With school funding, there’s only one way to have your cake and eat it

6 April 2017

Since joining Reform I’ve had the privilege of being asked to comment in the media on the important, emotive and complex issue of school funding. I suspect this trend will continue, and so I’d like to lay out my developing thinking, beyond the odd soundbite or headline, in the hope it can be refined through constructive critique and reasonable debate.

To set the scene, I’m not talking about individual schools, only the national picture. That necessarily hides huge variety. Every school is different and everybody has compelling personal anecdotes to support whichever argument they happen to support.

The interests of pupils, citizens, and taxpayers should all be aligned – nobody wants to waste money on things that don’t help children to learn and thrive. However, public services such as schools require the Government to make trade-offs between a dizzying array of people with current (and future) interests, including students and their families, voters, taxpayers, and users of other public services i.e. everyone. That necessitates some tough choices about spending priorities, which should be informed by evidence. This is what the world-leading National Institute of Clinical Excellence (NICE) helps with in healthcare, using the most robust evidence available to help determine which medical interventions achieve the best overall outcomes, given limited resources. This is why some expensive medicines aren’t funded through the NHS, even when it’s literally a question of life and death. But even in healthcare such choices aren’t only based on evidence, they also have to be informed by values and politics.

So, in thinking about school budgets it’s important to separate out three issues; the size of the cake, how the cake is divided and what is done with the cake. I caution against listening to any argument that lumps the three together, presents any part as simple and one-sided, or ignores the third point entirely i.e. most of the current debate.

The size of the cake

On overall school funding levels, per-pupil funding will fall slightly for the rest of this Parliament, due to rises in pupil numbers, inflation and other costs. Reform has known this for a while, with calculations in April 2016 predicting a seven per cent real terms cut to per-pupil funding. Similar findings were made by the National Audit Office (NAO) and the Institute for Fiscal Studies. Rather than only highlighting record total spending, the Government should be more transparent about the real-terms fall in per-pupil funding, and as the NAO and the Public Accounts Committee have pointed out, should do more to help schools respond, with clear lessons from the NHS.

However, this drop comes after two decades where school funding has effectively doubled, as one of the few public services protected since the financial crash. Reform’s calculations in June 2015 found that between 1997 and 2013, spending on schools rose by 166 per cent, while the number of pupils fell by one per cent. Average staff to pupil ratios are currently 10.2 adults for every student, only falling by 0.3 over the last five years. Per-pupil funding has been flat in secondary schools since 2011, at just over £6,000 per pupil per year, and has risen slightly to almost £5,000 in primary schools. In this context of relatively generous funding, if schools simply ask for more money, rather than describing what money helps their students to achieve, they will put their high levels of public trust at risk.

How the cake is divided

Separately, how money is currently shared between schools is highly variable and unfair, and has been for a long time. Per-pupil funding differs massively between areas, with some students receiving almost twice as much as others, and many disadvantaged and high-needs students under-funded. Too many politicians have put a national funding formula in the ‘too difficult’ box. This Government should be applauded for taking the challenge on, with backing among the unions, the National Governors’ Association, and many others for proposing a fairer, national approach to school funding.

Fairer school funding has to involve redistribution, with the new system creating ‘winners’ (10,653 schools will see funding rise, by as much as three per cent for Loxford School in Redbridge) and ‘losers’ (9,045 schools will see funding fall, by as much as 1.5 per cent for Nottingham Academy). Protections are promised to ensure no school loses more than 1.5 per cent per year. Although many ‘losing’ schools (and their local MPs) are fighting these changes, rebalancing national school funding more fairly towards genuine need is a necessary and long overdue pain. I hope this important nettle is grasped in the imminent schools White Paper, whatever else it contains.

The challenge is that the redistribution is taking place in the context of a slightly shrinking total funding pot. This means both ‘winners’ and ‘losers’ can experience falling per-pupil funding at the same time. As two ex-Ministers explained to my question about this recently, usually some money is required to help ‘lubricate’ such changes.

What is done with the cake

Economic growth follows a cycle of rises and falls, with tax revenues, political careers, and public sector funding all following suit. If nothing else, post-Brexit Britain’s economic future looks uncertain, on top of some significant long-term challenges. The best way for schools to keep serving their communities – regardless of inevitable changes to policies and funding – is to keep their own houses in order, constantly evolving to stay on top of the latest thinking, practices and technologies. This is a challenge that all employers and sectors grapple with.

Can schools do more with what they’ve got? Based on the experience of other public services – such as local authorities and the police – who faced significant cuts in recent years, they can. That in no way underestimates how difficult and painful such changes can be. But many school leaders are already tackling that important challenge. What can be learned from those schools doing new things to both improve outcomes for students while also saving money by making more of their resources?

Three things in particular would help:

  • Every single school should be involved in a deep partnership with other schools, for instance through a Multi Academy Trust (MAT), federation, Teaching School Alliance or other local grouping. That should help achieve economies of scale, for example through shared operational costs, pooled staff across schools, in-house professional development and progression, or by negotiating together with suppliers on everything from energy to photocopying. Governance and accountability should be increasingly aligned with such arrangements.
  • Schools can make better use of technology, both in the classroom and outside of it. This can be about low-tech solutions and practices, as well as high-tech. For example, helping all staff to use modern systems for handling data should free up their time to focus on teaching, reducing the number of staff required overall. It would also provide valuable live and predictive information, rather than backwards looking lag data. I’ve written before about how new, direct recruitment platforms can cost schools as little as £6 a day per supply teacher, rather than highly variable agency fees of up to 40 per cent of salaries (plus hefty ‘finders fees’ if staff go permanent). Agency use has more than doubled in the last ten years, now accounting for over three quarters of supply teachers, at a cost of £1.3 billion in 2014-15, an increase of over 27 per cent on the previous year.
  • More schools should be trialling new, flexible approaches to class sizes – the evidence from the Education Endowment Foundation shows that, up to a point, moderate increases don’t have a significant impact on most pupil outcomes, but can save a lot of money. Some of those savings could allow for targeted smaller-group work with specific students, which is found to be effective. The latest data shows that the average class sizes for primary and secondary schools are 27.1 and 20.4 respectively, with 0.3 per cent of all secondary and 0.6 per cent of all primary classes containing 36 or more pupils. These stats suggest there is considerable scope to try innovative approaches to class sizes, staff deployment and the experience of learning – such as team teaching, flipped learning and plaza learning.

A more reasonable, collaborative and realistic debate about school funding, rather than a simplistic bun fight about cake size, would be an opportunity for both the Department for Education and schools to jointly ask what can be done differently, to achieve better outcomes with fewer resources. The wider world is not standing still, far from it. Doing new things is the only way for schools, and the students that they serve, to truly have their cake and eat it.

Louis Coiffait, Head of Education, Reform




09 April, 2017

I very much agree with the main thrust of your argument. The trouble is that the DfE continues to be a poorly performing department with bad financial management and an imperfect approach to policy formulation, stuck in their expensive bubble in Sanctuary Buildings. The challenge for you is to get your ideas implemented. Good luck!