases of up to 3% in both 2018-19 and 2019-20. As well as providing for these increases, we have listened to those who highlighted in the first consultation the risks of major budget changes for schools, so we are also including significant protections in both the formulas. No school will face reductions of more than 1.5% a year, or 3% overall, per pupil, and no area will lose funding for high needs.

London will remain the highest-funded part of the country under these proposals. Schools in inner London will attract 30% more funding per pupil than the national average. Despite the city’s increasing affluence, London’s schools still have the highest proportion from disadvantaged backgrounds and the highest labour market costs in the country, so our formula matches funding to those needs, which is why those schools are funded better than those elsewhere. As a result of our proposals, 17 of the 27 schools in the hon. Member’s constituency will gain funding. That is 63% of schools in her constituency.

Some schools in London, however, will see some reduction in their current funding, and this reflects significant changes in relative deprivation between the capital and the rest of the country over the last decade. For example, the proportion of London pupils eligible for free school meals dropped from 27% in 2005 to 18% in 2015, as London became more affluent, but the current funding system has taken no account of these changes. It has simply built on an anachronistic, atrophied system, over 10 years, under which we simply increase the amounts, year on year, based on a formula designed for life in 2005. It is well past time that our funding system reflected the levels of deprivation that exist today, not those that existed a decade or more ago.

For those schools that will see a budget reduction, the significant protections we are proposing will mean that no school will face reductions of more than 3% per pupil as a result of this formula. This will mean that they can manage the significant reforms while continuing to raise standards. All schools need to make the best use of the resources they have, ensuring that every pound is used effectively to improve standards and have the maximum impact for children and young people. To help them, we have put in place, and continue to develop, a comprehensive package of support to help schools make efficiency savings and manage cost pressures, while continuing to improve the quality of their education.

To be specific, which the hon. Member asked me to be, we are preparing a national buying scheme for things such as energy and information technology, but we are also providing advice to schools about how to manage staff and ensure the right combination of staff to reflect the curriculum they are providing.

We are using a broad definition of disadvantage to target additional funding to schools most likely to use it, comprising pupil and area-level deprivation data, prior attainment data and English as an additional language. No individual measure is enough on its own. Each picks up different aspects of the challenges that schools face, and they work together to target funding. Where a child qualifies for more than one of these factors, the school receives funding for each qualifying factor. For example, if a child comes from a more disadvantaged household and lives in an area of socio-economic deprivation, their school will attract funding through both the free school meals factor and the area-level deprivation factor. That helps us to target funding most accurately to the schools that face the most acute challenges, while not ignoring the needs of children who face some barrier to achievement, and of course the school will continue to receive additional funding through the pupil premium to help them improve the attainment of the most disadvantaged.

There are specific reasons why funding as a whole rises by 0.7% in the hon. Lady’s constituency, and they include the growing affluence, as I have said. Historically, Westminster has been one of the lower-funded inner-London local authorities. As a result, it sets higher basic per pupil funding than most other local authorities in England, and the difference between Westminster’s basic per pupil funding rates and the national funding formula rates is not as substantial as in other parts of London. The majority of schools in Westminster North are primary schools rather than secondary schools. The Westminster formula is currently marginally more generous to secondary schools than under the national funding formula, so primary schools benefit from a slight adjustment to the primary-to-secondary ratio that we are introducing. Schools in Westminster North gain from the national funding formula deprivation and low prior attainment factors.

Westminster Council currently chooses not to use IDACI, the income deprivation affecting children index, factor for primary schools at all—it does for secondary—so its schools are gaining from the broader measure of deprivation that we are using in the national funding formula. The national funding formula’s prior low attainment factor is also more generous than Westminster’s formula, at £1,050 plus the area cost adjustment under the national funding formula, compared with £722 under the Westminster formula.

On that note, I hope that I have assured the hon. Lady that this is a fairer funding system, but I shall be happy to discuss the details with her in due course.

Question put and agreed to.