A ten-year plan for school and college funding Contents

7Towards a solution - a ten year plan

Long-term strategy

116.Throughout our inquiry we consistently saw a need for the Department to take a more strategic, long term approach to school and college funding. This appeared to be driven in part by wider questions over the future of the school and college system itself. Over the past decade there have been commitments to a ‘self-improving school-led system’ to make schools more autonomous and accountable for their own improvement,237 only to be followed by an increased role for regional schools commissioners, tighter regulation, and increasing pressure to produce good outcomes or face being taken over by a MAT.238 The academisation process has also experienced difficulties; the National Audit Office recently raised questions over the feasibility of continuing to convert large numbers of schools to academies and called on the Department to ensure the school system was “coherent with all of its parts working effectively together”.239

117.When we explored the issue of long-term planning in our inquiry, there were concerns that ‘initiative-itis’ was standing in for long-term vision.240 Indeed, we were not always able to discern overarching strategic objectives or funding prioritisation behind the Department’s policy announcements, which have in recent months included offline activity passports encouraging outdoor pursuits; free learning apps; tackling plastic waste; academisation; reducing teacher workload; life-saving classes in all schools; and improving teacher productivity through better technology use.241

118.Substantial sums have been announced for a range of initiatives – in January 2019 alone, there was £45 million for new social workers; £4.5 million for MFL ‘centres of excellence’; £1.3 million to support music; £130 million for the teacher recruitment and retention strategy; £2.5 million to support international exchanges for disadvantaged pupils; and the launch of a school energy price comparison website.242 April 2019 saw the widely welcomed announcement for £940 million to protect the Teachers’ Pension Scheme, alongside a range of other initiatives including £84 million on the 30th anniversary of the Children Act for projects to support families; £6.5 million on early communication skills projects; and £10 million on the EdTech strategy.243 Whilst these initiatives were doubtless important and beneficial, we were concerned that this busy schedule masked a wider absence of engagement around what the 5–19 education sector could and should look like in future.

119.Taking the NHS’s recent Long Term Plan as an example of matching funding to long-term objectives,244 we examined the merits of a ten-year strategic plan for education funding. One of the primary benefits would be greater long-term consistency and a de-politicisation of education policy–a theme that has featured across a range of our inquiries.245 Terrence James O’Neill, Baron O’Neill of Gatley, said he would “plead for some kind of underlying imposition of long-term consistency [ … ] so that whoever comes in next just doesn’t suddenly discover their own favourite things from a spad [and] trashes everything else that has been around”.246

120.Substantial long-term benefits in savings and efficiencies could also be achieved. To take but one example, Jules White highlighted the £1.3 billion spend on supply figures and £600 million on agency fees that could be reduced by addressing underlying problems in the system.247 A long-term plan would also help overcome silos and support the Department’s case for funding allocations to reflect the balance of inter-dependencies and cross-departmental responsibility areas, for example taking into account the benefits of education keeping people in physical and mental health, or ensuring adequate pastoral provision which reduces the rate of costly exclusions.

121.Most importantly, the concept of a ten-year plan offered a good opportunity to move education funding towards a needs-based model. This would involve conducting a wide-ranging assessment of what the school and college curriculum should look like; what outcomes these institutions should be delivering; what additional responsibilities might arise from changing responsibilities around assessments or qualifications; what support and services schools and colleges should be providing given the wider public services context; and a realistic estimate of how much these all cost.248 Kevin Courtney of the National Education Union (NEU) believed the Department could learn useful lessons from the Gonski review in Australia on transforming the debate around the school system and needs-led funding in this regard.249

122.Aligning funding allocations with real-world delivery costs appeared to be a common sense approach. We were however not able to establish during our inquiry whether the Department had actually carried out such bottom-up assessments. Our evidence suggested that it had not,250 or if it had, it did not appear to be driving policy given the serious mismatch between requirements and current funding availability.251


123.Initial indications suggested that an activity-based funding model would require multi-billion pound funding increases; modelling published by the Association of School and College Leaders found an estimated £5.7 billion shortfall for primary and secondary schools in England for the year 2019–20.252 The Institute for Fiscal Studies said £3.8 billion would be needed to fill the 8% funding gap, based on a 2019–20 schools funding budget of circa £44 billion, though this figure did not attempt to take into account more subjective assessments of what schools required.253 Unions cited a range figures for funding requirements, from £5 billion (UNISON) to £8 billion (NEU), and 6% of GDP (NASUWT).254 Jules White believed schools needed £6 billion extra funding: £2.7 billion to reverse the real-terms cuts; £1.5 to £2 billion to support the high needs block; and £1.3 billion to better fund the implementation of the national funding formula to reduce gaps between the lower- and better-funded areas and address real-term costs.255

124.We noted the complexities involved in coming up with a reliable figure at present, given the lack of clarity around the Department’s long-term priorities, uncertainty around the level of services schools were expected to provide, and unclear or under-explored options for cross-departmental collaboration on policy and funding.256 A range of issues could be taken into account, for example:

Funding model

125.The funding model for a ten-year plan could take several forms, for example continuing with the spending review process; pinning investment to a proportion of GDP (similar to NATO or overseas aid commitments); or agreeing a new multi-year funding settlement similar to the five-year funding settlement which preceded (but was dependent on) the NHS plan.

Spending review process

126.Some submissions argued the spending review process was a sufficient258 or indeed optimal approach, as it allowed for dynamic assessments of the overall fiscal forecasts and planning to ensure that cross-Government spending plans were affordable and joined up.259 Others noted that some departments seemed to manage the spending review process and longer term forecasting reasonably well, so the two should not be seen as mutually exclusive.260

127.Several submissions levelled substantial criticism at the current spending review system, however, arguing that its inherently political nature too often led to short-term considerations and inter-departmental competition taking priority over wider strategic goals.261 Questions were also raised as to why the additional cost pressures did not appear to have been taken into account in the last spending review period.262 A different approach would be needed to encourage collaborative assessments of where funding could be more joined up (for example across education, health, and communities and local government remits), and take a more long-term holistic view.263 As the Sixth Form Colleges Association put it:

all or nothing bids to Treasury every few years, punctuated by small, eye catching announcements in annual budgets, is no way to fund our colleges and schools.264

128.Stephen Tierney similarly believed that without a ten-year plan “you are going to end up with more initiative-itis and quick fixes, and that is the danger, because that creates a lot of fuss and fury and poor spending.”265 Written evidence submitted by School Financial Success agreed, arguing that the spending review cycle

does not match patterns of cost changes, meaning funding is not responsive to any new burdens. New policies are introduced mid-term such as the Apprenticeship Levy, pay awards are decided annually, and notification of changes in employer National Insurance and pension contributions are often too late for schools to plan for them. Some cohorts of pupils are therefore at an unfair disadvantage in terms of the resources available to them [ … ]

This is an expensive and wasteful system, where schools, colleges, [local authorities] and Trusts are pulled first one way then another, with pupils being the likely losers.266

129.The general school and college funding cycle also appeared to be in need of revision. We heard that schools were required to prepare budget forecasts over a three-year period, but the lack of certainty over funding—particularly towards the end of a spending review period—undermined the utility of this exercise.267 Schools and local authorities said there was a delay of around eleven months in receiving funding for additional pupils who arrived during the course of the year–a situation which put further pressure on already strained budgets.268 We received several submissions calling for multi-year funding settlements to aid financial planning;269 schools generally advocated a 3–5 year period, while colleges called for a 5–7 year planning period.270

Percentage of GDP

130.We did not find substantial support for ringfencing a proportion of GDP. One submission argued that allocating a proportion of GDP might be attractive in a strong economy, but a downturn could result in ongoing funding decreases at a time when investing in skills and education would be most needed.271

Funding settlement

131.A more promising approach would be to secure agreement from the Treasury to fund a ten-year plan, following the example of the NHS Long Term Plan.272 This would have the benefit of enabling the Department to develop a properly-costed bottom-up assessment of the school and college education system requirements, and engage in detailed negotiations with the Treasury on securing a commensurate funding settlement.

132.Our evidence suggested this option would offer the best chance of rejuvenating England’s school and college system. Continuing with the business-as-usual model and securing a modest package under the spending review process would be unlikely to address the deep structural problems that would continue to drive spiralling costs and uneven outcomes. Securing a substantial increase within the spending review process that reversed the 8% funding gap would likely go a long way to addressing priority funding areas, such as further education and SEND, but again this would not be enough to tackle underlying drivers, or provide longer-term financial certainty, improved strategic thinking, and better cross-departmental working. A ten-year funding plan, by contrast, would provide a properly financed education system characterised by strategic investments rather than reactive adjustments, and ensure that children and young people received the high quality education and support they deserved.

Government position

133.The Ministers seemed sympathetic to our proposal for a ten-year plan. The Minister for School Standards Nick Gibb was clear that there was “a case for having a longer-term strategic plan in education as they have in health”.273 When asked further about emulating the NHS in terms of securing funding, the Minister said the Department was

very serious about how we present our case to the Treasury. We are working extremely hard in all these areas: early years, schools, post-16, and high needs. We are presenting the best case possible in this spending review, as we did in the last two spending reviews, to make sure that first we are protected, but secondly that they address some of these very serious challenges.274

134.We questioned the Ministers on how this case to the Treasury was being prepared, and what figures they were requesting. The Minister for Apprenticeships and Skills told us that our inquiry did

not necessarily coincide with the moment at which the Department for Education wants to make that sort of information public. I could not tell you. I do not think either Nick or I are qualified to tell you. One has to be careful when you set out spending plans that you also have the right incentives in place. It is not just about the money. It is how you make sure it is spent to the benefit of people who need education.275

135.In response to questions about the level of cross-departmental collaboration in developing a case, the Minister for Apprenticeships and Skills acknowledged the scope for joint working to overcoming existing silos, and believed that “your idea of a five or 10-year plan, which is an entirely valid one, would have to suck in that”.276 When we pressed the Ministers for details on the potential timescales for developing a long-term plan, the Minister for Apprenticeships and Skills told us that within the Department

those sort of discussions are going on [ … ] and I think probably Nick and I would both agree with you that something like a five- or 10-year plan is exactly the sort of thing that I’m sure the Secretary of State will be thinking about.277

136.A ten-year plan for education funding is essential. It would provide schools, colleges and the Department with much needed strategic direction and financial certainty. The short-termism and initiative-itis that characterises the Department’s current approach cannot afford to continue. We are pleased that Ministers recognise the value of our proposal.

137.The Department needs to take political short-termism out of school and college funding by developing an ambitious ten-year plan. We suggest the funding model should involve a multi-billion pound settlement from Treasury, informed by a bottom-up assessment of the cost of delivering a quality education for all children and young people. The Department should confirm in response to this Report its intentions and timeline for doing so.

138.The Department needs to be transparent about how much money is needed for the education system. It must conduct and publish a comprehensive, bottom-up assessment of what services and support schools and colleges are having to provide, the real-world costs of delivering these activities and meeting attainment expectations, and how these costs relate to current school and college funding provision. The outcome of this assessment must inform the funding package for the ten-year plan.

237 See Department for Education, The Importance of Teaching: The Schools White Paper 2010, Cm 7980, November 2010

239 National Audit Office, Converting maintained schools to academies, HC 720, 22 February 2018, p13

240 Q246

244 See NHS England, NHS Long Term Plan

245 Education Committee, Oral evidence: Education in the north, HC 819, 5 June 2019, Qq44–48; Education Committee, Oral evidence: Special educational needs and disabilities (roundtable), HC 968, 20 November 2018, Q151

246 Education Committee, Oral evidence: Education in the north, HC 819, 5 June 2019, Q44

247 Q243

248 Qq153–6

249 Q152

250 Qq71, 152. See also National Audit Office, Financial sustainability of schools, HC 850, 14 December 2016, p29 para 2.7

251 School Financial Success (FUN0057) para 10.3

252 Association of School and College Leaders, The True Cost of Education, March 2019

253 Institute for Fiscal Studies, Extra spending on education in England – the numbers explained, 18 June 2019

254 Qq172, 175–6, 184

255 Q237

256 Qq153–5, 240–2

257 Qq71, 152

258 Hinchley Wood School (Ben Bartlett) (FUN0032) para 4.1

259 Education Policy Institute (FUN0064) para 10.1

260 Association of Colleges (FUN0026) para 9

261 Sixth Form Colleges Association (FUN0041) para 33

262 Essex County Council (FUN0016) para 8

263 Sixth Form Colleges Association (FUN0041) para 33; Martin Matthews (FUN0017) para 5.1–2; NCFE (FUN0019) para 11; School Financial Success (FUN0057) para 10.1

264 Sixth Form Colleges Association (FUN0041) para 33

265 Q246

266 School Financial Success (FUN0057) para 10.2

267 Martin Matthews (FUN0017) para 5.4; Norfolk County Council (FUN0043) para 3; Devon County Council (FUN0051) para 2.2; School Financial Success (FUN0057) paras 3.1–2; National Governance Association (FUN0079) para 2.1; Mrs Sarah Chambers (FUN0088) para 1.2; Cumbria County Council (FUN0089) para 29

268 Essex County Council (FUN0016) para 5; Robert May’s School (FUN0071) para 4.9; Cambridgeshire County Council (FUN0078) para 5.1

269 Burton and South Derbyshire College (FUN0044) para 9; The Local Government Association (FUN0055) para 4.1; School Financial Success (FUN0057) para 12.2; Norfolk Governance Network (FUN0072) para 2a; Association of Colleges (FUN0026) para 8

270 Gateshead College (FUN0027) para 4.1; Derby College (FUN0080) para 2.4

271 Islington Council and Schools Forum (FUN0022) para 14

272 See NHS England, Long Term Plan

273 Q338

274 Q356

275 Q347

276 Q357

277 Q339

Published: 19 July 2019