School Funding Formula (London)

Debate between Vince Cable and John Redwood

Wednesday 28th June 2017 Commons Chamber

[Sir Vince Cable]

My right hon. Friend anticipates a point I was going to make, but he is absolutely right to say that this problem is widely shared. Several elements have contributed to this anxiety in the schools sector, one of which is that we have had flat or falling funding in nominal terms per pupil, certainly over the past couple of years—it is a small fall but it is significant. Much more seriously, there has been a very big increase in costs. Costs that were previously borne by central Government are now being offloaded on to individual schools. Some of them are obvious ones, such as national insurance contributions, which have added a couple of percentage points to the payroll—that is 80% of the cost of a typical school. The increase in pension contributions is another.

One particularly bizarre item causing considerable puzzlement in schools is the apprenticeship levy. I can perhaps claim some authorship of the original ideas behind the levy, from the coalition years, but none of us ever intended that it would apply to schools. The training of teachers, and indeed other professionals, does not go through an apprenticeship route. It appears that this is being introduced because people in maintained schools are regarded as council employees, and of course the whole direction of Government funding is to move in the opposite direction. In addition, there is a completely bizarre distinction between academies and non-academies. I wonder whether the Minister, in discussions with his colleagues, can lift what is not a massive but an extremely irritating and, at the margin, onerous burden on schools. It is something that would help significantly, and the burden is clearly inappropriate.

The consequence of these changes, together with the new funding formula that the Government have mooted, is very significant indeed. The National Audit Office has estimated that, between 2014-15 and 2019-20, which is when the funding formula comes in, there will have been an 8% real cut overall in English schools. The Education Policy Institute, which has done a parallel study and is broadly in favour of the principle of the funding formula, notes that the cut is something in the order of 6% to 11% in the narrower period of 2016-17 to 2019-20, with more than half of primary and secondary schools facing cuts of that magnitude.

Let me take the discussion very specifically to the funding formula, which is how I couched this debate. I have no objection—I do not think that any of us possibly could have—to the principle of trying to achieve fairness in the allocation of funds. It is a perfectly desirable objective. Although there is never likely to be much of a consensus on this, striving to achieve better fairness in distribution is a perfectly acceptable philosophical principle. I am not coming here to make a particular whinge about my own Twickenham constituency and borough, because, as the figures net out, we are not significant losers. Indeed, on some calculations, there may be a small gain, but that is not the case in many parts of inner London, which will be hit very severely. None the less, there are some very serious problems with the funding formula as it is due to be applied, and I just wanted to raise them with the Minister in the hope that he can give us some confidence that they will be addressed.

My first concern is that, clearly, it is much easier to introduce a new funding formula when budgets overall are flat or rising than when they are falling. It is a simple matter of common sense. Some secondary schools in my constituency face 3% real cuts to meet the funding formula. If that were done at a time when their budget was flat and others were rising, one can see how they could accommodate it, but imposing on already very stressed financial budgets real cuts as a consequence of the formula is just making this deeply, deeply unattractive.

The informed estimate is that if the Government were to bring in the funding formula while ensuring that no school actually loses in absolute terms, it would probably cost them £335 million. That sounds a lot of money, but, as my right hon. Friend has pointed out, in relation to some of the other transactions of the past 48 hours it probably is not all that significant. Can the Minister clarify a commitment, which I think was made in his party’s manifesto, that the Government will ensure that no school is absolutely worse off as a result of the formula? That would certainly help to lubricate the whole process.

My second concern is different and has nothing to do with money. It is about the centralisation of decision-making that is a consequence of this new formula. At present, there is a significant degree of flexibility for local authorities in moving money within the funding blocks, particularly within the school block. That enables local authorities to take account of local circumstances. In my particular case, we have a significant number of problems in the secondary sector. This involves a significant number of outer borough pupils, the fact that we have a large number of pupils who go into the private sector at 11 or thereabouts, and more challenging demands on the secondary sector. There is an understanding locally that, effectively, there should be a cross subsidy from primary to secondary. That is the result of local circumstances, and people understand that and accept it. Under the funding formula, such local, particular concerns can no longer be taken into account. One of the practical consequences in my area is that the secondary schools, which have particular needs, will be very savagely hit, because the cuts will fall on them disproportionately. As I understand it, there will be very little capacity in the Department for Education or with regional commissioners to handle the kind of local negotiation that would be required to take account of such particularities. I ask the Minister to try to ensure that as we move to a new funding system, it does not become hopelessly over-centralised. There is a real danger that we have a Soviet style of financial allocation that takes no account of local circumstances.

My third concern is about special needs and disadvantaged pupils who fall within the special educational needs block. As the Minister knows, funding for that at a local level is a complete mess. Local authorities are not funded up to anywhere remotely near the level that is required to meet the special needs of statemented pupils. The new plan system, which was passed in the last Parliament, requires substantial funding, which is simply not available. Local schools are having to use out-of-borough private providers of special needs education, which is often very high cost. Indeed, one of the things the Government should think about is a Competition and Markets Authority referral for some of these institutions.

Whatever the reasons, local councils have run up very large deficits on their special needs budgets. They are having to use school block money in order to support it. Many schools are in great difficulty as a result of the financing of special needs, so much so that schools that were regarded as centres of excellence are now trying to deter people from coming because of the extra cost involved, and a pass-the-parcel system is developing with special needs, which is deeply unhealthy, and completely inimical to good schooling.

A fourth concern I have about the proposals as they currently stand is that all kinds of perverse incentives are built into the rather complex formula that the Department has evolved, one of which is that it penalises high achievement. I happen to represent a borough where 50% of schools are regarded as “outstanding” and the other 50% “good”. It is a very high achievement area. Parents have very high expectations: schools deliver. Under the formula, high achievement will be penalised, and the funding is being redirected to schools in which there is low achievement. One of the utterly perverse consequences is that schools in London, particularly in inner London—areas such as Hackney, Lewisham and Lambeth, which 20 or 30 years ago were regarded as dreadful sink schools—are now very high-achieving schools in terms of value added, and those schools will need significant amounts of funding.

[John Redwood (Wokingham) (Con)]

The right hon. Gentleman is making a very good point. Certainly in Wokingham, which has very low per-pupil amounts and good-performing schools, we feel there is a problem. Was not the idea of the reform to have a higher absolute amount for every pupil in the country, because there is a basic cost wherever you are being educated?

[Sir Vince Cable]

Yes, indeed. The right hon. Gentleman makes the important point that it is not just a question to read having a basic amount of funding, but an evidence base for what the cost of running a school actually is. I worry that as the formula is currently devised, there is no evidence base. Wild guesses have been made about the differential costs of secondary and primary schooling, and we need objective studies of what it costs to run a school, so that the formula can work well.

AstraZeneca (Pfizer Bid)

Debate between Vince Cable and John Redwood

Tuesday 6th May 2014 Commons Chamber

[Mr John Redwood (Wokingham) (Con)]

I would like the Secretary of State to clarify the legal position, because it seems to me that, under the law the previous Government introduced, Ministers were going to stay out of all these decisions, which would be trusted to an independent body; and that, under the 2004 European Union merger regulation that they signed up to, this is clearly a concentration that falls to be determined by Brussels regulation, not by this elected House of Commons. I therefore find it very surprising that the Opposition are demanding the Secretary of State intervene, when he might end up in an illegal position if he tried to do so.

[Vince Cable]

It is precisely because of the legal position that I have been studiously neutral on this matter. It is fair to say that there are elements of ambiguity—it is not absolutely clear—but the main position is exactly as the right hon. Gentleman described it: under the legislation we inherited from the Labour party, Ministers do not engage with decisions except in three very specific areas of public interest.

Zero-hours Contracts

Debate between Vince Cable and John Redwood

Wednesday 16th October 2013 Commons Chamber

[Vince Cable]

I am sure the hon. Gentleman has given a totally genuine example. I am not a lawyer, but there is at present a common law defence against exclusivity. I can see the practical problems of bringing a legal case against big companies, but none the less some legal protection exists. I accept that in many cases exclusivity may be highly undesirable, and in our consultation we will try to establish what concrete action, if any, we can take about it.

[Mr Redwood]

When the Secretary of State holds his consultation shortly, will he consult on the extent to which there is a problem and try to get a definition of it, or will he consult on possible remedies to the abuses he has identified?

[Vince Cable]

Such abuses are highly relevant, but people may come forward and explain, as I have done, that for certain contexts, groups of workers and sectors, such a contractual arrangement is necessary and positive and it would be unhelpful to take action. We have an open mind. We are not trying to close down the debate.

Business and the Economy

Debate between Vince Cable and John Redwood

Monday 14th May 2012 Commons Chamber

[Vince Cable]

I do not think that the Foreign Secretary actually said that. He works extremely hard with me and my colleagues promoting British business around the world. A large part of his job is commercial diplomacy and he is doing it extremely well.

One key proposal in the enterprise and regulatory reform Bill is legislation for the UK green investment bank, which will drive the transition to a green economy. The Bill will set the bank’s purpose, ensure its independence and make funding provision. The bank will be formed as a public company under the Companies Act, with initial funding of £3 billion to March 2015. It will operate independently from Government, but will agree its strategic priorities with the Government. Until formally established, the Government are making investments, on commercial terms, in green infrastructure through a specialist team in my Department. I reported to a Standing Committee of the House two weeks ago on its progress.

[Mr John Redwood (Wokingham) (Con)]

I think that the Secretary of State agrees with me that the Vickers proposals for more competition among our domestic banks are very good. What further measures can the Government take urgently to get some competition in banking capacity in the high street?

[Vince Cable]

My right hon. Friend is right that, in addition to the structural reforms, competition is essential. He will know that the Government are endeavouring to carry through as ambitiously as possible the divestment of branches from Lloyds, and a potential solution to that is in sight. There are also some excellent new banks coming up—Handelsbanken and Metro bank are good examples—and we must ensure that the regulatory process is as efficient as possible in order to get those up and running. I thank him for his continued pressure on that important point.

Executive Pay

Debate between Vince Cable and John Redwood

Monday 23rd January 2012 Commons Chamber

[Vince Cable]

I start by acknowledging that the issue is, as some of the hon. Gentleman’s questions implied, complex. The best way to proceed with it for the country is to have an all-party consensus. The contributions made in recent weeks by the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition have contributed in a very positive way towards that, and we can make some progress on that. I contrast that slightly with the hon. Gentleman’s somewhat carping response. I believe that today he put out a press release describing as “half-baked” proposals that he had not seen; he did not know what was coming. That was not terribly clever.

The hon. Gentleman’s central criticism was that we had not gone far enough. Let me reflect on what that means. We have emerged from 12 years of Labour government, when many of the issues could have been dealt with. That period of government started with something called the “prawn cocktail offensive”, which led to my immediate Labour predecessor saying that he was “intensely relaxed about people being filthy rich”. Those were the standards that we inherited. I remind the hon. Gentleman about what happened in that period of government. At the beginning, chief executives’ pay was 47 times average pay; at the end, it was 120 times average pay. That is the problem that we are now trying to correct. Before the hon. Gentleman lectures me any further on not going far enough, he should reflect on why so little was done when his party had the power to do it.

Let me respond specifically to the point about workers on boards. It would be very desirable if there were more workers on boards. The initiatives being promoted in respect of encouraging John Lewis-type arrangements, which by definition will get workers on boards, will take that further. We welcome worker participation in industry; that is one of the reasons why my ministerial colleague, in conducting the Royal Mail legislation through Parliament, laid such insistence on worker shareholding and giving workers a right to participate. But there is a specific set of problems around mandating companies to have workers on their boards. Consider the position of the large number of FTSE companies whose employees are predominantly overseas. How would the work force be selected? Worker participation is a good idea for many companies, but let it be done without the prescriptive route, which would simply not work.

The same applies to pay ratios. There is a lot to be said for pay ratios; the hon. Gentleman may not have heard me, but I did advocate that kind of metric as a way of assessing what is happening. But if he had reflected for a few minutes, he would have seen that there is a big difference between a company that, for example, has a large number of unskilled workers, and another company that has outsourced a lot of its unskilled labour force, producing totally meaningless figures in respect of ratios. So we welcome pay ratios, but they should not be mandated and prescribed.

The hon. Gentleman asked about the High Pay Commission, which has done excellent work; I referred to it during my contribution. I checked back on its 12 recommendations, and we are implementing 10 of them in practice or in spirit. Of the remaining two, one—about employees on boards—I have already referred to. The other was a very specific recommendation on the structure of pay, which we judged to be impractical.

On RBS, let me just say that that matter is above my pay grade. The Prime Minister has said that he will ensure that it is dealt with properly. I am sure that it will be, and that there will not be excessive bonuses.

To return to my first point, we can make progress in this important area on an all-party basis. I encourage the hon. Gentleman to revert to his usual more constructive and moderate approach, and to work with us to achieve far-reaching and overdue reforms.

[Mr John Redwood (Wokingham) (Con)]

I welcome anything that recognises that it is the role of shareholders and competitive markets to decide pay in companies. With that in mind, let us consider what happens where the Government are the shareholder. Will the Secretary of State remind us what deal the Labour Government signed up to for RBS top executives, explain why it was so far in excess of the dreadful results that have been delivered in public ownership, and say what this Government can do to put that right?

[Vince Cable]

My right hon. Friend is right to stress the central role of shareholders and to remind us about the conditions according to which the head of RBS was appointed and the contract negotiated. Of course, the problem is not just with pay; we are now also having to consider the problem of knighthoods that were awarded for appalling behaviour in British banking.

Postal Services Bill

Debate between Vince Cable and John Redwood

Wednesday 27th October 2010 Commons Chamber

[Vince Cable]

We are asking Co-operatives UK to give us advice. The hon. Gentleman is very close to the co-operative movement, so his input to the discussions will be welcome.

[Mr John Redwood (Wokingham) (Con)]

Will the Secretary of State give way?

[Vince Cable]

Oh dear.

[Mr Redwood]

I am grateful to the Secretary of State. Do I assume that he is talking about mutualising the Crown offices, which the state already owns, and not mutualising the bulk of post offices, which are independent private sector retail businesses that it might be difficult to mutualise against their will?

[Vince Cable]

Individual post offices are of course self-managed, but they operate within Post Office Ltd. It is the structure of Post Office Ltd that we are concerned about. The process clearly needs advice and further thought, which is why we are approaching it with the maximum degree of engagement and consultation, and the right hon. Gentleman will be one of the people whose advice I shall seek.

--- Later in debate ---

[Vince Cable]

No. The relationship between Royal Mail and the Post Office rests on two things—first, on mutual interest. They have strong mutual interests and depend on each other. Secondly, there is a contractual relationship. This will not change as a result of the separation of the two. Public ownership did not secure the arrangement. It is secured by mutual interest and contractual obligation. That will continue.

[Mr Redwood]

Where the property is shared between the Post Office and Royal Mail, as it is in a number of important locations, is the intention to split the site, create separate title to different parts of the site and give each its own front door, or will they share the property?

[Vince Cable]

Obviously, such detailed matters will need to be resolved as the process of separation continues. It is a practical issue and, as it is a commercial matter, Post Office and Royal Mail will look for the most sensible, practical, least cost arrangement.

For the foreseeable future, Royal Mail will be the only company capable of providing the universal postal service. That means that if we want to continue to benefit from a universal service with uniform and affordable prices, we have to equip Royal Mail to survive, and indeed thrive. There is no choice. That was the conclusion of the original Hooper review commissioned by the Opposition, and his recent update for the coalition Government.