School Funding

Richard Graham Excerpts

Tuesday 24th April 2012 Westminster Hall

[Richard Graham (Gloucester) (Con)]

It is a pleasure to serve under your chairmanship, Mr Gray. There is a very strong representation from the south-west here today, including the Chair, and we welcome that.

School funding is an issue that has bedevilled the country, particularly for those of us who represent underfunded areas. In many ways, the problem of school funding reminds me irresistibly of the late 19th-century question of Schleswig-Holstein, about which Lord Palmerston says:

“Only three people…have ever really understood the Schleswig-Holstein business—the Prince Consort, who is dead—a German professor, who has gone mad—and I, who have forgotten all about it.”

Although I would not suggest for a moment that the Minister responsible for schools and the Secretary of State for Education are the only two people who really know about school funding, it is fair to say that I certainly got lost early on in the quagmire of the local authority central spend equivalent grant—or LACSEG, which sounds very similar to some medicine that I once took for Barrett’s oesophagus.

None the less, the issue is clear to us all. There are many schools across the country, including all those in my constituency, whose pupils effectively lose out significantly in terms of the amount of money spent on them per year relative to pupils in the large metropolitan areas. In fact, there are some 2.5 million pupils in the F40 areas, which are the poorest-funded local authorities in England. Therefore, on average, £5,000 less per child is spent on children’s education in my county of Gloucestershire and other counties represented here today.

[Anne Marie Morris (Newton Abbot) (Con)]

Does my hon. Friend agree that the problem is exacerbated by the rural nature of constituencies in the south-west? Certainly, in Devon, that makes the problem of underfunding even more acute.

[Richard Graham]

My hon. Friend makes a very good point and speaks powerfully for children in rural areas. Of course, there can also be a problem for those in urban areas within a rural county. In my case, one of the reasons why some of us in Gloucester feel so passionately about the issue is that we are a relatively poor city and a relatively rich county. I am sure that other hon. Members have similar situations, and I am happy to take interventions from them on that point.

[Mr Robert Buckland (South Swindon) (Con)]

Will my hon. Friend give way?

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[Richard Graham]

With great pleasure. I see a spokesman for Swindon emerging.

[Mr Buckland]

I cannot resist an invitation like that. Swindon has a similar demographic to that of Gloucester. We are in a relatively rich part of the world and have historically been underfunded. We are doing our best with the resources that we are given, but the option set out by the F40 campaign—an extra £99 million—would be a good interim way to deal with an historic problem that Governments of all parties have wrestled.

[Richard Graham]

My hon. Friend makes a powerful point that relates perhaps to a later stage of the argument that I will develop. I agree with him absolutely that although, as the saying goes, size—or, in this case, money—is not everything, it does go a long way towards improving the opportunities for children in our constituencies. As we all know, above all else, the Government are concerned with aspiration and providing equal opportunities for children across the country.

[David Simpson (Upper Bann) (DUP)]

Would it not be a travesty if areas of social deprivation lose out on the school funding formula when the Government’s ethos is to encourage young people into education and perhaps to go on from that to vocational studies?

[Richard Graham]

The hon. Gentleman is implying that my argument is to beggar my neighbour, to give pupils in Gloucester a better chance. He is right in saying that a charge to the lowest common denominator to achieve equality is not necessarily what we are looking for, and that is not what I intend to propose. However, perhaps we will come on to the specifics of that in a moment.

Broadly, we have already established a degree of consensus in the debate—and I suspect across the House—that the principle of equal funding for every child in the country is one that we would all happily sign up to. The Secretary of State for Education has made it clear that that is his principle as well. Of course, the Government have, in a sense, made deprivation much easier to deal with by introducing the pupil premium, which hugely helps those children who come from very deprived backgrounds and who therefore deserve additional money being spent on them to give them the same opportunities as those children from more stable family backgrounds. We all agree on the principle, but what can be done about it? Given the length of time that the issue has been with us—some 20 years or more—and, I regret to say, the previous Government’s complete failure to tackle the problem, it falls upon the coalition Government to deal with it.

During the various debates that have already taken place in the House since the Government came to power, my right hon. Friend the Secretary of State for Education has perfectly summarised the issue. He has said:

“The current system is not only ludicrously bureaucratic, it is also unfair as schools in different parts of the country are not funded on a rational basis. Moreover, the sheer complexity of the system gives schools less incentive to respond to the needs of local parents by expanding or establishing new provision.”

With the exception of not alluding to the Schleswig-Holstein issue, he could not have put it better, and I do not suppose that any hon. Member here today would disagree with him. How do the Government therefore propose to create a fairer system that will enable those authorities in which our constituencies lie to be reassured that the Government can right the wrong that has been with us for more than 20 years?

Of course, I should say that the Government first launched a consultation. At the announcement of the consultation, Lord Hill determined that it would address the disparities and inequalities within our school system. The consultation was the first step towards ensuring fair funding. None the less, the Department for Education has been unable to find the additional money that would have provided the top-up to all those areas in the F40 group. That would have provided us with the simple one-stop solution of equal funding for all pupils across the land. In times of extremely constrained finance, it is not surprising—no one in our constituencies could conceivably blame the Government for this—that the additional significant amount of money needed to solve the problem in one go has not been found.

However, there has been good news in terms of a significant reduction in the factors that local authorities can consider when constructing school formula. The number of factors that need to be considered have dropped from 37 to 10, which will slightly reduce the complexity of the education funding formula, to which I alluded earlier, and make it easier for schools to understand the rationale behind their budgets. The consultation also arrived at a much greater delegation of funding to schools and will ensure that local authorities can no longer top-slice school budgets. Above all, given that 75% of the secondary schools in Gloucestershire are now academies, the consultation provided for academies to be funded using exactly the same formula as maintained schools, because there had been a year’s lag under the system inherited from the previous Government. That single change will make a significant difference to the academies in my constituency of Gloucester and elsewhere.

[Guy Opperman (Hexham) (Con)]

It is a bit like watching Martin Luther King in his prime. Is it not right that my hon. Friend has a dream, not only for all schools to be equal, but for the Schools Minister to give us the first step, the first indication and the first rung on the ladder to an equal and fair funding for all the schools we represent?

[Richard Graham]

Yes, apart from an alarming analogy with Martin Luther. [Hon. Members: “King.”] Martin Luther King—even more puzzling. Martin Luther was of course responsible for the great saying, “Who loves not wine, women and song remains a fool his whole life long,” but I do not think that that was the object of my hon. Friend’s attempt to introduce him into the debate. However, my hon. Friend’s fundamental point—that we are looking for an early gesture from the Government to reassure our constituents that they do not just have warm sounds, but an initial step towards resolving the funding problem—is absolutely right, and one that I think all hon. Members endorse.

There are budgetary challenges to finding a solution, but the F40 group has submitted various suggestions for interim funding proposals that would improve the situation considerably. It has put forward four options to make steps towards equality, not all of which are hugely expensive. It is not for me to ask for a specific amount of money or a specific formula for the Government to start the ball rolling, but I urge the Government to look closely at the F40 group’s proposals in the hope that one of them is attractive and affordable, and, above all, can be introduced for the academic year 2014-15—before the funding settlement of the next Government.

My main wish is for the Minister to take from the debate the thought that not only are the Government able to agree with the principle and the direction of travel, but they can make the first steps to implement financial change to show that this long, 20-year inequality will finally be tackled.

[Mark Garnier (Wyre Forest) (Con)]

My hon. Friend has mentioned timing on three occasions. Is that not one of the crucial points? Given that we have had that inequality for 20 years and that we have a very strained economic environment, it is vital that we resolve this problem as soon as possible and in the best way possible.

[Richard Graham]

My hon. Friend is absolutely right. Of course, the difficulty is in the words, “as soon as possible” and “the best way possible”. Neither he nor I have control of the finances, but I think we both agree strongly that this is our opportunity to lobby the Minister and for him to reflect the strength of our conviction to the Treasury in the hope that additional moneys can be found as soon as possible.

[Pauline Latham (Mid Derbyshire) (Con)]

This is happening because for more than 20 years civil servants have recognised that there will be winners and losers. As a group, we, and my hon. Friend in particular, must impress on the Minister that the most important thing is to get on with it now and have no further delay. There have always been winners and losers, and the F40 group are the losers every single time. We need to ensure that we level things out very quickly, because it has been 20-odd years.

[Richard Graham]

My hon. Friend makes a good point about winners and losers. Personally, I am not trying to advocate taking money away from deprived areas in large metropolitan cities. They have benefited from generous settlements in the past 20 years, which is absolutely right, but this is not necessarily the moment to rob Paul to pay Peter. I am looking for additional funding from the Treasury to the Department for Education in a formula that allows gradual progress over a period to resolve this inequality of funding.

The Secretary of State sent a letter to a number of us, in which he commented on the consultation:

“Support for reform was widespread but responses also suggested this model would need careful planning. Getting the components and implementation of a fair national funding formula right is critical and we need to manage transition carefully”.

I think that we all agree with him. We would like him to move on as quickly as possible, rather than delaying until the next Parliament—the issue on which I will close my speech. This situation is not of the Secretary of State’s making. This is a 20-year legacy problem that could and should have been tackled by the previous Government. God knows, they had long enough to consider it carefully. None the less, the issue of fairness echoes powerfully for all of those involved in education in our constituencies, which is why so many of us are here today to engage with the Minister, who has once again kindly picked up the cudgel. I am sure he will respond with his usual positive and encouraging noises, but we are looking for more than just noises. We encourage him to take the message back to the Treasury that the strength of feeling is strong.

[Mr James Gray (in the Chair)]

Before I call the next speaker, perhaps those who intend to speak will remain standing for a moment. There are six hon. Members, so there is no necessity to impose a formal time limit. Perhaps those who intend to speak can be aware that we have approximately an hour before the Front Benchers reply to the debate. I was going to the hon. Member for Congleton (Fiona Bruce).

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[Guy Opperman (Hexham) (Con)]

It is a great pleasure and privilege to speak in this debate that was so ably secured by my hon. Friend the Member for Gloucester (Richard Graham). We know that this is a debate about schools because everybody has started quoting famous names. By my account, we have had Shakespeare, Mark Twain, Martin Luther, Martin Luther King, and Reagan snuck in at the end. I prefer to take the Minister back to the ancient Chinese proverb of Lao Tzu who—as our eminent Education Minister will know—was the founder of Taoism and said that the longest journey begins with a single step. Is not the essence of this debate that we are all seeking that first step? It is not a large step; it could be a short step.

[Richard Graham]

Since my hon. Friend introduced Lao Tzu, he will no doubt also be aware of the more recent Chinese philosopher and statesman Deng Xiaoping’s great remark, “Yi bu yi bu”—one step at a time. Does my hon. Friend think that that is appropriate for the way in which we might resolve the issue of fair funding for schools?

[Guy Opperman]

I do, and I will reply with words from Sun Tzu who, when he talked about the art of war, said, “Know your enemy.” That is interesting given that there is no enemy present today, but does not the absence of Opposition Members—save for the shadow Minister, the hon. Member for Westminster North (Ms Buck), who will no doubt act robustly in defending the 13 years during which we all endured a funding gap—speak volumes?

I will move on from the happy badinage in which I and my hon. Friend have been engaged to say that like other hon. Members, I represent schools in Northumberland that look enviously at counties and cities that have a greater degree of funding. To put it simply, no change is not an option. As has happened to my hon. Friend the Member for Warrington South (David Mowat), school governors and head teachers have drawn me to one side and whispered surreptitiously in my ear, “Do you really understand how badly off we are compared with X, Y or Z?” To be frank, they are correct in that analysis of the deficiencies in the present funding system, and significant issues need to be addressed.

We all accept the fair point raised earlier about the fact that there is a financial deficit and restrictions apply, meaning that progress is slow. However, when I go to areas of social deprivation in my constituency—of which there are a significant number—I see schools that survive only because of head teachers and governors who go so far beyond the extra mile that I shake my head in wonder.

I remember going to Prudhoe Castle first school where the head explained how she bought things out of her own pocket because the budget would not cover many of the basics, including essentials such as pencils. I was taken round that school by the head girl who said, “We really would like the lighting to be improved, because at times we cannot see the blackboard.” On a day when I welcome St Joseph’s school to the House of Commons, it is significant that everybody—quite rightly—has made the strong and eloquent point that we are gravely indebted, particularly in schools where there is less funding, to the unbelievable work and unstinting commitment of our head teachers, governors, teachers and staff who work in those schools. I pay tribute to the many members of staff whom I have had the opportunity to meet, but with more than 40 schools in my constituency I have not been able to meet every one of them thus far.

I will conclude my remarks because it is important that we hear from the shadow Minister and the Minister. However, I echo everything that has been said and believe that we should be spending the money more equally. I endorse the great support for the pupil premium, and eagerly await the Minister indicating how far the first step will be.

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[Ms Buck]

There are several answers to that. As a Member of Parliament for Westminster, I was anxious that we should not be drawn too far into our own local experiences. I just point out that the last time I looked, which was a year ago, my local authority had the ninth-highest entitlement to free school dinners—the imperfect but accepted measure of deprivation for funding purposes—in the entire country. The school deprivation is significantly greater than the deprivation of the local authority area as a whole. One of the other difficulties that we must face is that school populations are not necessarily the same as resident populations. That is another area of tension that must be dealt with. I am completely at one with those who say that not all the discrepancies can be explained, but some are more easily explicable than others.

[Richard Graham]

rose—

[Sheryll Murray]

rose—

[Ms Buck]

I will give way first to the introducer of the debate.

[Richard Graham]

Can the shadow Minister confirm that she, like every other hon. Member who has spoken in the debate, supports the principle that every pupil in the country should receive the same basic funding?

[Ms Buck]

The issue is more difficult than that. The core of the debate, which I want to come on to, is this. There need to be—the dedicated schools grant was taking us in this direction—some basic building blocks of education funding. The issue then is that although we do not have unlimited money—we did not have unlimited money even in the more generously funded years—we must also recognise that we need to address not just the deprivation element, but things such as special educational needs funding, which is a very difficult issue as well. It is very difficult to achieve what the hon. Gentleman wants to achieve without significant additional funding and without some of the consequences that none of the hon. Members who have so far spoken has been willing to deal with.

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[The Minister of State, Department for Education (Mr Nick Gibb)]

It is a pleasure to serve under your chairmanship, Mr Gray. Let me begin by congratulating my hon. Friend the Member for Gloucester (Richard Graham) on securing a debate on a topic of great importance to us all; indeed, I met him and other colleagues on 12 March to discuss it.

I understand my hon. Friend’s concerns. Gloucestershire is ranked 136th out of 151 authorities for funding allocations per pupil. In 2011-12, funding per pupil was £4,661, compared with the national average of £5,082. My hon. Friend’s opening remarks and the whole debate reflect concerns across the sector about the school funding system.

My hon. Friend is the Martin Luther of school funding reform; indeed, I found a letter from the F40 chair, Councillor Ivan Ould, nailed to the door of the Department for Education. It listed four options or grievances, and we will respond to it in due course. I should, however, point out that option 3 would cost £99 million, which is not an insubstantial sum, given the current financial climate.

I pay tribute to my hon. Friend for the passion, commitment and perseverance he has shown in campaigning for a fairer funding system and formula. He has raised these issues on countless occasions, including when I visited Tredworth junior school, Finlay community school and Gloucester academy in his constituency last July. I also pay tribute to the work of my hon. Friend the Member for Worcester (Mr Walker), who has provided the leadership and steering for the F40 campaign in Parliament.

I wholeheartedly agree with hon. Members that the current system for funding schools is in desperate need of reform. It is based on an assessment of need that dates back to at least 2005-06, if not further, so it has not kept pace with changing demographics and the needs of pupils across the country. It is also too complex and opaque, so head teachers and governing bodies are often unable to understand how their budgets have been calculated.

It is not right that schools with very similar circumstances can receive vastly different funding for no clearly identifiable reason. We have found that funding between similar secondary schools can vary by £1,800 per pupil. As my hon. Friend the Member for South West Bedfordshire (Andrew Selous) said, the neighbouring areas of Luton, which is poorer than central Bedfordshire, and Buckinghamshire, which is richer, receive more funding per pupil than central Bedfordshire. My hon. Friend the Member for Loughborough (Nicky Morgan) made a similar point, when she said that Leicestershire, which received the lowest amount in the country, received £900 less per pupil than the city of Leicester. That seems unfair.

As my hon. Friend the Member for Warrington South (David Mowat) said, there is a 50% discrepancy in funding between Warrington and Westminster local authorities. My hon. Friend the Member for Redditch (Karen Lumley) said that Redditch receives £1,000 per pupil less than Birmingham. My hon. Friend the Member for Kingswood (Chris Skidmore) noted that one side of the Sandwell road in his constituency receives £4,487 per pupil, while the other receives £5,469 per pupil. I have never been compared to Mr Gorbachev, but I accept the challenge to tear down these walls and end these absurd inequities.

The Government remain committed to reforming the funding system so that it is fair, transparent and reflects the needs of pupils across the country. On 26 March, the Secretary of State for Education announced our intention to introduce a new national funding formula during the next spending period. I am sympathetic to my hon. Friends’ wish to see us move faster and address the system’s inequities much sooner. However, in reforming a system that is so entrenched, we need to proceed with caution, and it is important that we introduce full-scale reform at a pace that schools can manage. At a time of economic uncertainty, stability is crucial.

Our priority must be to ensure that schools are able to focus on delivering high educational standards and are not side-tracked by destabilising shifts to their funding. Attempting to introduce any dramatic change to the funding system at a time when we are, by necessity, addressing the budget deficit could cause problems in those schools where there might otherwise be significant changes in their funding.

We will move towards introducing a new funding system, but at a pace that gives us sufficient time to agree the construct of a new formula and that allows schools enough time to adjust to changes in their funding arrangements. Since last spring, we have consulted widely on how to create a funding system that is fair and logical and that distributes extra funding towards the pupils who need it most. The Department for Education has had a number of conversations with key groups, including schools, local authorities, unions and academies, to consider how we can move towards a fairer funding system.

The announcement made by the Secretary of State for Education on 26 March not only reaffirmed our commitment to introducing a new national funding formula during the next spending round, but set out detailed funding arrangements from next year. The funding arrangements from 2013-14 will make the local funding system simpler and more transparent for schools, early years provision and high-need pupils. Under the new arrangements, education provision will be funded on a much clearer, more comparable basis than under the current system. Head teachers, parents and governors will be able to see precisely how their budgets have been calculated, and why.

The first step—we have heard a lot today about first steps, in various languages—to simplifying local funding will be to work on the basis that as many services and as much funding as possible will be devolved to schools. I firmly believe that schools are best placed to decide how to meet the needs of their pupils and to target funding effectively.

[Richard Graham]

Just to clarify, I think that we all welcome the announcements made by the Education Secretary on 26 March, which will, as the Minister says, simplify things considerably; but does the Minister see that as a first step, which can be improved during this Parliament?