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House of Commons Hansard
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School Funding: Greater London
31 January 2017
Volume 620

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Barclay.)

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I am grateful for the opportunity to have this short debate on the impact of funding changes on London’s schools. I apologise to the Minister for his drawing the short straw of having to respond to a debate at midnight, although I suspect that this will be the first of many such debates.

London Members of Parliament have some grave concerns, although I know that other parts of the country are affected by changes to the funding formula and by the wider squeeze on schools funding. In my constituency—this experience will be replicated widely, particularly in London—the story of school progress over recent years has been one of the great public policy successes. In the mid-1990s, our school estate was crumbling. We were teaching children in badly ventilated, overheated and old-fashioned buildings that had not received investment for decades. I remember when North Westminster community school, which was a sprawling three-centred school, achieved in the last year before its closure just 18% GCSE grades A to C, including English and maths. It was one of the worst results in the country. I remember when half our secondary schools and a number of primary schools were in special measures, despite some frankly heroic efforts by a number of teachers and heads. I remember when there was virtually no provision at all for pre-school education.

Over the course of the past 15 years, the situation was transformed by a number of measures, including the London challenge programme—a focused management and good practice sharing policy that, under the inspirational leadership of Tim Brighouse, was widely understood to be a key factor in driving change in London schools. The transformation was also brought about by the new infrastructure, with magnificent new buildings across the city. It was brought about by the investment that went into the Sure Start children’s centres and the early years programme. Critically, it was brought about by money. The additional funding that went into London schools was used particularly to invest in teaching and improved teacher pay; in support for schemes such as Teach First; and in generally giving headteachers the ability to marshal resources to support a better learning environment. We have seen the outcome of that investment —both human and resource investment—in the hugely improved outcomes in school performance across the capital.

In the days before the London Challenge, London was the worst performing region in the country at key stage 4 level. By the end of that programme and the additional investment that accompanied it, we were the best performing region. Yet we know that the job is not done. Despite the improvements, there are still too many children who are not going into secondary school having achieved the standard at primary that is our benchmark. Across the country as a whole, we are still not managing to close the gap in attainment with some of our competitor nations. That is, as the last few hours of debate have confirmed, more of a challenge to rise to than it was previously. More than ever, the country as a whole but London in particular requires an education system that will allow us to be a world leader creatively, technically and economically, with an education system to support that.

The pressures and challenges that face London education are as great as ever. We have problems of deprivation that are still acute, and problems of churn. I appreciate very much that the Government have, for the first time, introduced a churn or pupil mobility indicator into the funding formula. I remember having an Adjournment on this very topic 10 years ago, when I wanted a factor of mobility to be brought into the funding formula for policing, for health and for education. I welcome the introduction of the indicator, but none the less schools face enormous pressure in some cases. I know of primary schools where not a single child at key stage 2 was there at the completion of the key stage 1 process. This is a very real difficulty for schools. We know of the challenges of English as an additional language and, critically, of the higher salary, building and other operating costs that London schools have to face. Even my borough of Westminster—the hon. Member for Charnwood (Edward Argar), who was a Westminster councillor, will recognise this—despite its reputation as the glittering centre of the capital that people see with Oxford Street and, indeed, the Palace of Westminster and so forth, has the seventh highest child poverty in the whole country.

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My hon. Friend is making a very powerful speech. The impact of child poverty on educational attainment is very much the subject and the driver of the work we are doing in Hounslow with Hounslow’s promise. Does she agree that there is tremendous concern about comments I have heard from headteachers suggesting that schools may be reluctant to accept pupils with significant needs, who may also be quicker to be excluded, because those schools do not have the resources to deal with some of their in-depth needs? Will she, with me, congratulate Hounslow Council, which tonight, with Tory and Labour councillors together, has called on the Government to consider again the impact that these changes will have on Hounslow schools’ ability to maintain the highest standards in quality of provision?

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I am happy to congratulate Hounslow Council, and I completely endorse what my hon. Friend has said. I will come in a second to the comments of headteachers and councillors from across London who have expressed their dismay about the effect of the funding formula changes.

I want to finish what I was saying about the level of deprivation. I think that it is either not understood or glossed over by too many of the representatives from the shires, who want to negotiate a better funding settlement for their own schools—that is something that I completely understand and appreciate—but who do not always recognise the extent of the expense and the pressures faced by the capital city, which is experiencing a redistribution away of funding to meet those needs. Seven of the 10 local authorities with the highest levels of poverty in the UK are in London, so it is horrifying that the new Government formula for distributing schools funding hits London particularly hard. In briefing me for this debate, London Councils and the Mayor of London have made it clear that they are extremely concerned about that.

A higher proportion of London schools—an estimated total of 1,536—will see a reduction in funding than in any other region. Seventy per cent. of London schools face a fall in funding, compared with 58% of schools in the north-west and 53% in the west midlands—and the figures for those areas are bad enough. Eight of the 10 local authorities that face the highest percentage losses in funding are in London. Worst affected are councils known for high levels of deprivation and challenge, such as Hackney, Camden, Lambeth, Lewisham, Haringey, Tower Hamlets and Hammersmith.

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I am grateful to my hon. Friend for securing this important debate, even at this late hour. I have written to all the headteachers in my constituency over the last few weeks, and they tell me that the pressures of the increase in national insurance contributions and the cuts to their funding are already forcing them to make very difficult decisions about cuts to support staff, in particular, and to SEN provision and so on. Does she agree that those are precisely the kinds of resource that have enabled London schools to be so successful over the past 10 years?

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I absolutely agree with my hon. Friend, and I will reinforce that point in a minute. The modelling undertaken by London Councils indicates that at constituency level the national funding formula element of the changes alone will mean that 28 schools lose in Barking; 35 in Bermondsey; 42 in Bethnal Green; 41 in Poplar and Limehouse; 37 in Tottenham; and 48 in West Ham, to list just a few. Leyton will lose £4.5 million —equivalent to 6.8% of its funding; Deptford £6.1 million or 7.6%; Hammersmith £5 million or 7.6%; Brent North £9 million or 7.3%; and Hendon £5.5 million.

My council, I am happy to say, is not one of the worst affected. We are still waiting for some of the modelling data, but I think that that is to do with the churn factor that the Government have introduced. Even allowing for that, many individual schools still stand to lose. Westminster Academy, for example—last time I looked, it was the seventh highest on the free school meal indicator, making it one of the most deprived schools in the country—will potentially have its funding cut by a quarter of a million pounds. According to analysis undertaken by the council, all but two secondary schools are potential losers, including Westminster Academy, Paddington Academy, St George’s, St Augustine’s, Pimlico Academy, St Marylebone and Westminster City. Primaries that face losses include George Eliot, St Joseph’s, St Luke’s, Robinsfield and Barrow Hill. Many Westminster children attend schools across the borders in Kensington, Camden and Brent, which are hit even harder. A number of local parents will be affected by the impact of the cuts on schools outside the boundary.

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I congratulate the hon. Lady on securing the debate, which comes at an important time. She is talking about the indices of deprivation, which are important. In the London Borough of Barnet, we do not suffer to the same extent as other people, but we have a significant number of one-form entry schools. Yesterday, I visited Etz Chaim Primary School, where the staff explained to me that economies of scale mean that they will find themselves in a very difficult financial situation. Does she agree that the Government should be looking at that as part of their funding formula? It is not just the shires that suffer from that problem; so do some local authorities in inner London.

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I absolutely agree with the hon. Gentleman. The pattern of school development in London—not just inner London—means that we have a historically large number of smaller schools and one-form entry schools, which are taking a particular hit from this formula.

Our troubles do not of course end with the impact of the redistribution through the funding formula. We know that the changes will coincide with the wider spending shortfall identified by the Institute for Fiscal Studies and by last month’s National Audit Office report on the financial sustainability of schools. The report identified a £3 billion squeeze, reflecting the fact that education is protected in real terms, but not against inflation, the pressures arising from salary increases and national insurance contributions—my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) mentioned that—or pension contributions, the impact of the rates revaluation, the apprenticeship levy and other costs.

Taken together, the funding formula implications and the unfunded cost pressures hitting schools are turning what would already be a challenging situation into a nightmare. Schools spending next year will be reduced by £6.6 million in Westminster, £23.3 million in Newham, £13.5 million in Enfield and £11.1 million in Ealing. For some individual schools, such a scale of cuts is equivalent to £1,000 per pupil per year.

As both my hon. Friend and my hon. Friend the Member for Feltham and Heston (Seema Malhotra) have said in respect of their own local schools, heads and schools are also contacting me to describe their fears about the consequences of this reduction in funding. Many are anxious not to be individually identified at this stage, as in many cases they are not absolutely certain which of the many unpalatable decisions they may have to make to balance the books they will have to make, but they are keen to stress their concerns.

Heads point out that many of them are struggling to recruit at current pay grades, and trying to retain more experienced staff is of course more expensive. For others, the cuts mean the loss of teaching staff, and particularly of support staff, and some very worrying cases of special educational needs support being under threat are emerging. The early intervention services relating to mental health, speech and language, and SEN support are in some cases being targeted as areas where cuts are more possible to make than they are in the number of teaching staff. In many of those cases, schools are already grappling with the consequences of the loss of funding through child and adolescent mental health services.

One of my long-standing concerns, which I know is shared by my hon. Friend the Member for Dulwich and West Norwood, is the issue of gangs and serious youth violence. That issue has a crossover with child protection, and it is having an impact even down to primary schools, not just secondary schools. Early intervention and support in schools is absolutely vital if we are to turn what is, unfortunately, once again a rising tide in London. At the extreme end, two teenagers have already lost their lives in the past fortnight. I know that this is a particular concern for the Mayor, who is being briefed on the impact of school budget cuts with particular reference to early intervention.

Our outstanding nursery schools are also coping with pressures because of unrelated and already extant changes to their funding. One told me yesterday that the payment for the 30 hours provision for early years that they expected to begin in September is exactly half of what they were getting per child two years ago.

Why are we putting the quality of our children’s education at risk when, facing so much uncertainty, we need skills and creativity more than ever? Why would we risk undermining London’s crucial role as an economic driver for the whole country? The Government must think again, not choose this moment to inflict damage where it will hurt most—in the foundations of our future.

I want to end my speech by asking the Minister a few specific questions. I hope he will be able to answer them now, but, if not, that he will be kind enough to write to me after the debate. Although I appreciate that some parts of the country have historical spending patterns that are perceived as unjustly low, is it fair that the deepest cuts are being proposed for schools in the poorest local authorities in the country, most of which have to cope with the impact of very high staffing and other operating costs? What specific recommendations are the Government making to heads in respect of efficiency savings, which are cited as a way in which schools could accommodate both the funding formula changes and the £3 billion spending squeeze identified by the NAO? Will the Minister tell us what efficiency savings are being recommended to schools to achieve these savings?

What guidance will be given to ensure schools do not seek to meet shortfalls by seeking additional contributions from parents, as is increasingly being flagged up by schools across the capital? What action will the Minister take to ensure that special needs and pupil support are protected within school budgets, and what protection is available to schools hit by the combined impact of reductions under the funding formula and cost pressures? I know that a cap is being applied to school funding changes through the funding formula, but not to the additional cost pressures, which actually have a larger total impact. I hope that the Minister will be able to address some of those comments, and I look forward to what he has to say.

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I congratulate the hon. Lady on securing this important debate. I hope I can assure her about some of the issues she raises.

Whenever a national funding formula is introduced, no matter what weightings are attached to the factors in the formula, there will be winners and losers. If we apply the formula to the current year, 2016-17, and produce an array of figures for each of the 23,000 schools, there will by definition—mathematically, it has to occur—be winners and losers. In the interests of transparency, we are showing the effect of the new formula, the factors and principles of which were agreed in principle when we consulted last year. We have applied the new formula, with the weightings we discussed in the second consultation, to all 23,000 schools. It shows, of course, that some schools gain and some schools lose. That will happen no matter what national formula anybody in this House produces. If we want a national funding formula—we committed to that in our manifesto—that is the consequence of doing so on the basis of this year’s figures.

We have committed to protecting school funding in real terms over the course of the Parliament. It stands at a record high of £40 billion at the moment, and is projected to grow to £42 billion as pupil numbers grow over the spending review period.

I share the hon. Lady’s view about the success of London’s schools. Their academic standards have soared in recent years, bucking the trend of inner cities throughout the world. The Government are equally ambitious for the rest of the country. All children should have an excellent education that unlocks their talent and creates opportunity regardless of where they live, their background, their ability or their need.

The Government are, because of this ambition, prioritising spending on education. We have protected the core schools budget in real terms, so that as pupil numbers rise so too does the amount of money for our schools. This means that schools are receiving more funding than ever before: a total, as I have said, of over £40 billion this year.

The current funding system prevents this record amount of money from getting to where it is needed most. Underfunded schools do not have access to the same opportunities to do the best for their pupils. It is harder for them to attract the best teachers and to afford the right support. That is why the Government are introducing a national funding formula for mainstream education and for the high-needs support provided for children with special educational needs.

The national funding formula will be the biggest change to schools and high-needs funding for well over a decade. Such change is never easy. That is why previous Governments assiduously avoided doing it. However, it will mean that for the first time we will have a transparent system that matches funding to children’s needs and the schools they attend.

In the current system, schools and local areas receive significantly different levels of funding with little or no justification. For example, a primary school in Westminster teaching a pupil eligible for free school meals, and with English as an additional language, would receive £4,973 for that pupil this year. However, if that same pupil were in a school in Greenwich, the school would receive £6,676 this year, a difference of £1,703. Under our national funding formula, they would receive the same amount.

These anomalies will be ended once we have a national funding formula in place, and that is why introducing fair funding was a key manifesto commitment for the 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 schools and high-needs funding systems in March last year. We set out the principles for reform and the proposals for the overall design of the funding system. Over 6,000 people responded, with wide support for our proposals. Building on that support, in December we were able to proceed to the second stage of the consultation, covering detailed proposals for the design of both the schools and high-needs funding formula.

Our proposals will target money towards pupils who face the greatest barriers to their education. In particular, our proposals boost the support provided for those from disadvantaged backgrounds and those who live in areas of deprivation but who are not eligible for free school meals, whose families are just about managing. We are putting more money into supporting pupils who have fallen behind, both in primary and secondary school, to ensure that they, too, receive the support they need to catch up.

Overall, 10,740 schools will gain funding, and the formula will allow them to see those gains quickly—54% of schools will gain. There will be increases of up to 3% in per pupil funding in 2018-19 and up to 2.5% in 2019-20. Some 72 local authority areas are due to gain high-needs funding, and they will also do so quickly, with increases of up to 3% in both 2018-19 and 2019-20. As well as providing for these increases, we have listened to those who highlighted in the first consultation the risks of major budget changes for schools, so we are also including significant protections in both the formulas. No school will face reductions of more than 1.5% a year, or 3% overall, per pupil, and no area will lose funding for high needs.

London will remain the highest-funded part of the country under these proposals. Schools in inner London will attract 30% more funding per pupil than the national average. Despite the city’s increasing affluence, London’s schools still have the highest proportion from disadvantaged backgrounds and the highest labour market costs in the country, so our formula matches funding to those needs, which is why those schools are funded better than those elsewhere. As a result of our proposals, 17 of the 27 schools in the hon. Member’s constituency will gain funding. That is 63% of schools in her constituency.

Some schools in London, however, will see some reduction in their current funding, and this reflects significant changes in relative deprivation between the capital and the rest of the country over the last decade. For example, the proportion of London pupils eligible for free school meals dropped from 27% in 2005 to 18% in 2015, as London became more affluent, but the current funding system has taken no account of these changes. It has simply built on an anachronistic, atrophied system, over 10 years, under which we simply increase the amounts, year on year, based on a formula designed for life in 2005. It is well past time that our funding system reflected the levels of deprivation that exist today, not those that existed a decade or more ago.

For those schools that will see a budget reduction, the significant protections we are proposing will mean that no school will face reductions of more than 3% per pupil as a result of this formula. This will mean that they can manage the significant reforms while continuing to raise standards. All schools need to make the best use of the resources they have, ensuring that every pound is used effectively to improve standards and have the maximum impact for children and young people. To help them, we have put in place, and continue to develop, a comprehensive package of support to help schools make efficiency savings and manage cost pressures, while continuing to improve the quality of their education.

To be specific, which the hon. Member asked me to be, we are preparing a national buying scheme for things such as energy and information technology, but we are also providing advice to schools about how to manage staff and ensure the right combination of staff to reflect the curriculum they are providing.

We are using a broad definition of disadvantage to target additional funding to schools most likely to use it, comprising pupil and area-level deprivation data, prior attainment data and English as an additional language. No individual measure is enough on its own. Each picks up different aspects of the challenges that schools face, and they work together to target funding. Where a child qualifies for more than one of these factors, the school receives funding for each qualifying factor. For example, if a child comes from a more disadvantaged household and lives in an area of socio-economic deprivation, their school will attract funding through both the free school meals factor and the area-level deprivation factor. That helps us to target funding most accurately to the schools that face the most acute challenges, while not ignoring the needs of children who face some barrier to achievement, and of course the school will continue to receive additional funding through the pupil premium to help them improve the attainment of the most disadvantaged.

There are specific reasons why funding as a whole rises by 0.7% in the hon. Lady’s constituency, and they include the growing affluence, as I have said. Historically, Westminster has been one of the lower-funded inner-London local authorities. As a result, it sets higher basic per pupil funding than most other local authorities in England, and the difference between Westminster’s basic per pupil funding rates and the national funding formula rates is not as substantial as in other parts of London. The majority of schools in Westminster North are primary schools rather than secondary schools. The Westminster formula is currently marginally more generous to secondary schools than under the national funding formula, so primary schools benefit from a slight adjustment to the primary-to-secondary ratio that we are introducing. Schools in Westminster North gain from the national funding formula deprivation and low prior attainment factors.

Westminster Council currently chooses not to use IDACI, the income deprivation affecting children index, factor for primary schools at all—it does for secondary—so its schools are gaining from the broader measure of deprivation that we are using in the national funding formula. The national funding formula’s prior low attainment factor is also more generous than Westminster’s formula, at £1,050 plus the area cost adjustment under the national funding formula, compared with £722 under the Westminster formula.

On that note, I hope that I have assured the hon. Lady that this is a fairer funding system, but I shall be happy to discuss the details with her in due course.

Question put and agreed to.

House adjourned.