National Funding Formula: Social Mobility

Nick Gibb Excerpts

Tuesday 22nd May 2018 Westminster Hall

[Wera Hobhouse]

I very much agree with the hon. Gentleman. It is not just about what happens in our classrooms; it is about what happens outside them. He makes a very powerful point. It is about the importance we place on our young people and their future. It is not only about schools, but about youth services, support and, as we are discussing today, social mobility and how we help people from disadvantaged backgrounds to thrive fully.

[The Minister for School Standards (Nick Gibb)]

I would not normally intervene at this stage in a debate, but I wanted to point out to the hon. Lady that when the national funding formula is fully implemented, funding for schools in Bath and North East Somerset will rise by 8.8%. That is one of the largest rises of any local authority. In her own constituency, it will rise by 7.1%, and the funding for the school she mentioned—Twerton Infant School—will rise to £5,457 per pupil, compared with the national average of £4,189.

[Wera Hobhouse]

I thank the Minister for that intervention, but it is very clear that talking in percentages hides the real picture and does not tell us the per pupil funding. My headteacher in Twerton is absolutely clear that per pupil funding is going down, year on year, and the pupils who are particularly suffering are those who need extra support.

[Nick Gibb]

With regard to Twerton Infant School, I was talking about per pupil funding. It will rise to £5,457 per pupil once the national funding formula is implemented in full, compared with the national average of £4,189 per pupil.

[Wera Hobhouse]

I am listening to my headteacher, who has given me the numbers. If he gets a 0.5% increase, but has to pick up increases in teachers’ pay and in support staff, his overall funding is going down. If the Minister is happy to meet with me and that headteacher, we can probably discuss it at an individual level.

If children do not receive the right support, they do not reach their full potential, which is a national tragedy, because we lose out as a country. We lose out on the nurses and teachers of the future, the software engineers and the hospitality professionals—the list is endless. We deprive Britain of the people who will continue building its prosperity. The worst thing is that the loss of opportunity particularly affects children and families from poorer areas.

In my maiden speech, I said that whenever I mention that I am the MP for Bath, people go, “Ooh, Bath, how beautiful!” It is, but like almost every other place in the country, Bath suffers from serious inequality. One fact illustrates that perfectly, and it is well known in Bath, but perhaps not outside it. Twerton Infant School, which I mentioned, lies on the number 20A bus route. Three stops on from Twerton, life expectancy increases by seven years. Let that sink in for a second—seven years’ difference over a five-minute bus journey. The so-called “fair funding” formula eradicates the extra funding that used to go to schools in catchment areas with high levels of deprivation.

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[The Minister for School Standards (Nick Gibb)]

I congratulate the hon. Member for Bath (Wera Hobhouse) on securing this debate. I will start by saying that standards are rising significantly in our schools: 1.9 million more pupils are in schools now rated good or outstanding compared with 2010. Children are reading better thanks to our reforms and we secured the highest ever scores in the PIRLS—the progress in international reading literacy study—of nine-year-olds’ reading ability when that was published last year. The proportion of young people taking at least two science subjects at GCSE has risen from 63% to 91%. Nine out of 10 young people now take at least two science subjects at GCSE.

The attainment gap between those from disadvantaged and advantaged backgrounds has closed by 10% both at primary and secondary level. We are spending record amounts of money on our schools: £42.4 billion this year, rising to £43.5 billion from next year. We are spending £2.5 billion on the pupil premium: £13 billion since 2010. None of that could have been afforded had we not made careful decisions about public spending across Whitehall when we came into office in 2010, tackling a historic budget deficit of £150 billion, equal to 10% of our GDP. The country was on the verge of bankruptcy owing to the banking crisis of 2008-09 and because of decisions taken by the previous Government. We brought that down to about 2% of GDP. We have the highest level of employment in our history and the lowest level of unemployment for 40 years, and that has enabled us to maintain spending in real terms per pupil in our schools.

Of course, there have been cost pressures, particularly in the three years leading up to last year: higher national insurance contributions, which help to deal with the deficit, and higher employer’s pension contributions to the teachers’ pension scheme are costs that schools have had to absorb. We are helping schools with our school resource management advice on how they can manage those costs.

[Nick Gibb]

Under the national funding formula no school will see a cut in funding this year or next year. They will all receive, through the national funding formula, the money that is allocated to local authorities, which will be a rise of at least 0.5% for every school in the country and up to 3% this year for the lower-funded schools. How those local authorities allocate the funding to the schools this year and next year—we are allowing local discretion as we transition towards the national funding formula—will be for them to decide, but every local authority is receiving sufficient cash to pay at least a 0.5% increase to every single school in their area.

[Wera Hobhouse]

Can the Minister explain to me how advice increases funding? Advice is not the money that the schools need. In Bath, which has definitely not had a particular drop in population, 58 schools are losing and 17 are gaining. Almost three out of four schools are losing funding. How can the Minister explain that loss in funding?

[Nick Gibb]

Perhaps I may turn to schools in the hon. Lady’s constituency. Funding for Bath and North East Somerset will rise by 8.8% once the national funding formula is fully implemented. That is an increase of £8.4 million under the national funding formula. As my hon. Friend the Member for Horsham (Jeremy Quin) said, it is one of the largest increases for any area. To take some individual examples of schools in the hon. Lady’s constituency, Bathwick St Mary Church of England Primary School will have a rise of 9.5% once the national funding formula is fully implemented, and there are large increases for other schools in the constituency. She cited Twerton Infant School, whose funding level is £5,457 once the funding formula is fully implemented. That is significantly higher than the national average for a primary school of £4,189. In the move to a national funding formula, there will be schools that do not get as big an increase as schools in, for example, Horsham, or, indeed, other schools in her constituency that were underfunded, according to the formula. She happened to pick the one that was receiving a smaller increase than others, but that is because its per pupil funding of £5,457 under the formula is significantly higher than the national average.

[Wera Hobhouse]

Figures are figures, and can be turned one way or the other. I said in my speech that the funding increase received per pupil is 0.5%, but the extra pressures, which have been acknowledged, are mounting up to 4.5%. That is a lot of pressure—more than the extra funding. I worry about schools that are getting even less, because the head teachers in Bath do not lay people off for the fun of it. They do it because they do not have the necessary resources any more. Figures and percentages will not take that away. Will the Minister explain why headteachers have to lay off staff?

[Nick Gibb]

In circumstances where headteachers feel they have to do that, it is because they need to manage their funding within their budget. Funding for schools goes up and down depending on the number of pupils. If they have fewer pupils, they will of course receive less money per pupil and the overall budget will be less. That sometimes means planning for staff not to be replaced.

[Stephen Lloyd]

On that basis, how does the Minister explain the fact that in the past 18 months or so the number of schools releasing teaching assistants has grown faster than in the previous few years? Does he accept that that must be because of budgetary pressures and that, if it happens across the piece, it could lead to severe challenges down the line?

[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.

[Mrs Lewell-Buck]

I have been following the Minister’s remarks on overall funding. Does he seriously think that what the Government are now implementing makes up for the £2.7 billion lost since 2015 in the first cuts to school budgets in a generation and for all the neglect since 2010?

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[Nick Gibb]

I remind the hon. Lady that last year schools funding was £41 billion. This year—2018-19—it is £42.4 billion, and in 2019-20 it will be £43.5 billion. As the independent Institute for Fiscal Studies has confirmed, that will allow us to maintain school and high-needs funding in real terms per pupil for the next two years. The IFS also pointed out that by 2020 real-terms per pupil funding will be some 70% higher than it was in 1990 and 50% higher than it was in 2000.

The hon. Member for Oxford West and Abingdon (Layla Moran) acknowledged the extra £1.3 billion brought in, which we were able to identify last summer. We have been able to ensure that all schools, and all areas, will attract some additional funding over the next two years and have provided for up to 6% gains per pupil for underfunded schools by 2019-20. We have therefore, Mr Walker, gone further than our manifesto pledge—and I should have mentioned at the outset what a pleasure it is to serve under your chairmanship; I was keen to get stuck into the debate. Now every school in every area will, under the national funding formula, receive at least 0.5% more per pupil this year than it received in 2017-18 and 1% more in 2019-20. The significant extra investment in schools demonstrates our commitment to ensuring that every child, regardless of their background, receives an excellent education.

During consultation on the formula, we heard that we could do more to support the schools that attract the lowest per pupil funding, something that the hon. Member for South Shields (Mrs Lewell-Buck) mentioned in her remarks. We listened to those concerns—something that I am criticised for, but I thought it was important to do so—and our formula will rightly direct significant increases towards those schools. In 2019-20, the formula will provide a minimum per pupil funding of £4,800 in respect of every secondary school and £3,500 in respect of every primary. That ensures that every school will attract a minimum level of funding through the formula, no matter what its pupil characteristics are. In addition, those schools will be able to attract even larger increases, as we have not limited their year-on-year gains to the 3%. Some of the lowest-funded schools in the country will therefore attract gains of more than 10% per pupil by 2019-20—something that I now understand the Labour party opposes. It therefore opposes, for example, the increase under the national funding formula of 10.1%—some £145,000—for Newbridge Primary School in the constituency of the hon. Member for Bath. That minimum funding also applies to St Stephen’s Church School, which, under this system, will receive a funding increase of 17.5%, or £214,000. Beechen Cliff School will receive a 10.9% increase in funding, equal to £427,000, once the national funding formula is fully implemented.

[Mrs Lewell-Buck]

Will the Minister give way?

[Nick Gibb]

I will give way once I have finished this list, which I have to say is rather long. Hayesfield Girls’ School in the constituency of the hon. Member for Bath will receive an 8% increase, equal to £335,000, once the national funding formula is fully implemented, and Oldfield Secondary School will receive a 9.4% increase of £414,000. Saint Gregory’s Catholic College will receive an 8.2% increase once the funding formula is fully implemented, equal to £293,000.

With the national funding formula, we have been able to allocate funding to schools that historically have been underfunded. We listened carefully to the f40 campaign, of which my hon. Friend the Member for Horsham was part, and we want to deal with the historical unfairness of schools that have been underfunded year after year. We are addressing that, and the examples I have given show that we have a national funding formula from which schools in the constituency of the hon. Member for Bath are benefiting. Bath is getting one of the biggest increases of any local authority in the country, and I had hoped that she would come to this debate to congratulate the Government on taking a brave stance in implementing that funding formula.

[Wera Hobhouse]

rose—

[Mrs Lewell-Buck]

rose—

[Nick Gibb]

I will give way to the hon. Member for Bath since I mentioned her, and then to the shadow Minister.

[Wera Hobhouse]

The Minister is generous in giving way. I am grateful on behalf of any school that receives extra funding, but that extra funding should not come at the expense of other schools that most need more funding. To me, a fair funding formula should be based on the biggest need. As I said earlier, every child from whatever background should receive the education they deserve, but if we are to address social mobility, we must focus on those who need the most support. In Bath, schools in the most deprived areas are losing out, which is not acceptable.

[Nick Gibb]

But those schools are funded at significantly above the national average for schools, and if we are moving towards a national funding formula, that will be the consequence. We addressed that in our 2017 manifesto when we said that no school would have a cut in funding to get to the national funding formula position, but we changed that when we came back after 2017 and secured extra funding of £1.3 billion. That enabled us to introduce this minimum funding from which many schools in the hon. Lady’s constituency have benefited and to ensure that no school will have a cut in funding, since the worst that can happen is a 0.5% increase in each of those two years.

[Mrs Lewell-Buck]

The Minister is talking about fairness and equity in the system, but what does he say to a school in the north-east that, according to the National Education Union, is set to lose £8,000 per pupil? How is that fair?

[Nick Gibb]

What the NEU is doing with its school cuts campaign is misleading. It is taking the cost pressures that we have acknowledged and telling the public that those are funding cuts. I have been clear that no school has had a funding cut. School funding went up in real terms per pupil in the last Parliament, and that increase has been maintained in real terms.[Official Report, 19 Jun 2018, Vol. 643, c. 1MC.] The NEU is talking about cost pressures that have had to be absorbed, not just by the school system but by other parts of the public sector and the private sector. The hon. Lady will know that once the national funding formula is fully implemented, funding in South Tyneside will increase by 4.5%, which is equal to £3.9 million more going into schools in that area.

[Mrs Lewell-Buck]

I was not going to intervene again, but the Minister mentioned my area, and I will not take any lessons from him about what is happening to schools on my patch. Teachers come to see me on a regular basis saying that they are at breaking point because the cuts are damaging their ability to continue. Some schools are saying that they will have to go down to teaching just four days a week. I am sorry, but the Minister is wrong when he talks about how great things are for school funding in south Tyneside .

[Nick Gibb]

I am saying that thanks to the £1.3 billion extra funding that we secured, schools in south Tyneside will receive an extra 4.5% once the funding formula is fully implemented, which is equal to £3.9 million. [Interruption.] I have acknowledged that over the last three years, up to 2017-18, there have been cost pressures. Higher employer national insurance contributions have had to be absorbed not just in the school sector but across the public and private sectors, and there have been higher teachers’ pensions contributions, which was the right thing to do.

[Jeremy Quin]

I am slightly frustrated, so I will share my frustration with the Minister. I would like more money to be spent on schools—I think everyone in the Chamber would like more money to be spent on pupils, and we would like better standards even more. I know that standards are rising, and what is being achieved on the attainment gap is great. However, I am frustrated because when the Conservative party came into office with its coalition partner, there was a £145 billion deficit that the kids of today were going to have to pay back. It is all very well wanting more and more money spent on things, but that money has to be raised. In the past, billions and billions of pounds were being left for the schoolchildren of today to repay, and that is not fair either.

[Nick Gibb]

My hon. Friend makes a good point, because that debt also carries an interest charge, which is similar to the overall amount of money we spend on schools each year. If we were to go down the Labour party’s route of promising even more expenditure and borrowing tens of billions of pounds to renationalise whole swathes of the private sector, as was promised during the general election and has been promised since, we would add even more to the interest that we have to pay each year. Indeed, we would have to pay something like £9 billion more in interest charges than we pay already.

When fully implemented, the national funding formula will lead to a 4%—£3.4 million—increase in the constituency of the hon. Member for Peterborough (Fiona Onasanya), and in Oxford West and Abingdon the increase will be 2.4%, which is £1.2 million extra for schools. Once the funding formula has been implemented in full, there will be a 3% increase in funding for schools in Oxfordshire as a whole, which is £10.5 million. The hon. Member for Oxford West and Abingdon referred to high-needs schools, and those schools will get an increase of 3.7% to £60.6 million. That important money is being spent on the most vulnerable children in our society, which is why there has been a 3.8% increase in funding in her area.

[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.

[Stephen Lloyd]

The Minister has been talking a lot about the national fair funding formula and the additional money in the constituencies of the hon. Member for South Shields (Mrs Lewell-Buck) and of my hon. Friends the Members for Bath and for Oxford West and Abingdon. When exactly will that national funding formula come in? Does the Minister acknowledge that when it comes in, it will be taking over from cuts of upwards of 20%? There is an awful lot for it to make up for.

[Nick Gibb]

It came in this year, for 2018-19. In the first two years, because of the transition, we want to allow local authorities to have some discretion over how they implement it on a school by school basis. Most authorities are moving quite close to the national funding formula if not moving to it fully, but some want to tweak it for the two years of the transition, and we have allowed that. As I said, we acknowledge that there have been cost pressures, and are helping schools to manage those cost pressures. Going forward, as the IFS said, we are maintaining funding in real terms per pupil for the next two years, because we have managed to secure an extra £1.3 billion.

We are absolutely committed to providing the greatest support to the children who face the greatest barriers to success. That is why we have reformed not just the schools formula but high needs provision, by introducing a high needs national funding formula. It will distribute funding for children and young people with high needs more fairly, based on accepted indicators of need in each area. The extra money that we are making available means that every local authority will see a minimum increase in high needs funding of 0.5% in 2018 and 1% in 2019-20. Underfunded local authorities will receive gains of up to 3% a year per head for the next two years. Overall, local authorities will receive £6 billion to support those with high needs in 2018-19, up by more than £1 billion since 2013-14.

I will draw my remarks to a close, to allow the hon. Member for Bath to make a final contribution to the debate. I thank all Members who have contributed to the debate. Our prime concern is the investment we are making in schools and the steps we are taking to ensure that that money reaches the schools that need it most. That is why we have introduced the national funding formula.

We have been reforming our schools system since 2010, by changing the curriculum to improve the way children are taught to read and the way that maths is taught in our schools. We have reformed our GCSEs so that they are on a par with some of the qualifications taken in higher education institutions around the country. We have been improving behaviour; we have given teachers more powers to deal with bad behaviour in our schools. Standards are rising in our primary and secondary schools, and the attainment gap between children from wealthier and poorer families is closing by 10% in both. Clearly there is more to do, but we are on the right track. Our funding formula is a fairer and more transparent way of distributing funding to our schools.