Letter from Rt Hon Michael Gove MP, Secretary
of State for Education
DEPARTMENT FOR EDUCATION ALLOCATIONS
1. I am delighted to write with detail about
the government's plans for the pupil premium and for funding allocations
for schools revenue and capital for 2011-12, and for the Early
Intervention Grant in 2011-12 and 2012-13.
THE PUPIL
PREMIUM
2. Gaps between deprived pupils and their non
deprived peers persist through all stages of education, including
entry into Higher Education. The highest early achievers from
deprived backgrounds are overtaken by lower achieving children
from advantaged backgrounds by age seven. The gap widens further
during secondary education and persists into Higher Education.
3. This is why we are implementing a pupil premium,
which will target additional funding to those pupils that need
it the most in order to support schools in the work they do to
raise their attainment.
4. Today I am delighted to be announcing the
level of the pupil premium and the methodology that will be used
to distribute it. The funding for the pupil premium is in addition
to the underlying schools budget which will be at the same cash
per pupil level for 2011-12 as this year.
5. In 2011-12 the level of the pupil premium
will be £430 per eligible pupil. We have decided to allocate
the premium to those pupils currently eligible for Free School
Meals. The school census in January 2011 will be used to determine
the number of pupils receiving the premium in 2011-12.
6. The additional barriers that looked after
children face means that we are also allocating the pupil premium
to these pupils. In 2011-12 it will be £430. I can also confirm
that deprived pupils in non-mainstream settings (including children
in special schools, non-maintained special schools, independent
schools, not in school, hospital schools and pupil referral units)
will receive the premium.
7. For both looked after children and deprived
pupils in non-mainstream settings we will pay this funding to
the authority that has the responsibility of care for the child
and will give local authorities additional freedoms to distribute
the funding in the way they see best for the provision of support
for these pupils.
8. As announced last week by the Prime Minister,
we are also introducing a premium for Service children. Service
children—many of whose parents are risking their lives for
their country—face unique challenges and stresses. The premium
will provide extra funding to schools with Service children to
support the schools in meeting these needs. We expect the focus
of expenditure from the premium to be on pastoral support. Today
I am pleased to announce that the level of this premium will be
£200 in the first year.
9. We aim to extend the reach of the pupil premium
after 2011-12 to those who have been eligible for free school
meals before. The Coalition's objective
is to reform the underlying funding system to ensure that over
time deprived children in every part of the country receive the
same level of support. We will consult on how best to meet this
objective.
10. We trust schools to use the premium for the
purposes intended and believe they know best how to raise the
attainment of their pupils. We will support schools by making
available the evidence we have about interventions which are effective
in supporting the achievement of disadvantaged children.
11. However, we also want schools to be transparent
in the way that they use this additional funding and will ask
that they inform parents how they have spent the premium to benefit
deprived pupils. In addition we will include new measures in performance
tables that will capture the achievement of those pupils covered
by the pupil premium.
SCHOOL FUNDING
12. The spending review announcement in October
confirmed that school funding will be maintained at flat cash
per pupil until 2014-15, with the pupil premium as additional
funding. Today I have announced 2011-12 Guaranteed Units of Funding
(GUFs) for each local authority.
13. I can confirm that we will be maintaining
the current distribution method for funding local authorities.
As signalled in the consultation, we will be mainstreaming relevant
grants into the Dedicated Schools Grant (DSG) on the same per
pupil distribution as in this year. 2011-12 GUFs are therefore
the sum of 2010-11 GUFs and the per pupil grant allocations. This
means that at local authority level, allocations for school funding
are flat cash per pupil for 2011-12.
14. Local authorities will now be able to work
with their schools forums to produce 2011-12 budgets for their
maintained schools. This will include resources from grants mainstreamed
into DSG and we are allowing local authorities to use previous
levels of grant as a factor in their local formulae. This is to
prevent turbulence for those schools who have previously received
funding through grants that we are mainstreaming. Although the
overall schools budget before the addition of the pupil premium
will stay at the same level per pupil, the actual level of budget
for each individual school will vary. It will depend on local
decisions about how best to meet needs. This does mean that some
individual schools may see cash cuts in their budgets—either
because they have fewer pupils or because changes are made within
local authorities to the distribution of funding. I have, therefore,
decided to apply a national protection arrangement for schools—the
minimum funding guarantee—and have set it so that no school
will see a reduction compared with its 2010-11 budget (excluding
sixth form funding) of more than 1.5% per pupil before
the pupil premium is applied. The guarantee applies to a school's
overall 2010-11 budget including grants that have been mainstreamed
into DSG.
15. However, I hope that in many areas local
authorities will be able to offer their schools a greater level
of protection, and will therefore, in consultation with Schools
Forums, be able to choose to set a higher guarantee. The pupil
premium will be in addition to this underlying budget.
FUNDING ACADEMIES
FOR LOCAL
AUTHORITY CENTRAL
SERVICES EQUIVALENT
GRANT (LACSEG)
16. I know many Members raised concerns during
the passage of the Academies Bill about how LACSEG for Academies
was calculated. It has become clear to me that LACSEG is extremely
complex and in serious need of reform. We announced through the
recent White Paper that we want to move to a much more simple
and transparent set of funding arrangements for schools and we
will be consulting on that early in the New Year. My intention
is to bring forward proposals for the future of LACSEG as part
of that consultation.
17. I have considered carefully what that means
for LACSEG for the coming year. Given our intention to move to
better arrangements from 2012, I have decided to keep changes
to the minimum necessary. LACSEG budgets will therefore be calculated
on the basis of LA 2010-11 formulae adjusted as follows:
(a) For early Academies, budget lines were calculated
on a gross basis including any income the LA might have earned
and spent. We recognised that this could, on some lines, lead
to higher amounts than justified so moved to net funding for later
Academies. We now intend to bring all Academies in line and move
to a net calculation for all academies for these lines.
(b) Government funding to LA budgets is being
reduced this coming year to reflect the overall fiscal position.
As LACSEG is partly based on LA budgets, we think it only right
that Academies are asked to find equivalent savings on the relevant
budget lines and we will therefore be reducing them as well.
(c) As you are aware, a number of central LA
school improvement grants are ending this year. We therefore propose
to exclude those from the calculation of Academy budgets.
18. I recognise that LACSEG budgets can fluctuate
from year to year and that the above changes will lead to higher
budget reductions for some Academies compared to others depending
on circumstances. To reduce the impact of these changes we propose
setting a cap. This will limit the reduction in grant received
between the old and new formulae.
19. In looking at LACSEG, I also considered the
representations that have been made to us about Special Educational
Needs (SEN) funding. I recognise there are some finely balanced
arguments over which elements of the funding should go to Academies
and which should stay with local authorities. We are shortly going
to publish a Green Paper on SEN and I intend to rehearse those
arguments and possible ways forward in the Green Paper. In the
meantime, I have decided not to make any changes for 2011-12 which
risk pre-empting a long-term solution.
20. The YPLA is now working on calculating what
the above means for individual Academy budgets and will be writing
to individual schools soon to set out indicative budgets when
that is complete.
21. We have also agreed with the Department for
Communities and Local Government to address the issue of double
funding that currently exists in relation to LACSEG. To date,
we have not adjusted local authority funding outside of the DSG
to reflect their changing responsibilities when schools become
Academies, which has meant both local authorities and Academies
(through LACSEG) have received funding for the same responsibilities.
Clearly this situation represents poor value for money and is
not sustainable in the current fiscal climate. To address this
DCLG will make a transfer of funding over the next two years to
meet the estimated cost of LACSEG for new Academies and Free Schools
over the period. Because it is not possible to say precisely which
schools in which local authorities will convert to Academy status
and where all new Academies and Free Schools will be, it is not
practical to target the reductions at individual local authorities
and therefore a national top slice has been applied. This means
that all local authorities will have certainty over the funding
they will receive over the period and will not see unpredictable
changes because of variable patterns in the growth of the Academy
sector.
CHANGES TO
THE DEPARTMENT'S
AREA BASED
AND SPECIFIC
GRANTS
22. Our decision to prioritise and protect frontline
spending on schools and to target local authority spending on
vulnerable and deprived children, young people and families has
meant that we have had to make some hard choices. As part of the
local government announcement we have announced that we are ending
a number of education related area based and specific grants.
The ending of these grants does not mean that we do not see a
future role for local authorities in relation to schools. The
White Paper—"The Importance of Teaching"—which
I recently published makes clear that local authorities continue
to have an important strategic role to play. Local authorities
though will need to prioritise services and look at opportunities
for delivering services more cost effectively including through
working in conjunction with other local authorities.
23. In other areas, although the current grants
are ending, we do expect to continue to provide funding. The White
Paper made clear that we are committed to improving music education.
Darren Henley is currently conducting a review of music and we
will make announcements about future music funding in the light
of recommendations which arise from the review.
24. We want all families to be able to choose
the right school for their child. We are therefore reviewing home
to school transport so that we can better meet the needs of not
only disadvantaged families, but all families, ensuring transport
is properly targeted to those that need it most. In relation to
the grant which supports extended rights for free home to school
travel, we will be announcing transition funding in the New Year
to enable local authorities to continue to deliver their duty
in this area for the rest of this academic year, pending the outcome
of the review.
CAPITAL
25. I can also set out today details of schools
capital funding for the spending review period. This includes
details for 2011-12 of devolved formula capital (DFC) for schools,
and of basic need and capital maintenance allocations to local
authorities, and capital maintenance to the Locally Co-ordinated
VA Programme (LCVAP) which I have decided to retain for 2011-12.
26. The capital settlement for my department
was extremely tight, with a 60% reduction in 2014-15 compared
to the historic 2010-11. I know that there are schools in need
of refurbishment which have missed out from previous Government
capital programmes, and who feel they have therefore been treated
unfairly. I will continue to invest in the school estate. Indeed
we are investing £15.8 billion of capital over the Spending
Review period, and the average annual capital budget will be higher
than the average annual capital budget in the previous Government's
first two terms. However, over the next few years our priority
is to reduce this country's budget deficit. This is essential,
as the amount we are currently spending on debt interest payments
could be used to rebuild or refurbish ten schools every day. However,
I realise that in the short term it will be difficult for schools
to adjust to reduced capital funding.
27. There are two particular pressures we face
which have informed how I have allocated this funding. First,
I have inherited substantial forward commitments for the Building
Schools for the Future, Academy and myplace projects which I did
not stop in July. Energetic efforts are being made by local authorities,
contractors and others to reduce the cost of these projects, but
I expect the cost of these commitments to remain significant over
the spending review period. If the Building Schools for the Future
programme had not been stopped there would have been no additional
funding for schools outside that programme or for urgently needed
primary school places.
28. Second, there are significant pressures for
additional school places, particularly at primary age, in many
areas of the country because of rising birth rates and changed
migration patterns. In 2011-12, £800 million will be available
to local authorities to address the need to provide additional
school places. I have doubled the amount to be spent on what is
called basic need from the levels spent by the previous Government.
I recognise that this issue needs to be addressed and I am supporting
local areas to do so
29. This will enable Local Authorities to plan
for sufficient school places in their areas. Where growth in numbers
is planned, my expectation is that Local Authorities will consider
all sectors in prioritising this funding. This includes schools
in the voluntary aided sector, open academies, and proposals for
new free schools where they can address basic need pressures.
30. I am also allocating over £1 billion
capital maintenance funding to local authorities and to the LCVAP,
with a further £185 million to schools as devolved formula
capital. The £2 billion of funding which I am allocating
today is the full allocation for local authorities and maintained
schools for 2011-12.
31. I have only set out details of local authority
and school allocations for 2011-12. I know that authorities would
welcome capital certainty for the following years, to enable them
to plan with confidence for larger projects. Details of capital
from 2012-13 will depend on the outcome of the capital review,
where I aim to publish the final report in the New Year. However,
I can say that the level of support for basic need and for capital
maintenance for each year to 2014-15 is expected to stay in line
with the total amounts allocated for 2011-12. The mechanisms for
allocation and management will however depend on the capital review.
THE EARLY
INTERVENTION GRANT
(EIG)
32. Finally, I can also set out today indicative
allocations of a new Early Intervention Grant for Local Authorities
in England, nationally worth £2,212 million in 2011-12 and
£2,297 million in 2012-13.
33. The Coalition Government is keen to emphasise
the immense potential in combining a reduction in central prescription
with a stronger focus on what works for different localities to
produce better results. Investing in early intervention—acting
more strategically and targeting investment early, ensuring the
maximum resources go to frontline services—is essential
if we are to have the greatest impact and secure better results
for children, young people and families.
34. A number of existing centrally-directed grants
to support services for children, young people and families are
ending. They are listed in a note on my Department's website.
In a tight funding settlement, some reduction in central government
support was inevitable. In 2011-12, the amount to be allocated
through EIG is 10.9% lower than the aggregated 2010-11 funding
through the predecessor grants. In their place however, the new
EIG will provide a substantial new funding stream, with new flexibility,
for early intervention and preventative services. It is not ring-fenced,
bringing significantly greater freedom at local level, to respond
to local needs and drive reform, while supporting a focus on early
intervention in the early years and up through the age range.
35. I am clear that it is for local authorities
to determine the most effective use of this money. The Government
has however made clear certain key areas of early intervention
where we are ensuring that the overall grant provides support:
(a) Free early education for disadvantaged
two-year olds: evidence shows that early education is particularly
beneficial for the most disadvantaged, for whom gaps in attainment
start to appear as early as 22 months. We want to make sure that
the poorest two year olds are given the best start, and subject
to Parliamentary approval have committed to extending free early
education with an entitlement for disadvantaged two year olds
from 2013, funded by an additional £300 million a year by
2014-15. £64 million and £223 million will be available
through the EIG over the next two years so that authorities can
build capacity and quality. Local authorities must still have
regard to their statutory duties under the Childcare Act 2006
to provide information, training and advice to all providers of
early education. Quality matters and a highly skilled workforce
is critical if we are to have a positive impact on social mobility.
(b) Short breaks for disabled children.
Providing respite to the most vulnerable families improves their
outcomes and reduces the cost of care. That is why we have included
within the EIG £198 million/£202 million, at the same
time as investing directly in the voluntary and community organisations
that support this work.
36. We have ensured there is enough money in
the EIG to maintain the existing network of Sure Start Children's
Centres, accessible to all but identifying and supporting families
in greatest need. Local authorities continue to have duties under
the Childcare Act 2006 to consult before opening, closing or significantly
changing children's centres and to secure sufficient provision
to meet local need. Together for Children will be ready to assist
LAs in making plans to keep centres open. Important new investment
through Department of Health budgets to provide 4,200 extra health
visitors, working alongside outreach and family support workers,
will enable stronger links with local health services.
37. We want to see much greater involvement of
organisations with a track record of helping families, and want
to give voluntary and community groups the right to offer a better
alternative to public service delivery if they can do things better
or more cost effectively. The Department for Communities and Local
Government will shortly be introducing legislation to give communities
this right, which we want to apply to children's centre services.
Voluntary sector organisations are already working with local
authorities in a number of areas to consider how they can help
reduce costs whilst still delivering high quality services. We
will be publishing an early years policy statement in the spring,
taking a new approach to co-production with local authorities
and other early years partners to give them leadership in designing
how the system could work at local level.
38. The Early Intervention Grant is of course
not limited to these areas. It underpins creative approaches to
local priorities across all services for children, young people
and families. Most of the Department's funding for services for
young people will now flow through the EIG. As we maintain the
commitment to raise the participation age to 18 by 2015, the grant
will help local authorities to support vulnerable young people
to engage in education and training, intervening early with those
who are at risk of disengagement. It will support transitional
arrangements so that young people have access to impartial careers
guidance in advance of the all-age careers service being fully
operational. It will also provide funds to help to prevent young
people from taking part in risky behaviours, like crime or teenage
pregnancy, and to support those young people who have a learning
difficulty, disability or mental health problem.
39. The new grant also provides an opportunity
to look more widely than individual children and young people
and to seek greater coherence of local services, for example in
supporting families facing the poorest outcomes who pose the greatest
cost to local services. Local authorities will want to consider
using EIG funds to support local action in support of the national
campaign to improve outcomes for families with multiple and complex
problems and reduce costs to welfare and public services. This
will be underpinned by local Community Budgets and more flexible
ways of funding services for vulnerable families and children.
40. We will promote transparency by working with
the sector to measure the key outcomes and incentivise reform
and effectiveness through payment by results, working with a number
of authorities to develop a fair and effective methodology.
41. We have sought to be transparent in the method
of allocation for EIG, and we are publishing a technical note
on the methodology. Our aim has been to allocate in a way that
is objective, transparent and which has a good fit with the principles
of the grant. It is also desirable to ensure the transition is
manageable, by damping early changes so that no authority gains
or loses unduly. For the longer term, the Department will work
with stakeholders, including local authorities, to consider possible
improvements to the distribution approach, and if appropriate
agree a new methodology.
42. The Department's settlement was challenging,
however I am clear that the decisions I have taken and the announcements
that have set out above demonstrate the Coalition Government's
commitment to fairness, to ensuring that the most disadvantaged
in society have the best possible start in life, and that all
children have the highest quality education.
43. I look forward to discussing the settlement
in due course when I appear before your committee tomorrow.
December 2010
| 
