Nick Gibb Minister of State (Department for Education)

In Lambeth, under the new national funding formula, the funding per pupil is £6,199 and in Southwark it is £6,271, whereas in Waltham Forest it is £5,129 and in Surrey it is £4,329. It is that discrepancy that the national funding formula tries to go some way to dealing with.

I congratulate Helen Hayes on securing this important debate. I trust that she would agree that we share the ambition to have a country that works for everyone, where all children have the opportunities for an excellent education that unlocks talent and creates opportunity. BOLD That should be regardless of their background or where they live, which is why today 1.8 million more pupils are in good or outstanding schools than was the case in 2010, and why 147,000 more six-year-olds are now reading more effectively this year compared with 2012 as a result of our reforms.

The Government are prioritising spending on education and have protected the core schools budget in real terms so that, as pupil numbers increase, so will the amount of money for our schools. School funding today is at its highest level on record at more than £40 billion in 2016-17, and is set to rise to £42 billion by 2019-20. The current funding system is preventing us from ensuring that the money is allocated fairly. In the current system, similar schools and similar local authority areas receive very different levels of funding with little or no justification. For example, a secondary school in Wandsworth that is teaching a key stage 3 pupil with English as a second language and low prior attainment would receive £7,699, but if that same pupil were in a school in the neighbouring Borough of Lambeth, the school would receive £10,263, which is a difference of more than £2,500. There is no reason why moving just a single mile should lead to such a change in funding.

Opposition Members complained about the debate. They do not like their figures being challenged, but I am afraid that I am going to do so, because they repeatedly cite misleading campaign data from the National Union of Teachers…..

Allocations are based on 10-year-old data—2005 data—but during that 10-year period deprivation in London has been reduced. In 2005, 27 per cent of pupils in London were eligible for free school meals; today, that figure is 18pc. By ensuring that we allocate funding on the basis of up-to-date data and fairly, we can allocate £5 million more to boroughs such as Merton, the funding of which will rise from £114 million a year to £119 million a year, reflecting the fact that Merton has been underfunded in the past. It was disappointing that Siobhain McDonagh (Lab, Mitcham and Morden) did not acknowledge that, directly as a consequence of this fairer way of allocating funding—this new funding formula—her schools are receiving £3.5 million more.

Wes Streeting (Lab, Ilford North) … said that his borough of Redbridge was seeing a reduction in funding. I am afraid that that is simply not the case. Redbridge’s school funding will increase from £201,600,000 to £209,859,000, a 4.1pc increase, as a direct consequence of the introduction of a national funding formula.

These anomalies will be ended once we have a national funding formula in place, which is why introducing fair funding was a key manifesto commitment for this 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 the schools and high needs funding systems in March last year. We set out the principles for reform and proposals for the overall design of the funding system. More than 6,000 people responded to that first stage of our consultation, with wide support for those proposals.

We have just concluded a 14-week second stage consultation, covering the detailed proposals for the design of both the schools formula and the high needs formula. Our proposals will target money towards pupils who face the greatest barriers to a successful education. In particular, our proposals will boost the support for those from disadvantaged backgrounds, and for those who live in areas of deprivation but who are not eligible for free school meals—those ordinary working families who are too often overlooked. We are also putting more money towards supporting those pupils in both primary and secondary schools who have fallen behind in their education to ensure that they have the support they need to catch up.

Overall, 10,740 schools would gain funding under our proposals, and the formula will allow those schools to see those gains quickly, with increases of up to 3pc per pupil in 2018-19 and of 2.5% in 2019-20. Seventy-two local authority areas will quickly see an increase in their high needs funding, and no local authority will see a fall in its funding.

As well as providing those increases, we have listened to those who highlighted in our first stage consultation the risks of major budget changes for schools. That is why we have proposed to include significant protections in both formulae. No school would face a reduction of more than 1.5pc per year or of 3pc overall per pupil and, as I have said, no local authority will lose funding for high needs. The proposals will limit the otherwise quite large reductions that some schools, including many in London, would see as the funding system is brought up to date.

The real-terms protection of the core schools budget underpins these proposals. As a result, we are able to allocate some £200 million to schools in both 2018-19 and 2019-20, over and above flat cash per pupil funding. That will combine significant protection for those facing reductions with more rapid increases for those set to gain under the fairer funding formula. High needs funding will see an equivalent real-terms protection.

London will remain the highest-funded part of the country under our proposals. Schools in inner London will attract 30pc more funding per pupil than the national average, which is right. Despite the city’s increasing affluence, London schools still have the highest proportion of children from a deprived background and the highest labour market costs, as has been acknowledged in the debate.

We are using a broad definition of disadvantage to target additional funding to schools, comprising of pupil and area level deprivation data, prior attainment data and data on English as an additional language. No individual measure is enough on its own. Each factor reflects different aspects of the challenges that schools face, and they work in combination to target funding. Where a child qualifies for more than one of those factors, the school receives funding for each qualifying factor. For example, if a child comes from a more disadvantaged household and they live in an area of socioeconomic deprivation, their school will attract funding through the free school meals factor and the area-level deprivation factor—the income deprivation affecting children index.

The additional needs factors in the formula are proxies for the level of need in the school. We are not suggesting that the funding attracted by an individual pupil must all be spent on that pupil, but that schools with high numbers of pupils with additional needs are more likely to need additional resources. Using the proxy factors helps us target funding on schools that are more likely to face the most acute challenges.

In addition to the formula, schools will continue to receive additional funding through the pupil premium to help them improve the attainment of the most disadvantaged pupils. We have also included a mobility factor in our formula to recognise the additional costs faced by schools, many of which are in London, where a high proportion of pupils arrive at different points through the year. We were influenced by Stephen Timms (Lab, East Ham) in making that change. London schools will receive additional funding to reflect the higher cost base they face from being in London, which is particularly important given that so much of schools’ spending goes on staffing costs. The higher funding for London schools will support them to continue their success in recent years, particularly for children from disadvantaged backgrounds.

I understand the reactions of those members who are disappointed by our formula’s impact on their constituencies. BOLD The formula is not simply designed to direct more money to historically lower-funded areas or areas with the highest levels of deprivation. It is designed to ensure that funding is properly matched to need using up-to-date data, so that children who face entrenched barriers to their education receive the support they need. That includes pupils who do not necessarily benefit from the pupil premium but whose families may be only just about managing.

I recognise that schools are facing cost pressures, including salary increases, the introduction of the national living wage, increases to employers’ national insurance and pension scheme contributions, and general inflation. We have estimated, as has been acknowledged in the debate, that national pressures will add about 8pc per pupil between the start of 2016-17 and 2019-20, but it is important to note that some of those cost pressures have already been absorbed, and 8pc is not an estimate of pressures to come. Over the next three years, per pupil cost pressures will on average be between 1.5pc and 1.6pc each year.

The current unfair funding system makes those pressures harder to manage. We felt very strongly that introducing a national funding formula will direct funding where it is most needed. That will help schools that have historically been underfunded to tackle those cost pressures more easily. We will continue to provide advice and support to schools to help them use their funding in cost-effective ways and improve the way they buy goods and services so that they get the best possible value for their pupils. BOLD We have published a wide range of tools and support, which are available in one place on the website and include tools to help schools assess their level of efficiency and find opportunities for savings, guidance on best practice, including on strategic financial planning and collaborative buying, and case studies from schools. We have launched the school buying strategy to support schools to save more than £1 billion a year by 2019-20 on their non-staff expenditure.

In addition to those pressures, I appreciate that schools will be paying the apprenticeship levy. As my hon. Friend Paul Scully (Con, Sutton and Cheam) pointed out, the apprenticeship levy comes with real benefits for schools. It will support schools to train and develop new and existing staff. It is an integral part of the Government’s wider plan to improve productivity and provide opportunities for people of all backgrounds and all ages to enter the workplace.

In conclusion, I am grateful for this opportunity to debate school funding in London. I hope Members are reassured to some extent that the Government are committed to reforming school funding and delivering a fair system for children in London and across the whole country—a system where funding reflects the true level of need of pupils in schools.


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