Justine Greening gives education a financial uplift

18 Aug

I        Introduction

On 17 July 2017, the Education Secretary, Justine Greening, pledged an extra £1.3 billion to schools and academies over the next two financial years in an announcement in parliament.  The aim is to provide a per-pupil increase of at least 0.5% for every school/academy in 2018/19 and 2019/20.

While this is welcome, the reality is that instead of a significant cut in the budget, it will be a real-term freeze from now to 31 March 2020.  Over a four-year period up to that point, schools/academies will face a 4.6% cut in their finances, according to the Institute of Fiscal Studies (IFS). Education spending in the UK is expected to shrink from 4.4% of the gross domestic product to 3.8%. Today, the government spends 18% more on state pensions than on education.   Unsurprisingly, the teacher unions are calling for an extra £2 billion a year.

According to its manifesto in the run-up to the 8 June 2017 election, the Conservatives promised to raise the schools’ budget by £4 billion by 2022 to ensure that no school lost out under the National Funding Formula (NFF) which is to be introduced in the next financial year.   The IFS is of the view that Ms Greening’s promise is more generous than plans in her party’s manifesto and matches those of the Liberal Democrats.

While it will be up to Local Educational Authorities (LEAs) to act as post men and women when distributing the budgets to schools following the government allocation, Ms Greening is introducing a minimum level of per-pupil spending in 2019-20 set at £4,800 for every secondary school/academy.  (The minimum funding level per pupil for primary schools has yet to be announced at the time of writing.)   While youngsters in Berkshire will benefit from rise in the current per-pupil secondary funding of £3,991, those in Tower Hamlets where the per-pupil funding is £6,906 will have to endure the reduced pain of lesser financial cuts than expected.

II       Sources of the extra funding

The additional funding is coming from within the overall educational budget, unsurprisingly, given Chancellor Philip Hammond’s determination to keep a tight hold on government spending – what with the increasing national debt currently standing at £1.75 trillion and the implications of Brexit.

Mr Hammond has given the Department for Education (DfE) permission to raid its capital funds – normally used for building projects.  He wants the DfE to “make savings” through efficiencies to provide £420 million.   Accordingly, £280 million will be diverted from the Free Schools programme.  Potential founders of future Free Schools will be expected to work “more collaboratively with local authorities to provide Free Schools when meeting the basic needs of an area for more school places.   However, LEAs are unsure what this precisely means.

The DfE will also be expected to cut £200 million from its central programmes which will be diverted directly to schools.

Meanwhile, the Education Funding Agency is having to find £537,440 to write off debts incurred by the Lilac Sky Schools Academy Trust (LSSAT) as it is wound down.  Mr Trevor Averre-Beeson established LSSAT and served as a director.  He and Ms Jane Fielding set up the Lilac Sky Outstanding Education Services in 2009, a school-improvement outfit which used a seven-point programme to help schools become “outstanding educators”.  Both (according to Companies House) are shareholders of a consultancy firm called Lilac Sky Schools Ltd, which has benefited from services given to LSSAT to the tune of £800,000.

The elephant-in-the-room question is: “Why has the EFA taken so long to find out about the didgy operations of a couple of people who have had their snouts in the financial trough of these academies?   Local Authorities in the past (remember Copland High School in Brent) were accused of inefficient systems that allowed governors and headteachers mismanage and misappropriate school funds.  The same is now happening with the EFA and history is repeating itself.

III     The National Funding Formula (NFF)

Going back to the National Funding Formula, the reader may recall that it comprises four elements, i.e.

(i)         Pupil costs

(ii)        Additional needs taking account of deprivation, low prior attainment and English as an additional language (EAL)

(iii)       School Costs – which will include a lump-sum sparsity factor (i.e. to compensate schools/academies in the shire counties with low numbers), rates, premises and growth

(iv)       Geographic Costs – i.e. to take account of the cost of housing, split sites and the London factor, for instance.

The NFF will take off on schedule on 1 April 2018.  Its introduction will result in winners and losers.   Altogether, 10,740 schools/academies are set to gain and 9,128 to lose.   However, with a hung parliament, the gains for the winners will be snipped and the pain for the losers will be mitigated.  We will see a softer NFF landing with Councils continuing to retain powers over how they use school budgets – at least for the schools that they control.

The overall funding for each LEA will be set by the government, but it will be up to each authority to allocate the money in accordance with a local formula.  Many authorities do so with advice from their local forums on which governors and headteachers serve.  Authorities ignore the recommendations of these forums at their peril.

Local Authorities (LAs) want the freedom to prop up budgets for pupils with special educational needs and disabilities (SEND) which appear to be under perennial pressure.  They do so by diverting cash from other parts of their schools’ budgets.  Add to that concern for vulnerable pupils, i.e. those who are entitled to free school meals (FSM), refugees and travellers and children who have a mother tongue other than English.  The F40 group of LAs, which have had the lowest funding levels, have not been impressed.  They consider that the government has gone overboard on funding “deprivation”.

Under the NFF, LAs must provide a basic “pupil funding entitlement”, which will be £4,800 for a secondary pupil.  (See above.) There could well be other restrictions placed on LAs about how they distribute the money.  The restrictions could be introduced through secondary legislation – i.e. regulations.

However, according to the Education Policy Institute (EPI), the government’s powers to curtail LA powers are severely limited by the hung parliament.  But LAs’ powers are limited too by their local schools and academies in their areas – especially if they get less than they are owed (according to the government).  The Times Educational Supplement (TES) reported that a few councils believe that they could persuade schools to cough up some of their monies in order to help neighbouring schools in deep financial trouble.   It is left to be seen whether this will happen.

At any rate, Ms Greening has hinted that LAs will be under closer scrutiny about how they are distributing the “dosh”.  In fact, the DfE is planning to publish an “operational guide” on the matter.  LAs will most definitely be under pressure not to divert the income flow from the general schools’ budget to support pupils with complex needs.

The NFF has had all-party support.  However, the “fairer funding” proposals have already come under fire from some Tory MPs.  If there are seven rebellious and revolting Tory MPs, the proposals will run into the sands.

IV     Academies Financial Handbook

Meanwhile, the Education and Skills Funding Agency (ESFA) published an updated version of the Academies Financial Handbook on 27 July 2017. It is effective from 1 September 2017.

Pages 5-6 list the main changes in the 2017 edition, many of which emphasise or clarify points from the previous version of the handbook.

There is

(i)         additional information to help trusts improve their financial efficiency;

(ii)        updated references to the submission of budget information to the ESFA to reflect changes in reporting requirements;

(iii)       explanations that repercussive, novel or contentious transactions require approval from the ESFA; and

(iv)       updates to reflect the introduction of an academies’ sector annual report and accounts.

V         Saving money is as important as generating income

The National Association of School Business Managers (NASBM) has decided to cease moaning about the financial darkness and light a candle or two, by suggesting ways of saving money, which is at least as important as generating income. These are as follows.

(a)        First, for the Headteacher, keep reminding the senior leadership team about finance. Create a regular agenda item at SLT meetings to review the finances and performance against the budget.

(b)        Make finance everyone’s business.   Governors and staff members should challenge one another to drive out waste and implement improvements that make their working lives easier and more rewarding. For instance, consider advertising posts in the local press and their local authority’s bulletin.

(c)        Invest sensibly when the school/academy is carrying a cash surplus. Do not leave money idle in current accounts for extended periods of time.   Spend some time researching safe financial opportunities which pay good rates of returns.

(d)        Cut back on meetings. Meetings are often time-consuming and ineffective, spawning further meetings to address unresolved issues. It takes a concerted effort to break out of this cycle. Time is money.  Rethink how time is used. Focus on what you want to achieve and take action to achieve those goals.

(e)        Cut back on emails, which steals everyone’s time.   Poor practices have developed over time that make the problem worse, i.e. copying non-involved governors and fellow staff members into messages. Excessive emails potentially obscure important emails, as well as taking up time that could be used more effectively elsewhere.  James Dyson, the vacuum cleaner supremo, restricts himself to reading only six emails daily.

(f)        For staff members, make better use of teaching assistants (TAs). Reconsider how TAs can be used in innovative ways rather than continue to follow established practice.  For instance, experienced TAs could (if TAs are well qualified) cover for teachers when the latter are absent, a more cost-effective way than hiring qualified teachers.

(g)        Check the timetable. See how well the allocation of teaching time via timetabling matches teaching demand. Is there an excess or shortage of teaching capacity? If there is an excess, how effectively is this spare time used?

(h)        Don’t let teachers buy supplies. Limit teaching staff to defining requirements and ask members of the administrative team to research the best suppliers. Minimise teaching time spent on non-teaching tasks.

(i)         Leave school computers on all day, thus avoiding wasted lesson time waiting for them to boot up.

V       Concluding Thoughts

Both, winners and losers among schools and academies, are going to be financially hard-pressed for the foreseeable future.  We have been going through a lengthy period of austerity beginning with the 2008 collapse of the world’s financial markets.  While our economy has done better than most, the future is uncertain as we make our way out of the European Union (EU) and there is little prospect of the economy booming any time soon. It could not have missed you that the value of the pound against the euro has plummeted.

With the national debt increasing, pressures increasing on Mr Hammond to spend, spend spend, and his determination to keep the brakes on largesse, the future is not going to be orange.   We must learn to do more with less.   This will not please the teacher unions.

Accordingly, every school/academy should address the following questions.

(i)         Can we reduce expenditure, for instance, by cutting down on one-to-one interventions?

(ii)        Do we use our Teaching Assistants effectively and have they been appropriately trained in subject content, effective questioning and liaising with the class teachers to accelerate the progress of pupils, especially those lagging behind.  Rob Webster has written eloquently on this issue.

(iii)       Use the time of teachers well.  What can they stop doing so that they can focus on what truly matters, the quality of teaching and learning?

(iv)       Finally (and this will not be very popular with the unions), worry less about class sizes.  A few extra pupils in every class will not ruin education.

Meanwhile, the School Teachers’ Review Body (STRB), has made the following recommendations to the Ms Greening on teachers’ salaries for the academic year 2017/18.

  • A 2% uplift to the minimum and maximum of the main pay range (MPR).
  • A 1% uplift to the minima and maxima of the upper pay range (UPR), the unqualified teacher pay range and the leading practitioner pay range.
  • A 1% uplift to the minima and maxima of the leadership group pay range and all headteacher group pay ranges.
  • A 1% uplift to the minima and maxima of the Teaching and Learning Responsibility (TLR) and Special Educational Needs allowance ranges.

In 2011 and 2012, teachers’ salaries were frozen. Since then, their salaries increased annually by 1%.  (They have asked for an increase of 3% this year but appear to be crying in the wind.) There will be little comfort for their members even when the unions bang their war drums.   The reality is that there is no more money to finance higher pay rises, even if Ms Greening accepts a hypothetical recommendation from the STRB to be more generous with teacher salaries.

But if the government was resolute about doing something for teachers, they would be able to find the money by reducing the overseas aid budget by between £4-6 billion.   There is considerable wastage in its use in that the help does not go to those in need of it but rather in the pockets of the politicians, bureaucrats and scammers in the countries served by this aid.

While pay progression for new teachers in England and Wales is in line with other graduates after three years, it falls behind after five.  The STRB report of 2017 mentions that a teacher’s pay after three years would have risen by 26% on average and 29% if allowances are included.  The average salaries (excluding bonuses) of other graduates across the UK after three years is also 29% higher than their starting rates.  However, over the next two years, a gap develops between them and teachers.  Typically, teachers in England and Wales will have achieved a 48% pay progress – 52% including allowances, compared with an average of 60% for other graduates.

In Scotland, teachers can expect to see bigger rises than their colleagues in England and Wales after the first three years but then after five they too lag behind the UK graduate average.

The situation is not being helped by the Labour leader, Jeremy Corbyn, proposing at the recent West of England Glastonbury Festival that, were he to come to power, he would abolish university fees for new students. Labour has claimed that the cost of the pledge, which is £10 billion annually, would be covered by raising Corporation Tax, which currently stands at 19%.  He also hinted that he would wipe out the debt of current and past university students, which would cost a further £100 billion.

The Times editor remarked that Corbyn had frequently sold himself “as a new kind of politician” who did not make promises one week only to break them the next, “that he speaks his mind and means what he says”.  However, when he makes statements like this to sell himself to young people for a mess of pottage, “Labour cannot hope to be taken seriously as ‘a government in waiting’….unless he is straight with the public about his party’s policies on student debt……”

Corbyn also avers that he is for the disadvantaged, but this move of dropping student fees and wiping out their previous debts would redistribute money from the disadvantaged to the middle classes. On 23 July 2017, he began “rowing back” by stating that he would “look at ways” of reducing the burden.

Moving away from the political to-ing and fro-ing of claims and counter-claims, and taking a more measured perspective, how we view education is critical.  Is it an expense or an investment in our young people’s future? If the latter, should we be finding a way of generating the extra finances to support them in their and the country’s future growth and development?  Just a thought.

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