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Russell Hobby

Blog: the education system is coming up short

It's the best of times and the worst of times to consider a revised funding formula. But we must get it right, says Russell Hobby

Posted by Stephanie Broad | October 15, 2015 | Law, finance, HR

There are two basic problems with funding in education: how much we get and where it goes. These two interact of course. If we are short of money it matters more than ever that what we do have goes where it is most needed. At the same time though, a shortage of funds make it incredibly difficult to cushion the transition to a new funding formula.

School budgets are flat in cash terms. This means a real terms cut. We are surveying our members at the moment on their budgets for this year.

We know that schools are facing dramatic inflationary pressures at the moment, including employer national insurance contributions and pensions payments going up by over five percent from this year onwards.

These are reasonably well known. Another source of pressure is less often spoken of. The price of preserving the school budget is significant cuts to other public services. These cuts are not free to schools, as they must often pick up the bill for missing services. Our survey in May, for example, put the cost of these interventions at around £43.5m and found that three quarters of schools were providing mental health services once offered by the local authority. As local authority school improvement services have been cut, schools have been expected to support each other. Fair enough, but they weren't given the money that local authorities used to spend on it.

The stark truth is that the education system is running short. This will probably come home fully to roost in 2016/17, although many schools are feeling the pinch already and sixth forms have been under intense pressure for years.

This makes it the best of times and the worst of times to consider a revised funding formula. There is no possible way to arrive at a fairer formula without taking money away from schools already facing cuts. Yet the needs of some schools are greater than others. There may be winners and losers under the new scheme, but there are winners and losers already.

On balance, then, it is still worth looking at a revised formula. What should we consider?

We need a system that is fair, of course, but also transparent. Schools must know what they are getting and why they are getting it. This implies getting the bulk of the money straight to schools, but we should reserve some small amount of funding for a local top up to cover factors that no national formula can cope with.

We need to rationalise the approach to funding for deprivation. The pupil premium is the right mechanism for this. It would be outrageous to hold schools to account for narrowing the gap while withdrawing the resources required to do so. So we will be looking for it to remain and to grow. It will be appropriate however to look at the balance between the base funding formula and the pupil premium to ensure we are not 'double counting' deprivation. We should also have a debate on whether part of the funding could be triggered by low prior attainment as well as low family income.

While we're at it, let's get pupil premium money into schools automatically rather than force schools to chase parents for eligibility.

On the matter of transition, this is a goldilocks scenario. It must be neither too fast nor too slow. We need a gap of at least two years between the design of the formula and its phased introduction. We need a steady transition after that of at least five years. Move too quickly and we risk pushing schools over the edge and everybody loses.

Reform of the funding formula is right and necessary. We can engage with it as a sector. However, we must guard against it being used to hide overall cuts. The total amount coming into the system must be sufficient before it can be distributed fairly and cuts are false economies. As schools, we should be concerned with the overall spend on children and young people not just that coming into our own budgets. This is both moral and economically rational: I'm not even sure that expenditure on education should be counted as a cost, as opposed to an investment in our future. 

Russell Hobby is General Secretary of NAHT

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