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Proposal to add VAT to private school fees – a knee-jerk notion

18 Apr

Two politicians at the opposite ends of the spectrum of thinking – Michael Gove, former Education Secretary, and Jeremy Corbyn, leader of the Labour Party –  have come together on a plan to “soak the rich”.

Writing in The Times (Put VAT on school fees and soak the rich) on 24 February 2017 Gove pointed to “group of highly successful enterprises that is pretty much insulated from the present row about business rates” – private schools – because they are charities.  Because private schools are VAT-exempt, writes Gove, “the wealthiest in this country” are able “to buy a prestige service that secures their children a permanent, positional edge in society at an effective 20% discount”.

Turning to the knotty issue of the number of scholarships and bursaries these schools provide, he criticises (with a rhetorical question) the small number of students given educational opportunities from depressed areas of the country such as Knowsley, Sunderland, Merthyr Tydfil and Blyth Valley.

Two months later, Jeremy Corbyn, Labour’s leader, and the Shadow Education Secretary, Angela Rayner, came up with a not dissimilar proposal to charge parents VAT on the fees they pay to private schools, with a view to using the income to offer free meals to all children in primary schools.

Rayner told the BBC: “There are many private businesses that are paying VAT that are struggling.  I don’t see why the state school system should subsidise the private sector.”

She added: “The evidence from the National Centre for Social Research (NCSR) and the IFS (the Institute of Fiscal Studies) have both been quite clear that actually providing universal school meals at primary level will raise attainment.”

She was backed by Labour’s headquarters which claimed that research had shown that access to free school meals improved educational attainment by two months.

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The National Funding Formula beckons and schools/ academies will feel the winter chill of financial reductions

1 Jan

Justine Greening, the Secretary of State for Education, unveiled to parliament on 14 December 2016 details of the National Funding Formula (NFF) for schools.   Consultations will close on 22 March 2017.

The introduction of the NFF will be a two-stage process.

(a)   From April 2018, the government will redistribute the overall school/academy funding to local authorities and directly to academies and free schools in accordance with the new formula.  However, local authorities will remain in control of allocating the school funding in accordance with their own, unique formulas.

(b)   From April 2019, there will be a National Funding Formula (which the DfE has styled a hard NFF) and local arrangements for the sharing will be eliminated.

Altogether, 10,740 schools/academies (54%) may see an increase but 9,128 (46%) could suffer severe losses.  Small rural schools/academies stand to gain and those in cities with increasing wealth will be hit.   But even schools which stand to benefit will see increases outweighed by extra expenditure over the rest of this parliament, i.e. to 2020.

Ms Greening said that schools/academies could lose up to 3% of their budgets over the next two years.  She told MPs: “The proposals for funding reform will mean that all schools and local areas will now receive a consistent and a fair share of the schools’ budget so that they can have the best possible chance to give every child the opportunity to reach their (sic) full potential.

“Once implemented the formula will mean that wherever a family lives in England, their children will attract a similar level of funding, and one that properly reflects their needs.”

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Implementation of the National Funding Formula postponed

28 Aug

I           Secretary of State’s Announcement

On the 21 July 2016, Ms Justine Greening, the new Secretary of State for Education, submitted a written statement to Parliament explaining that the National Funding Formula (NFF) which was due to take effect in the next financial year would be postponed to 2018/19.

Readers will recall that on 7 March 2016, the Department for Education (DfE) issued the first of its two stage consultation process on the national funding formula on the basis of which it sought views on

  1. the principles that underpin the formula and
  2. the pupil characteristics and school factors it should include in the formula.

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Developing children’s financial nous

28 Aug

The love of money is the root of much evil, but money, per se, makes the world go round.   Maslow would, in all probability, have placed money at the base of his triangle of human motivation – an essential for meeting physiological needs, which includes food, water, warmth and rest.  The best things in life may be free – such as the air we breathe, the songs of birds that we hear and the happiness emanating from the good life.  However, to appreciate these, human beings need food, water and creature comforts, which are not available unless humans have enough money.

It is sad, therefore, that in the United Kingdom, we have accumulated a national debt of £1.5 trillion – a debt that we will be expecting our children, grandchildren and future generations to pay back to the world.  And this debt can increase.

Schools/academies are suspect for not devoting sufficient time to teaching pupils/students how to manage money. Why else would so many, in a straw poll of 2,500 students between the ages of 11 and 16 carried out by The Times Educational Supplement (TES), list financial themes among the 100 things they would like to do before they finish their schooling such as “Learn what to do if you are in debt”, “Learn how to save money” and “Learn about taxes, mortgages and rent”.   In short, they are keen to learn how to survive (if not flourish) in the world of austerity that they will face. Continue reading

Lessons learnt from the demise of Kids Company

25 Aug

Kids Company, the children’s charity, closed on 5 August 2015.  Reactions across the country were mixed because Kids Company was very much an exotic curate’s egg – magically good in parts – but questionable and self-righteous in many of its practices.

The charity’s founder, Ms Camila Batmanghelidjh, established Kids Company in 1996 in Camberwell, South London, providing a range of support for extremely vulnerable children, including runaways, the neglected and those permanently excluded from school.   It had a policy of never turning a child away.

Over the 19 years of its existence, the charismatic Ms Batmanghelidjh raised over £160 million from the good, bad and ugly – individuals, organisations and the government.   In April 2013, it received £9 million from government to cover two years’ work and £30 million over its lifetime.

However, for several years, a number of people expressed serious concerns about the waste of resources, the most recent being Ms Camilla Long, correspondent and feature-writer of The Sunday Times, who in May 2015 visited the Kids Company.  She wrote a semi-satirical piece on her findings on 5 July 2015 stating, in so many words, that she was mystified by what she saw during visits she had made over two days.  Continue reading

Move to establish fairer funding for schools gathers a head of steam

25 Aug

(1)       Historical injustice

It’s been whispered in high places that the government will be issuing another consultation document about creating a fairer funding formula for schools on the basis of which they will be allocating the national budget for education.   The Association of Schools and College Leaders (ASCL) calculated (not so long ago) that the 10 best-funded local authorities received grants of £6,2977 per pupil on average in 2015-16 when compared with an average of £4,208 per pupil in the 10 most poorly funded areas.  Surely, this cannot be fair.

(2)       Attempts to redress the balance

On 13 March 2014, the Education Minister (in the then coalition government) made a statement in parliament acknowledging the unfair funding system the government inherited.  He described the arrangements as “opaque, overly complex and frankly unfair to pupils, parents and teachers”.

Similar schools can have huge funding disparities because they are in different authorities and occasionally disadvantaged pupils end up being funded at levels well below more advantaged pupils in nearby schools in affluent areas.   The minister cited the case of a school in Birmingham which had only 3% of pupils receiving free school meals (FSMs) getting higher funding per pupil than a school in Shropshire with over 30% of pupils eligible for FSMs.

The F40 group – comprising 37 local authorities – has been campaigning long and hard to redress the balance. F40 has made the case for a redistribution of the educational wealth of the nation.  However, successive governments, having acknowledged that the system is inherently unfair, have, notwithstanding, struggled to grasp the nettle of finding a solution. The dilemma with which they have had to grapple is squaring a circle of giving more to the less well-off without damaging the better funded authorities where there is considerable deprivation – while keeping a lid on spending, because of the Chancellor’s determination to reduce the national debt.

Way back in March 2014, the Education Minister tried to alleviate the situation by allocating an extra £350 million in 2015-16 to the worst-funded authorities.  In fact, the government increased this sum to £390 million and set a minimum funding level for the

  • basic amount that all pupils should attract,
  • deprived pupils,
  • pupils with English as an additional language (EAL),
  • pupils with low levels of attainment on entering school, and
  • pupils who have been looked after, i.e. in foster care.

The government also set a minimum level of funding that schools should attract, regardless of size, to assist with fixed costs such as employing a headteacher and additional funding for sparsely populated areas to ensure that rural communities were not unduly disadvantaged.  Higher funding was allocated to areas like Inner-London, where teacher salaries are greater.   No local authority or school received less funding per pupil as a consequence of the arrangements.

Some historical disadvantages were, as a consequence, addressed if not wholly, then partially.   Cambridgeshire, for instance, saw a boost of 7% in its schools’ budget, raising the per pupil funding from £3,950 to £5,225.  The top 15 gainers were Bromley, Cambridgeshire, Brent, Sutton, Northumberland, South Gloucestershire, Shropshire, Merton, Croydon, Bournemouth, Chestershire West and Chester, Leicestershire, Warwickshire and Devon.   Additionally, areas like Norfolk received an extra £16 million, Derbyshire £14 million and Surrey nearly £25 million.

(3)        The future for schools?

Steps to resolve the problem of funding schools equitably are likely to be taken when the Chancellor, Mr George Osbourne, unveils his autumn statement. This is unsurprising because Mr Robin Walker, MP and vice chair of the F40 group, is now the personal private secretary of Ms Nicky Morgan, the Secretary of State for Education.

In March 2015, Mr Walker argued for the “speedy implementation” of a new formula describing as “mind-boggling” the gap in funding levels of schools in different parts of the country.  A source in the Department for Education (DfE) close to ministers expected the formula to be phased in over a three-to-five year period with “floors and ceilings” built in to ease the pain of schools that will lose out.

Another source told The Times Educational Supplement (TES) that Labour areas in London, for example, would lose and Conservatives ones gain.  “That is not the purpose of the formula, but that’s what’s going to happen,” the source added.

Writing in the May/June issue of Governing Matters, the voice of the National Governors’ Association, Councillor Ivan Ould, chair of the F40 and lead member for the Children and Young People’s Service in Leicestershire County Council, presented his group’s master-plan.    He submitted that “the proposals would

(i)            introduce a new national formula from 2016-17, phased in over three years, based on a clear rationale and geared towards improving educational standards in the country;

(ii)           include core entitlement at a pupil level, reflecting different needs and costs at various key stages;

(iii)          use factors to reflect pupil level needs beyond the core entitlement, including deprivation and special educational needs, and reflect the needs of small schools that are necessary in a local authority’s (LA’s) structure;

(iv)         continue to use the Dedicated Schools Grant (DSG) with blocks for mainstream schools, high needs and the Early Years with LAs free to move funding between the blocks.”

We can look forward to exciting times ahead, particularly as it is very unlikely that Mr Osborne will enlarge education’s financial cake.  (The government has safeguarded the funding of education – but only in cash terms – and inflation has begun to rise.)  The DfE consulted on changing the funding formula in 2011 but paused on overhauling it for the good reason: the model “would need refinement and careful implementation”. The real reason was probably because it was too hot a potato to handle.

(4)        Sixth Form Colleges

Meanwhile, while the budgets in schools have been protected since 2010, colleges have had four successive years of funding cuts.  In addition, unlike schools, sixth form colleges are forced to pay VAT. The average VAT annual bill per college stands at £335,000.

Members of the Sixth Form Colleges’ Association (SFCA) are eager to align themselves with those in the schools’ sector.   The SFCA is currently exploring the prospect of converting to academies or morphing into Free Schools.

Ms Pauline Hagen, principal of New College Pontefract in West Yorkshire, is overseeing the opening of a 16-19 Free School in Doncaster in September 2016.  An academy trust has been established to oversee the new provision.  However, because New College Pontefract is incorporated it is unable to join the body the trust is creating.

Ms Hagen described the governance system for colleges “clumsy, unnecessarily bureaucratic and counter to (the government’s) aims and ambitions.  Her college population has expanded in the last four years from 1,600 to 2,000 students.   The organisation which is responsible for the college has become a teaching school.   “We’re leading strategic partners, helping challenged schools and colleges at every phase,” said Ms Hagen. “We are driving this phase-wide improvement, which is exactly what the government’s wanting, yet we can’t actually be part of the sector.”

The comments of Mr Paul Ashdown, of the Sixth Form College, Sollihull, chimed in with those of Ms Hagen.  “I think we are schools,” he told the TES.  “Our teachers tend to have the same qualification background as school-teachers; our provision is also largely what is offered in schools.  I started my career in a school.  Most of my staff (members) have worked in schools as well. I think that is where we actually belong and we’re very different from a big FE college.”

The SFCA considered a mass conversion to academies of its 93 colleges in 2012 but was averse to giving up the incorporated status of the colleges.   It could have saved them £30 million in VAT payments and written off the collective debt of £120 million.   One key benefit – which is denied to academies – of being incorporated is that the colleges are able to recruit students from abroad.  The sixth form colleges are also able to offer Higher Education (HE) courses and take out loans without the permission of the Secretary of State.  So, converting to academies has swings and roundabouts.

A DfE spokesperson confirmed to the TES that sixth form colleges were not allowed to convert to academies but added that the situation was under review.

Meanwhile, these colleges feel a bit hard-done-by financially.  Those working in schools would do well to spare a thought for them.

Minimum wage set to rise in October 2015 and then rise again

25 Aug

The current National Minimum Wage (NMW) for a person who is 21 years and over will rise from £6.50 an hour to £6.70 on 1 October 2015.

The rate for the 18-to-20-year-olds will increase from £5.13 an hour to £5.30 and for the 16-to-17-year-olds from £3.79 to £3.87.

In his July 2015 budget, Chancellor George Osborne announced that the new national minimum wage for working people aged 25 years and over will rise to £7.20 an hour.  There is discussion about a National Living Wage (NLW) with the Low Pay Commission (LPC) set to recommend future uplifts.   The government aims to set the rate at £9.00 an hour by 2020.

Mr Osborne stated that the Office for Business Responsibility (OBR) claimed that the NLW would have only a “fractional” negative effect on jobs, with 60,000 fewer posts available as a result but almost one million will be created.   The OBR estimates that the cost to business will amount to 1% of profits.  To offset that cost, the government is cutting corporation tax from 20% to 19% in 2017 and 18% in 2020.  Smaller firms will benefit from a cut in their national insurance contributions.  Continue reading

Should governors be paid and if so, what and for what?

13 Apr

The responsibilities and workload of school governors have grown unbelievably in the last few years.  No chair of governors worth her/his salt works for fewer than five hours a week.   Most chairs average at least 10 hours weekly.   A survey by the National Governors’ Association (NGA) revealed that 65% worked for 17 hours a week and 23% for over 36 hours.  With the rank and file of the rest, it is not unusual for at least two to three hours a week to be spent on school governance.

Consequently, we need to address four issues.

(i)         Should governors be paid?  If so, do we restrict payment to the chairs of governing bodies or extend it to all the members?

(ii)        If governors are to be paid, for what should they be paid?  Should it be for the work that they do and their expenses or should it be simply for the work they do or expenses?

(iii)       If governors are to be paid, should it be by way of “salaries” or a “stipends”?

(iv)       From where will the finance come, if governors are to be paid? Continue reading

The Pupil Premium – a financial lifeline for schools in deprived areas

3 Jan

The Pupil Premium is an invaluable resource which has lifted the progress and achievements of some of the most deprived in our country.  The government has informed schools what they will receive in the next financial year, i.e. 2015/16, under this heading, when the total allocation will be £2.545 billion.  The breakdown is as follows.

  1. £1,320 per (eligible) pupil of primary-school age (rising from £1,300 this financial year)
  2. £935 per (eligible) pupil of secondary-school age
  3. £1,900 for every pupil who has been looked after for one day or more or has been adopted from care or has left care under a special guardianship order, a residence order or a child arrangement order

For the first time, pupils in nursery schools and classes will also attract this funding if they and their families qualify under at least one of the following criteria.

  1. Income Support
  2. income-based Jobseeker’s Allowance
  1. support under part VI of the Immigration and Asylum Act 1999
  2. the guaranteed element of State Pension Credit
  3. Child Tax Credit(provided they’re not also entitled to Working Tax Credit and have an annual gross income of no more than £16,190)
  1. Where a child has been looked after for one day or more
  2. Where a child has been adopted from care
  3. Where a child has left care under a special guardianship order or residence order
  • A child must be eligible for free early education in order to attract Early Years’ Pupil Premium  (EYPP) funding. Children become eligible at different points in the year depending on when they turn three. Details of the dates when children become eligibleare available.

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How does the managing of school finances differ from business?

9 Dec

It is not unusual for a governor with an industrial background to seek clarification on how the management of school finances differs from a business.

In brief, a school’s income comes from government – and, where the school is not an academy or free school – via the local education authority.   It is fixed, predicated on the wealth of the nation and reliant on the public taxes. In other words, you and I, who benefit from education, also pay for it.

A business, on the other hand, derives its income from providing goods and services that generate profit.   The better the product is the greater will the income be enabling the business to grow.   The worse the product, the less the income resulting in the company shrinking until it goes to the wall.     Initial success creates the inertia to have future successes.  If nothing succeeds like success, nothing fails like failure. Continue reading