The schools sector: more money, more problems?

By Rowan Allport August 1, 2017 2:50 pm

When it was reported in early July that Education Secretary Justine Greening was aiming to secure more than a billion pounds in additional schools funding prior to the summer recess, her prospects for success were greeted with considerable skepticism. The subsequent announcement that £1.4bn will be provided to schools over the next two years in order to protect their funding in real terms proved the cynics wrong – to a point. She also confirmed that the plans to implement the new funding formula will go ahead, but with local authorities retaining a role in the funding system in the short term.

The ‘extra’ funding

Ms Greening did not succeed in securing new money from the Treasury. Instead, cash already allocated to the Department for Education has been re-prioritised through a mix of creative accountancy, a diversion of capital funds to the frontline, and as-yet-unspecified efficiency savings. The main sources of the funding are £350m from the healthy pupils’ capital fund, £280m from the free schools programme, and “re-prioritising” £600m from the Department for Education’s resources budget

Ms Greening’s accomplishment should not be understated: convincing the Treasury to divert from its existing plans for schools funding would have been extremely challenging. But there is no escaping the fact that she failed to persuade Chancellor Phillip Hammond to part with additional money, with her statement to MPs confirming that any genuine change in the Department’s resources will have to wait until the next comprehensive spending review – currently expected in 2020.

It is also unclear exactly what price the education sector is to pay for this new money. To an extent, stripping money from the healthy pupils’ capital fund – which focuses on supporting pupil health – is more a case of an opportunity forgone rather than a tangible loss, as it is a new programme yet to be implemented. Furthermore, the £415m of sugar levy revenue promised to schools in February to support the fund will still be available: what has disappeared into the main schools budget is the unallocated money for school sport and nutrition that the Treasury had previously pledged to plug the gap between what the sugar levy had originally been expected to raise, and what it is now expected to generate following action from industry that has included the reformulation of products.

The other budget raids pose far more serious questions. The free schools’ money is explicitly from the capital budget, and it is difficult to believe that the £600m of other Department for Education resources is not also largely sourced from funding earmarked to build and maintain schools. But with the school population continuing to rise, and the National Audit Office estimation that repairing all school buildings to a satisfactory standard would cost £6.7bn, redirecting these funds may have negative consequences further down the line.

Commenting on the announcement, Labour’s Shadow Education Secretary Angela Rayner, said: “[The Treasury] are not committing any new money and have not been clear about exactly what programmes they will be cutting to plug the funding back hole.” Layla Moran, the Liberal Democrats’ education spokesperson and a former teacher, dubbed the announcement “a desperate attempt to pull the wool over people’s eyes”.

The reactions from the unions were similarly skeptical. Geoff Barton, leader of the ASCL head teachers’ union, said this was a “step in the right direction and an acknowledgment of the huge level of concern around the country on this issue”. But he said schools are yet to see the implications of the money being “saved from elsewhere in the education budget”. Chris Keates, leader of the NASUWT teachers’ union, called Ms Greening’s statement “a recycled announcement of recycled money”.

Sector experts have expressed similar concerns. Speaking in the wake of a joint Whitehouse–Education Policy Institute event discussing schools funding and Justine Greening’s announcement, Whitehouse Consultancy Chairman Chris Whitehouse said: “The Education Secretary’s new commitment is welcome, as it will protect schools budgets in real terms over the next two years. However, it is clear that this is just a short-term solution, and has come at the cost of reduced spending on school infrastructure, supporting children’s health and a number of as-yet unnamed Department for Education programmes.”

What about the funding formula?

In addition to the funding announcement, the Education Secretary also reaffirmed the Government’s plans to press ahead with the new schools funding formula from April 2018, and said the additional investment in schools would mean an increase in the basic amount of funding for every pupil in 2018-19 and 2019-20. Some schools will see their per-pupil funding increase by up to three percent per year over the next two years, while every school will be guaranteed a 0.5% per pupil cash increase in both 2018-19 and 2019-20.

However, the implementation of the proposal to take local authorities out of the funding process will be more gradual than previously planned: instead of money being allocated to schools directly, local authorities will still be involved in distribution and decision making. In 2018-19 and 2019-20, the national funding formula will set indicative budgets for each school, and the total schools funding received by each local authority will be allocated according to the new national funding formula.

The shift in implementation plans for the new formula was widely expected. Whilst the Government can reform how schools funding is divided centrally, it cannot change the system to remove local authorities from the funding process without legislation – something that was effectively ruled out for the next two years in the recent Queen’s Speech. As a result, local authorities will stay in the loop until 2020 at the earliest, and possibly a lot longer.

In her statement, Ms Greening added that the Government will respond to the feedback on the second stage of the new funding formula consultation – an exercise which concluded in March – after parliament returns in September.

What happens next?

The Government is aware that the money is only a stopgap measure, and that if the parliamentary term continues for more than two years, it will be necessary to come up with a more permanent solution to the shortfall in schools funding before the next election. Analysis of the pledge by the Institute for Fiscal Studies found that despite Ms Greening’s claims about pupil funding now being protected until 2019/20, the end result will still be a real-terms cut of 4.6% between 2015 and 2019 due to inflation and rising pupil numbers. Nevertheless, this initiative will at least allow the Government to claim that current schools’ budgets are being protected without stretching the truth to a point that even Conservative backbenchers were finding difficult to defend.

The next major step in the school funding saga will be the Government’s response to the new funding formula consultation. In many ways it is already outdated, as the pledge to ensure that no school loses money under the new system came after the consultation period. Nevertheless, the exact details of who stands to benefit and by how much are likely to provoke the resentment of schools that will lose out.

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