House of Commons - The share of funding received by the East Midlands

The share of funding received by the East Midlands - East Midlands Regional Committee Contents

5 Other funding areas

79. During our inquiry we also received evidence on other areas of funding. We took oral evidence on lottery funding and received written evidence on other areas, including health and education. We examine these below.

Lottery funding

80. The Government Office for the East Midlands (GOEM) sets out the rules for how lottery funding bodies function. The Department for Culture, Media and Sport "issues policy directions setting the strategic distribution framework within which the independent lottery distributing bodies work."[67] Distributors are required to take into account a number of issues when making funding decisions including the need to ensure that all areas have access to lottery funding. GOEM argue that lottery distributors have done much to assist areas where expertise was lacking to submit successful lottery application. They pointed out that lottery funding is awarded in response to 'competitive applications' which means there is no target or guaranteed level of funding to particular geographic or regional area although distributors occasionally apply indicative regional allocations for specific funding programmes to ensure there is a good geographic spread of lottery funding. However this is no guarantee and projects still need to submit good quality applications.[68]

81. In 2008-09, individuals and organisations in the East Midlands received 1,012 grants from lottery distributing bodies with a value of £80 million which was 8.5% of the UK total.[69]

82. The Big Lottery Fund informed us that £23 billion had been raised for Good Causes in the UK with well in excess of 300,000 grants awarded since the National Lottery was created in 1994. By March 2009, the East Midlands had received nearly £1.2 billion. The table below shows the amount of funding by distributor:Table 2

The total awards in the East Midlands from 1994 to March 2009
Big Lottery Fund	£567,576,531
Arts Council England	£117,898,202
Heritage Lottery Fund	£226,987,588
Sports England	£282,481,744
EM Media	£2,072,260
Total	£1,197,016,325

83. The Big Lottery Fund provided us with the following regional comparison in respect of their funding:[70]Table 3: Big Lottery Fund: Expected and actual share of funding June 2004-December 2008

EXPECTED SHARE OF FUNDING ACTUAL SHARE OF FUNDING

% Regional Funding based 100% on regional pop 50% pop/50% dep % Regional Funding based 100% on deprivation Total funding
1 Jun 04-31 Dec 08 (£m)
Regional Share

East 11.0% 7.2% 3.4% 70.6 7.9%

East Midlands 8.6% 7.9% 7.2% 68.0 7.6%

London 14.8% 18.0% 21.2% 137.3 15.4%

North East 5.1% 6.9% 8.6% 62.3 7.0%

North West 13.6% 17.7% 21.7% 149.6 16.8%

South East 16.2% 10.5% 4.8% 96.2 10.8%

South West 10.1% 7.4% 4.7% 105.1 11.8%

West Midlands 10.6% 12.6% 14.6% 104.5 11.7%

Yorkshire & the Humber 10.1% 12.0% 13.9% 98.7 11.1%

England-wide n/a n/a n/a 111.9 n/a

Total 1,004.3

Note:
Population figures based on mid-2005 Office of National Statistics estimates.

84. We questioned regional representatives from lottery distributors on whether the East Midlands had received an appropriate share of lottery funding since the establishment of the lottery in 1994. The lottery distributors agreed that the region this had not been the case in the "early years" particularly in relation to large scale projects. Laura Dyer, Executive Director of the Midlands and South West, Arts Council, said:

From an arts point of view, that was true in the early days. What we have striven to do over the past 10 years is to work really hard. It was actually slightly about raising ambition and aspiration for some of the big projects, particularly for the large capital awards. We were slow off the blocks in terms of starting and getting in those large-scale applications. Obviously, over the past 10 years that has transformed.[71]

85. Anne Rippon, Regional Strategic Lead, Sport England (East Midlands), agreed:

That was certainly one of the concerns that we had in the early days. We were getting quite a lot of small projects through, so the actual numbers, in cash terms, were quite low compared with other regions, but we had lots of projects coming through, so there were lots of projects, but smaller projects. What we have tried to do over the years is work together to look at areas of need and address some of the issues that are behind that.[72]

86. Anne Rippon, Regional Strategic Lead, Sport of England (East Midlands), suggested that the East Midlands suffered because, unlike the West Midlands, it did not have a major conurbation to take forward large projects:

[O]ne of the issues for the East Midlands is having Nottingham, Derby and Leicester rather than having, say, a Birmingham as they have in the West Midlands. We do not have the large city authority to take forward the really big projects.[73]

87. The lottery distributors outlined some of the measures they had taken to try and increase the level of lottery funding allocated to the region in the early years. These included a regional lottery distributors forum which took a collective look at issues affecting lottery funding. Where common issues were identified, they worked together with bodies such as funders forums and local authorities to identify potential projects and issues that may be delaying them. The Arts Council and the Sports Council told us that they had also identified 'cold spots' for funding in the region. The lottery distributors stated that this outreach had continued, for example through working with arts and sports development officers at local and county level.

88. A number of witnesses agreed that the application process for funding was often unnecessarily complex and put off people applying. The Big Lottery Fund told us it had been proactive in working with councils for voluntary services and voluntary action groups to ensure that they were "skilled up to a level to apply successfully." Sean Tizzard, Big Lottery Fund, did however express concern about the complexity of application forms and that work was underway to make them simpler. The Sports Council used county sports partnerships in providing "information about grants and in supporting people who want to make bids for grants to let them know what is around and how our small grants, which are very important for small clubs, work." The Arts Council had similar arts partnerships and had held forums and workshops. The lottery distributors also confirmed that they have mechanisms in place for assessing the impact of funding.

89. Phil Hope MP, Minister for the East Midlands, said

As the Regional Minister, if it seems to me that we're not bidding well enough, the ambition is not high enough or that we're not putting enough bids in, could I do a better job—I haven't been doing a job at all, as it were—of raising awareness and encouraging bigger bids for the lottery? I feel that I could do something—it would be the right and appropriate thing to do.[74]

90. We welcome the £1.2 billion of lottery funding that the East Midlands has received since 1994—this has had an enormous impact on individuals and organisations in the region. We note the slow start experienced by the region obtaining lottery funding and commend the lottery distributors for their proactive efforts to rectify this. However, we are concerned that due to this slow start, the region continues to lag behind other regions in terms of lottery funding.

91. We note the assistance that lottery distributors give to potential applicants for lottery funding. We commend their efforts to increase the number of applicants from the region. To assist with this effort, we urge the Government and lottery distributors to continue to examine ways to simplify the application process without diminishing the requirement for good quality applications.

Health funding

92. The East Midlands has nine Primary Care Trusts (PCTs) which are responsible for commissioning health and healthcare services for their local population. PCTs hold their community's share of the regional NHS budget and serve a range of rural, inner city and urban populations. NHS East Midlands is the strategic regional body for the NHS in the East Midlands.

93. The Department for Health regional revenue funding allocations to the NHS were £6.4 billion in 2009-10 and £6.7 billion in 2010-11 which represents about 8% of the revenue allocations totals for England (of £80 billion in 2009-10 and £84 billion in 2010-11). The revenue allocations are made primarily to PCTs which act as commissioning bodies.

94. Using the pre-2009-10 funding formula, all PCTs in the East Midlands were "under target" i.e. actual funding was less than the assessed funding needs.[75] NHS East Midlands told us that "all nine PCTS in the region remain under target at present with eight PCTS in the worst 20 for distance from target." [76]

95. A new funding formula was introduced from 2009-10 which takes account of several components: population, age, need, market forces and health inequalities. NHS East Midlands state that the new formula "recognises the higher needs of Primary Care Trusts in the East Midlands and, as a consequence, East Midlands PCTs benefit directly from higher levels of growth funding."[77] NHS East Midlands highlighted that the new formula meant that the average growth in allocations for PCTS in the East Midlands is 12.3% over the two years, 2009-10 and 2010-11, compared with England's average of 11.3%. This means that all the region's PCTs, apart from Derby City, are in the top two deciles for growth over these two years.

96. We welcome the increased provision for health services in the East Midlands under the new funding formula. We will continue to monitor the situation to see whether the expected higher levels of funding are achieved. It is important that the data used for calculating funding under the formula is as up to date as possible so as to ensure the funding meets current needs and not those of the past.

Funding for Schools and Children Services

97. The main funding for schools and children services is distributed to local authorities by formula. The formula takes account of account of population (for schools, pupil numbers) and deprivation levels (including educational disadvantage, the costs of services in the area and sparsity).[78] Non-schools children services are funded through the local government system from a combination of formula grant and area based grant. Other initiatives are supported through ring-fenced grants.

98. The main funding for schools for pupils aged 3-16 is through the Dedicated Schools Grant which local authorities must spend in support of their schools budget. Post-16 education is funded separately. Other specific grants are also paid to local authorities and schools. According to the Government Office for the East Midlands (GOEM), the region received £2,777 billion (8.3% of national total) in school grants in 2008-09, increasing to 2,847 billion in 2009-10 (8.2% of national total).[79] The Government Office added that the national average of Dedicated Schools Grant spending per pupil will increase from £4,066 in 2008-09 to £4,398 in 2010-11, an increase of 8.2%. The equivalent figures for the East Midlands are £3,855 rising to £4,184, an increase of 8%. Figures provided by the East Midlands Regional Assembly show that in 2007-08 education spending in England was £1,259 per head and in the UK was £1,280 per head compared with £1,203 per head in the East Midlands (6% less than the UK figure).

99. We recognise that there have been significant increases in funding for education since 1997. Nevertheless, some areas in the region complain about underfunding. Leicestershire County Council were the only local authority from the region to submit evidence on schools funding to our inquiry, presumably because they felt they had received less funding than they were due. The Council told us that it received the lowest level of Dedicated Schools Grant per pupil in England. The Council added that the amount it received per pupil was "5.4% less than the average of neighbouring counties, 6.2% less than the average of shire councils, 11.6% less than the average of England, 7.7% less than Rutland and 13.5% less than the City of Leicester."[80] Leicestershire County Council accepted that "one authority has to be at the bottom of the league" but found it difficult to "understand the level of disparity against apparently similar authorities."

100. In seeking to explain why such disparities exist following the application of the schools funding formula, Stephen Hillier, Regional Director, Government Office for the East Midlands, said:

I want to mention the London effect. When you look at an England average and compare all the regions to that, the England average is always heavily inflated by the uplift for London. If you look at figures for schools in all the regions other than London, they are bunched around £4,100 per capita to £4,300. The London figure is £5,260, which inflates the England average to nearly £4,400. So actually the East Midlands are not doing too badly compared to other regions, but we are all doing badly compared to London, for reasons everybody will understand.[81]

Mr Hillier added:

I would go back to the discussion that we've had so far, which is that that would be based on national formulae. There would be a whole complex range of factors—the way in which deprivation is measured; all of these things are consulted on, on a regular basis. Authorities make their representations. Generally the LGA has been very supportive of the way these different formulae have come out, and the one thing I would say about the school service is that I think it's better at dealing with the population lag than some of the other services, because there are these annual surveys of pupils, which keep that reasonably up to date.[82]

101. Phil Hope, Regional Minister for the East Midlands, added:

Indeed, I've certainly argued in the past, before I became a Member of Parliament, that the funding formula that existed then was desperately unfair, particularly for the county that I was then an elected county councillor for. We've changed a lot of the funding formulae as a Labour Government, and I think we've made the funding formulae fairer than they were. We then can question the pace of roll-out of those funding formulae.[83]

The Minister went on to assert:

Ultimately, what's most important is that since 1997, revenue funding per pupil in this country has gone up by 39%.[84]

102. On 15 March 2010, the Department for Children Schools and Families launched a consultation on the Government's proposals for the distribution of schools funding from April 2011.[85] The consultation document states that around £4.5 billion is distributed to schools through specific grants. The intention is to incorporate as many of these grants as possible into the Dedicated Schools Grant. The department assert that this will "both simplify the process and give further control to schools and local authorities. After the incorporation of other grants proposed in the document, the DSG will total over £35 billion and will form the vast majority of funding for schools." The Secretary of State for Children, Schools and Families has announced that the Government intends to set a Minimum Funding Guarantee.

103. We welcome the increased funding for schools since 1997. We also welcome the Government's review of the schools' funding formula. We urge all local authorities in the East Midlands and other regional stakeholders to participate in the Government's consultation on school funding. We will monitor the effect of the new formula to ensure that the East Midlands is not disadvantaged.

67 These are the four national Arts Councils,; four national Sports Councils, the UK Sports Council, the Heritage Lottery Fund, the Big lottery Fund, Scottish Screen, and the UK Film Council. Back

68 Ev 53-54 Back

69 Ev 54 Back

70 Ev 89 Back

71 ^Q39 Back

72 ^Q40 Back

73 Q 41 Back

74 ^Q129 Back

75 ^Ev50 Back

76 Ev 106 Back

77 ^Ibid Back

78 Ev 50 Back