Spending Review promises long-awaited school funding formula shake up

25 Nov 15

The school funding system is to be overhauled and sixth form colleges are to be allowed to become academies, exempting them from VAT, chancellor George Osborne has announced.

In his statement to MPs, Osborne said he wanted to complete the “academy revolution” and help all secondary schools become academies and make local authority control of schools a thing of the past, saving £600m from the Education Services Grant.

Schools and core adult skills funding in further education colleges will be protected. Altogether, total financial support for education will increase by £10bn, the chancellor said, and he hailed reform of the school funding formula.

“We will phase out the arbitrary and unfair school funding system that has systematically underfunded schools in whole swathes of the country,” Osborne said.

“Under the current arrangements, a child from a disadvantaged background in one school can receive half as much funding as a child in identical circumstances in another school.

“In its place, we will introduce a new national funding formula. I commend the many MPs from all parties who have campaigned for many years to see this day come.”

A consultation led by education secretary Nicky Morgan will begin early next with a view to introducing the new formula from 2017.

Those studying for higher education qualifications in FE colleges will have access to tuition fee loans, as will part-time students, postgraduates and those studying second degrees. Osborne said this will extend support to poorer students and those who have never before had government help.

“Unaffordable” student maintenance grants will also be abolished and replaced with loans, allowing the chancellor to make savings of £2bn a year.

Apprenticeships will also get a boost, with Osborne saying twice as much will be spent on apprenticeships by 2020 than when the conservatives came to office. Funding per place will increase and a new business-led body will be established to set standards.

Responding to the chancellor’s statement, the National Union of Teachers said the education commitments fall far short of what is needed by the country’s struggling and overstretched schools.

Deputy general secretary Kevin Courtney said schools face additional costs from inflation and increases in employer National Insurance and pension contributions. Jobs, pay and learning materials are being cut while pupil numbers and class sizes are “rocketing”, he said.

This means a much greater investment in school buildings is required to provide the required space and prevent them from deteriorating. Similarly, FE colleges still recovering from 14% cuts that pushed them “to the brink” under the last government need funding restored, not cut in real terms again, he added.

Malcolm Trobe, deputy general secretary of the Association of School and College Leaders, agreed that coming rises to NI and pension contributions meant schools and colleges face “substantial” real-terms cuts, despite the apparent protection offered by Osborne. 

“The increase to the overall education budget announced today is largely driven by the need to provide more school places for children because of a demographic surge in pupil numbers,” he said.

“The amount of money spent per pupil is likely to remain the same. In other words, the ‘extra’ money will be spent on providing these places.”

 Plans to cut the Education Services Grant by £600m, which pays for school support services, were extremely concerning, however, he welcomed the commitment to bring in a new national school funding formula.

“It is essential to get this right, particularly at a time when budgets are under such pressure, and to make sure that it is introduced in a manageable way,” Trobe said.

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