Schools Funding

Baroness McIntosh of Pickering Excerpts

Tuesday 29th April 2014 Westminster Hall

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I congratulate my hon. Friend and the Government on the moves that they have made. Will the Minister comment on what we are doing about special educational needs in that regard? Does my hon. Friend support reversing the Government decision whereby schools used to have more say over their budget, which in rural areas really helped those schools most in need?

[Mr Walker]

I hear what my hon. Friend says and I hope that the Minister will answer her point. I agree that giving schools greater say is important and very much in line with some of the Government’s policies.

The East Riding of Yorkshire is by most calculations very low in the table for school funding, yet gets only 0.3% through this allocation, and Staffordshire’s MPs have been among the most consistent in pressing F40’s case.

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[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I congratulate my hon. Friend the Member for Worcester (Mr Walker) and all colleagues who have been associated with this campaign for years. I want to focus my comments on schools in rural communities, but on a day when we are mourning the loss of a teacher—the first teacher ever to be killed in a classroom—we must take the opportunity to pause and pay tribute to the pressures under which teachers work, and particularly to the lovely teacher who lost her life. We can never reward teachers or thank them enough for their work.

My hon. Friend the Member for Worcester referred to the cost of staffing as 65% and sometimes 85%. We must not lose sight of the fact that if there were a change of Government and national insurance contributions rose, that would take an enormous chunk out of school budgets. We must be extremely mindful of that.

The Select Committee on Environment, Food and Rural Affairs does not focus only on food, eating, farming and fishing. We recently produced a very wide-ranging report on rural communities. One of its most alarming conclusions was about what my hon. Friends the Members for Hexham (Guy Opperman) and for Beverley and Holderness (Mr Stuart) mentioned: the particular pressures on the budgets of schools in rural areas. There are particular issues about travel to work and school buses. I know that the matter is constantly reviewed in areas such as North Yorkshire. I am grateful for the tribute paid by my hon. Friend the Member for Beverley and Holderness to the outstanding excellence and achievements of North Yorkshire schools. I pay tribute also to the local education authority of North Yorkshire, which is generally there when needed but is recognised to be a very light-touch LEA. It has a good relationship overall with local schools.

However, as I mentioned in an intervention on my hon. Friend the Member for Worcester, we regret the loss of autonomy suffered by individual schools, which previously had the opportunity to have more say over budgets. That is highly regrettable. We called in our report for it to be reversed, and I repeat that call here today.

Let me deal with sparsity funding. Historically, rurality and sparsity have always been recognised by Governments. In particular, the members of the current coalition, the Liberal Democrats and the Conservatives, have historically paid great attention to rurality and sparsity. I urge the Department and the Minister to have a greater focus on that. There was, if I may say so, a very small, pitiful amount of money for sparsity provision. Look at the neighbouring education authority of York. One of the greatest difficulties is that when York went unitary, a big chunk of the education budget went into the York unitary authority and now we are feeling that pinch in North Yorkshire.

I have been able to make only a few remarks, but I believe that the measure we are discussing is a very important step. It would be churlish not to recognise that it will have a significant impact on schools in North Yorkshire.

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[Kevin Brennan]

I can absolutely confirm that we are on that journey. The last Government started the consultation process on that journey towards the end of the last Parliament, as the hon. Member for Worcester mentioned in his opening speech.

We also heard contributions from the right hon. Member for Banbury (Sir Tony Baldry), who mentioned Taoism in his remarks, and from the hon. Member for Hexham (Guy Opperman), who mentioned Deng Xiaoping. Perhaps I can also quote Zhou Enlai, who, when asked about the effects of the French revolution, said that it was too early to tell. It is also, perhaps, a little too early to tell exactly what the outcome of the funding formula for schools will be, but we would welcome some transparency about it from the Government.

I associate myself with the remarks of the hon. Member for York Outer—

[Miss McIntosh]

I am the Member for Thirsk and Malton.

[Kevin Brennan]

I beg the hon. Lady’s pardon. The constituencies keep changing all the time. The hon. Member for Thirsk and Malton (Miss McIntosh) paid tribute in her remarks to the teacher Ann Maguire, who was tragically killed yesterday in school. I associate myself with those remarks, and I am sure that everybody in the House would want to do the same.

Contributions were also made by the hon. Member for Stroud (Neil Carmichael) and by the hon. Member for Cambridge (Dr Huppert), who recognised the long-standing issues and the source of some of the present inequalities in the system, acknowledging that some of the issues in Cambridge go back to decisions taken by the county council in the 1980s. Such historical difficulties are hard to unravel, as Governments of all colours have found. Contributions were also made by the hon. Members for Redditch (Karen Lumley) and for South East Cornwall (Sheryll Murray). The hon. Member for Warrington South (David Mowat) managed to point out some of the odd outcomes of the Government’s methodology in the current allocation made in the recent statement. We heard a contribution as well from the hon. Member for Brigg and Goole (Andrew Percy), who also pointed them out and summed up the difficulty for all Governments when he said that he does not want to take a single penny away from Hull.

Will the Minister acknowledge that introducing a national funding formula will result in losers as well as winners? We must be open and honest about that. What I found frustrating about the statement was that the Schools Minister would not acknowledge that, and that some of the bad news about what will happen elsewhere was being parked down the road rather than openly alluded to now. I make that point now, as I made it at the time. Interventions were made by many hon. Members present, including my hon. Friend the Member for Stretford and Urmston (Kate Green), who rightly pointed out that her local authority has been subject to issues relating to the national funding formula.

There are undoubtedly wide disparities among different areas. Some of those disparities can be explained by levels of deprivation or by things such as London weighting, but it remains true that pupils in schools with essentially similar characteristics can be funded very differently depending on where in the country they are. It goes back even as far as to when I was teaching, 25 years ago, before the introduction of the dedicated schools grant. Before that, the exact level of funding for schools was determined by local authorities, and the grant from central Government was part of the overall local government settlement. The Government set out an expected level of school funding for each local authority during that time and well into the 2000s, until 2006, when the dedicated schools grant was introduced. However, authorities were free to ignore it, as the money was not ring-fenced. That is exactly what happened in Cambridgeshire, as the hon. Member for Cambridge pointed out.

The result was that most councils spent more than the Government’s expected amount, which was known then as the school formula funding share, but to widely different extents. The exact level of funding was determined as a result of local political priorities, including the level of council tax, and the arcane working of the local government settlement as a whole. The national funding formula grant was introduced in 2006, and those basic levels of funding were taken as the baseline. The grant was increased by a given percentage each year, so the differences basically continued, except that authorities that spent less got an increase to bring them up to that level. Over and above that, there was some relative increase in the funding for areas of deprivation. That leads us to the consultation that took place towards the end of the last Government. The issue is long-standing, and it is rooted in how the funding was calculated formerly. The last Government changed that system. I accept that the disparities remained, which is why we began consulting towards the end of the last Government on a national funding formula approach.

The current Government have committed themselves to the national funding formula, but when they made their announcement back in 2011, they did not analyse the figures fully. It was up to the Institute For Fiscal Studies to do so, and its report showed that the level of disruption caused by the introduction of the Government’s proposals for the national funding formula would be highly unpredictable. The IFS calculated that one in six schools would lose at least 10% of their budgets as a result of the Government’s plans as outlined at that time, that one in 10 would gain at least 10% and that nearly 20% of primary schools and 30% of secondary schools would experience a cash-terms cut in funding if those plans were introduced.

Having realised how complicated and difficult it is to get it right, as we must—I welcome hon. Members’ remarks that we should attempt to do so in a cross-party way—the Government have tinkered with the proposals a bit in the meantime and have put some money towards the problem in the announcement that we are discussing. However, as hon. Members have acknowledged, the Government have not done what they said they would do at the beginning of this Parliament and introduced the national funding formula. They could have done so, but they chose not to. That is the reality. Although they have made a down payment, as hon. Members have described it—another way of putting it is that they have thrown a bit of money at the problem—they have not actually introduced the national funding formula, as they committed themselves to do. I do not criticise them overly for that, as it is a difficult thing to do, and it must be got right. We have seen what the consequences are, as the IFS has pointed out.

On the Government’s proposals themselves, the current proposals assert that no authority will lose money as a result. That may be true purely in cash terms, but it will occur in the context of no increase for inflation throughout this Parliament, and an extra 2.3% increase in employer pension contributions that will not be funded by the Government. The consequence will be a continuing squeeze on school budgets. Will the Minister acknowledge that that is the reality on the ground? For many schools, many of the gains will only offset losses that they suffer elsewhere. Welcome as the proposals are for those schools, the reality is that they will not lead to a real increase in the amount of money available to them, and that other schools’ budgets will be squeezed by increasing pressures. Malcolm Trobe of the Association of School and College Leaders said that the announcement

“is completely overshadowed by the reality that all schools and colleges will have a huge hole in their budgets caused by the pensions contribution rise. This will have a catastrophic effect and lead to larger class sizes and reduced curriculum choice.”

I shall just ask a few questions, because I want the Minister to have time to respond. Will she confirm—it was difficult to get this information out of the Minister for Schools because he would not answer me—exactly where the money is coming from? He said that it was a mixture of Treasury and Department for Education money and, later, following a written parliamentary question, on which I had to press him to get an answer, he mentioned that some £90 million of the £350 million would come from the Treasury, the rest being taken from other parts of the schools budget. Will she confirm that and tell us which programme that money is being taken from? I have the text of that written answer, but not the reference from Hansard.

Will the Minister publish the Government’s modelling of who will be the winners and losers from the national funding formula? If she cannot do so now, will she place that in the Library? Over what period is she planning to introduce the national funding formula, if it is to be introduced, if the Government are re-elected at the next election? Other hon. Members asked about that. Is it possible that after the consultation there will be changes to the allocations announced in the statement and that some authorities will lose money that they were expecting and others will get more than they were expecting? Hon. Members have asked about that, too.