Progress | Centre-left Labour politics

The devil is in the detail with pupil premiums

Of all the parties’ school funding proposals, only Labour’s is genuinely progressive and workable

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When the school funding system crops up in policy debates, most people’s eyes glaze over. And with some good reason: it is one of the most complex, unwieldy areas of education policy. Add the fact that reforming the funding system invariably creates winners and losers, and it isn’t difficult to understand why it has been conspicuously absent from the education reform agenda since 1997.

Yet both the Liberal Democrats and Conservatives have seized upon it as an area for reform. Both parties have put forward proposals for a ‘pupil premium’ in education funding: an extra per-pupil premium for pupils from deprived backgrounds, paid to schools. The idea is that a transparent funding formula will better channel resources to schools with the greatest need, and encourage schools to diversify the social mix of their intakes. The principle is sound, but the devil lies in the detail with both policies.

To understand the rationale behind a pupil premium, it is worth going over some well-rehearsed – but deplorable – statistics. It remains the case that a child’s social background matters profoundly for how they do later in life. Only one in five young people from the poorest fifth of families got five A*-C GCSE grades, including English and maths, compared to over three-quarters of young people from the richest fifth.

Of course this isn’t just about what happens at school. Demos analysis has highlighted that just over one in 10 children are starting school without the behavioural skills they need to benefit from classroom learning – and that these children come disproportionately from very poor backgrounds. Many of these children also start school without basic communication skills.

It seems common sense that schools with a higher intake of needier children will need more resources to cater for them. Extra services that have a proven impact include those like in-school counselling services, and specialist tuition for children falling behind. These kinds of interventions are relatively expensive upfront. But it has been shown that they make good financial sense in the long run: not only does Reading Recovery, an intensive one-to-one reading tuition programme, bring 80 per cent of poor readers up to average, but every pound spent on the programme saves the Treasury between £11 and £17 over a child’s lifetime.

But schools often don’t have access to the discretionary budgets they need. One recent survey suggests schools currently spend about £1,750 extra per pupil with additional learning needs, but that there is an unmet need of around £1,800 for each of these pupils.

Of course, the Labour government has channelled extra funding into trying to improve outcomes for these children. The problem with much of this funding, however, is that it is time-limited and tied to specific programmes. But when the time-limited cash runs out, schools are expected to pick up the costs themselves – and too often this doesn’t happen. This isn’t a sustainable way of funding extra support.

Instead, schools that really need the extra resource should get it through discretionary budgets to spend as they wish – while at the same time being held accountable for the results they achieve for some of our most disadvantaged children.

The problem is that this is something the current system is not very good at doing. Deprivation funding has increased more quickly than other types of funding in the last few years. As a result, there is the equivalent of an extra £2,460 per primary pupil and £3,370 per secondary pupil from deprived backgrounds washing around the system. However, not all of that is getting to the schools serving pupils from deprived backgrounds. Analysis from the Institute for Fiscal Studies shows that local authorities only allocate about 40-50% per of deprivation funding to schools actually educating those pupils.

Second, schools get this extra money in the context of an accountability system that rewards most a focus on children who sit just below thresholds like getting five A*-C grades at GCSE, rather than those at the bottom of the attainment spectrum. There is also no way of holding schools to account for how they spend their deprivation funding, and there is anecdotal evidence that this funding isn’t always spent trying to improve outcomes for the pupils for whom it is meant.

Moreover, the funding system is very sticky and insensitive to changes in a school’s intake year on year. Schools experiencing changes in their intakes between 2005-06 and 2007-08 got no increase in funding on average as a result of taking more children from poor backgrounds.

Cue the arguments for a pupil premium. Channelling extra deprivation funding to schools using a transparent pupil premium funding formula gets rid of the financial disincentives for schools to increase the diversity of their intake, and ensures money reaches the schools that need it the most.

But there are fundamental issues with the proposals on the table. For the Conservatives, their pupil premium proposals are linked to their proposals for a free market education system: a world in which there are more places than pupils, funding tracks the pupils and poor schools are forced to close as parents transfer their children – and the funding that tracks them – elsewhere. But there is no evidence that this kind of education system will work in improving standards.

Although the Conservatives have not set out the detail of their premium policy, a Policy Exchange report authored by Cameron’s current education adviser suggests one way of funding it would be to scrap local authority education grants, including those used for early years education, services for children with special educational needs and alternative provision for excluded children: some of the most vulnerable children. It’s difficult to see how taking with one hand and giving back with another will improve matters for anyone.

The Liberal Democrat premium is more intuitively attractive: it calls for an extra cash injection on top of the current funding framework, initially £2.5 billion. But such a big injection in this economic climate is unlikely to happen. And there are no provisions for supporting schools in spending the money to the maximum possible effect. Indeed, one way the party suggests extra resources could be used by schools is in cutting class sizes – an expensive policy that evidence suggests has very little impact on outcomes for children aged over seven.

A genuinely progressive pupil premium policy would make it completely transparent how much funding a school receives is deprivation-based. It would be sensitive to the changing nature of a school’s intake year on year. Ed Balls recently announced that Labour was in favour of more deprivation funding going direct to schools, a welcome development.

Most importantly, there would be safeguards to ensure it actually works for our most disadvantaged children. Targets should be based on average performance, so that every child’s progress counts, and schools should be accountable for how they use their premium funding to governing bodies and Ofsted. Heads should also get more information about how to maximise the impact of extra resources – for example, through a kitemarking programme run by a NICE-style education body.

Labour’s education record is one of which it should be proud: historic levels of investment have been accompanied by improved standards for most children. However, children in the bottom 10-20 per cent of the attainment spectrum – disproportionately those from poor backgrounds – have not enjoyed similar gains. Education policy in the next decade needs to focus on giving schools that serve these children the extra resource they need. 

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Sonia Sodha

is a former adviser to Ed Miliband and writes for Progress in a personal capacity

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