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Schools funding: doing things the way we’ve always done is no longer an option – for schools, or for that matter, for government policy

Having dominated the first PMQs since Theresa May’s announcement that a General Election would be held on 8th June, school funding has proved a key political battleground in the early weeks of campaigning.

Pressure on school budgets imposed by pay rises, the national living wage, higher employer NI and pensions contributions, and by the imposition of the apprenticeship levy, has been growing for some time, but have been thrown into sharp relief following the publication of an NAO report estimating that the government would need to find £3 billion in savings by 2020. Last week, the NAHT warned that some schools may need to opt for a four-and-a-half day week to plug their budget shortfalls, while the Commons Education and Health  Committees said schools were already cutting mental health services such as counsellors and pastoral provision.

The Cameron government had committed to freezing school spending per pupil in cash-terms up to 2019–20. But recent Institute of Fiscal Studies (IFS) analysis has concluded that far from protecting the schools budget, the proposed freeze would entail a real-terms cut in spending per pupil of about 6.5% between 2015-16 and 2019–20 – representing the first such cut to school spending per pupil since the mid-1990s and the largest fall over a four year period since at least the late 1970s.

The significant political challenges involved in implementing these cuts are unfortunately now compounded as a result of years of dithering over a long-standing commitment to introduce a national funding formula, now slated for the 2018-19 school year.

The idea of the national funding formula is twofold. First, to ensure that as much funding as possible follows pupils (i.e. school choice) thus providing the baseline conditions for future productivity gains. And secondly, to bring greater parity to what have been widely divergent local and regional levels of school funding. A level playing field, according to which schools in different parts of the country receive similar amounts of per pupil funding, is necessary for the system to make competitive gains. It is also an important condition for the possibility of the growth of popular and high-performing schools where they are needed if ever planning is to move beyond politics.

What is the right level of per pupil funding is an altogether more difficult question. At another time, the formula might have been implemented by levelling up, but in the context of deficit reduction it is being implemented via a redistribution of the available resources. Unsurprisingly, for some (mainly urban) schools this means that budgets will be tighter still. The IFS have suggested that increasing the budget by £1bn in 2019-20 to £39.7bn would make it easier to implement school funding reform as ‘the baseline would be a real-terms freeze rather than a real-terms cut’.

The impact of funding on quality is a moot point. The lack of correlation between resources and attainment has long been noted, but is likely to be biased. A more recent and influential study of US reforms by Kirabo Jackson et al. (2016) has questioned received understanding of this issue. Schools funding must be ‘adequate’ but how the money is spent is of paramount importance for productivity. The evidence does not support that universal increases in school spending translate to improved pupil outcomes mechanistically, as seems implicit in Labour’s pledge to fully reverse the £3 billion of savings the NAO has said schools will have to make by 2019-20.

Without a market mechanism to test the adequacy of funding to meet pupil needs, school funding will remain a contested area. Nevertheless there are other areas we should look at in relation to the goal of achieving efficiency gains. The system does not currently do much to encourage innovation; only a minority of schools have implemented significant changes to management practice; the unions continue to exercise undue influence over pay and conditions, forcing conformity to national benchmarks; understanding of efficient teaching practice is slow to travel; minimum funding guarantees and additional supply-side transfers to schools from the EFA distort the picture further. One thing is for certain: doing things the way we’ve always done is no longer an option – for schools, or for that matter, for government policy.

James Croft

This blog originally appeared in the first trial issue of CMRE's weekly comment and analysis round up 'Education Watch'. For further details, contact the Director.

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