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Osborne to overhaul school funding and reduce council role

The chancellor has announced that the school funding system in England is to be overhauled and there are plans to make “local authorities running schools a thing of the past”. 

In yesterday’s Spending Review, George Osborne said that he wanted to complete the schools revolution and help every secondary school become an Academy. Also, sixth form colleges are to be allowed to become Academies, exempting them from VAT. 

He added that savings of around £600m will be made on the Education Services Grant (ESG), including phasing out the additional funding schools receive through the ESG. The government will also reduce the local authority role in running schools and “remove a number of statutory duties”. 

“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.” 

The government will launch a detailed consultation in 2016 – led by the education secretary, Nicky Morgan, and will implement the new formula from 2017-18. The total financial support for education and childcare is to increase by £10bn over the next five years. 

The Local Government Association (LGA) added that councils have been calling for a fairer funding system for schools. However, introducing a new national formula will inevitably create losers so it is essential that it is “introduced in a phased way to protect those schools facing a relative reduction in budgets”. 

Responding to the news on ESG, and the announcement that schools will be helped towards academy status, Cllr Roy Perry, Chairman of the LGA’s Children and Young People’s Board, said: “The ESG helps ensure that children are getting the education they deserve, from helping to provide speech, physiotherapy and occupational therapies and making sure that children are in school when they should be, to carrying out DBS checks on staff and providing music services in schools. 

“It also helps to plan for the new school places that are urgently needed, ensuring that every child has a place at a good school near their home.” 

Urgent clarification 

He added that last year, £815m was spent on the ESG, so there needs to be urgent clarification on how the £600m cuts will be achieved, and how quickly, without impacting on welfare and standards. 

“The announcement that all schools will be helped towards academy status seems to dismiss the fact that over 80% of council maintained schools are currently rated as good or outstanding by Ofsted,” said Cllr Perry. “Local authorities should be regarded as education improvement partners rather than as a barrier to change. 

“Hundreds of schools, often in disadvantaged areas, are being turned around thanks to the intervention of local councils and it clear that strong leadership, outstanding classroom teaching and effective support staff and governors are the crucial factors in transforming standards in struggling schools, rather than the administrative status.” 

Kevin Courtney, deputy general secretary of the National Union of Teachers, the largest teachers' union, added that the cut of £600m to the ESG is another cut to education funding and the government's plan to reduce the local authority role in education still further will mean less support for schools. 

The government added it will provide new financial support through maintenance loans for part-time HE students, tuition fee loans for higher level skills in Further Education and new loans for postgraduate Master’s degrees, reaching £1bn in 2019-20 and benefiting around 250,000 students. 

It will also freeze the student loan repayment threshold of student loans, for those paying back the £9,000 per year fee, for five years from April 2016. 

Martin Lewis, founder of MoneySavingExpert.com and former head of the Independent Taskforce on Student Finance Information, said: “This is a disgraceful move and a breach of trust by the government that betrays a generation of students. 

“It has chosen to freeze the repayment threshold even though 95% of the consultation responses did not support the freeze – what was the point of a consultation if when there's huge objection it does it anyway?” 

As reported by PSE’s sister title NHE the government has confirmed that funding for nursing education in the future will be through a system of loans, rather than bursaries.