LOCAL authority funding, and the funding of schools in particular, has been a hot potato for the last decade - too hot to handle for most politicians.

The gross underfunding of education in the mid-1990s had two effects. First, it united those at the sharp end - local authorities, teacher and governors - in the demand for increased overall funding, to ensure schools were adequately resourced, staffed and maintained.

Second, the struggle to balance budgets - now largely delegated to governing bodies - put the spotlight on the wide variations between similar schools in different areas, and to a lesser extent within the same areas. Last year, the country’s worst funded education authorities claimed their schools were receiving up to pound;841 less per pupil than neighbours in better funded areas.

The setting up of a grant

distribution review by the

incoming Labour government held the promise that at least the second of these two problems would be tackled. Ministers also imposed a moratorium on changes to the way

funding is allocated to councils via the labyrinthine standard spending assessment system while they worked out what to do about it.

Unfortunately, the high-powered review committee set up by the Department of the Environment, Transport and the Regions and the Local Government Association excluded two of the key stakeholders: governors and headteachers. But after more than two years’ work and six months of ministerial misgivings, the DETR’s Green Paper on modernising local government finance was published in September.

Only a handful of the paper’s 44 pages are devoted specifically to education. But an analysis of its conclusions indicates that its diagnosis is more complete than its prescriptions. It recognises that the SSA formulae used to distribute grants to councils are “widely criticised as unfair”. And it sets out admirable aims for a “good system”. These include adequate funding for all authorities; reasonable predictability; balance between national priorities and local freedom; fairness, accountability and transparency, and partnership.

In respect of education, three key issues are identified:

Ensuring funding is matched to the separate responsibilities of local authorities and schools;

Ensuring that funds allocated by central government are used for that purpose;

Ensuring “a fair allocation of funding between local authorities to reflect pupil needs”.

Few would dissent from those objectives. The Government is proposing that funding for schools at both national and local level should be identified separately from the resources required by education authorities for clearly defined purposes (special needs, admissions, ransport, under-fives, and the youth service). It is likely that the majority of governors will welcome this separation and that most local authorities will acquiesce, albeit grudgingly, on the basis that it is better than direct, central funding of schools which was contemplated at one stage.

What is clear from the new

proposals is that there remains a need to distribute the total

quantum of education support grant on the basis of a formula that is fair, transparent, stable and predictable. In that sense there will be a national funding formula for schools - although not of the kind demanded by a minority lobby which wants to bypass local authorities

altogether. What remains is the construction of that new formula on a basis that will avoid the complication and inequity of the present system.

Nobody with a knowledge of education has ever suggested that fair funding for all schools means equal funding for all pupils. What is required is an approach that ensures that the additional needs of certain areas are identified with the help of sound, up-to-date data, and that additional resources are allocated accordingly without robbing poor Peter to compensate the even poorer Paul (which currently happens with SSAs).

Fortunately, the Green Paper points us down this road; but the way ahead is still misty for want of sufficient detail. It says school funding should be based on a “simpler and more transparent formula” comprising “a basic entitlement per primary and secondary pupil” with enhancements for “significant deprivation” or for areas “where schools need to pay more to recruit and retain staff”.

But we should also consider whether we need enhancements for rural sparsity, pupil mobility, special needs, and pupils with English as an additional language.

The number of enhancement factors should be the minimum needed to compensate for significant additional demands on staffing and other resources. The amount of these additions must be based on specific additional costs and reliable data; most of these are already available in annual returns.

Hitherto, reform has been resisted in some quarters on the grounds that there would be losers as well as winners. This has meant that those areas which have lost out year after year have continued to be the losers.

Providing there are continued year-on-year real-terms increases in the total education cake, this dilemma can be overcome. The Green Paper acknowledges the need to “ensure that no authorities’ schools lose in real terms” and that those currently disadvantaged are “levelled-up.”

Jack Morrish is a former vice-chairman of the National Governors’ Council and a Somerset governor. He writes here in a personal capacity. Green Paper consultations close today. See http:www.local.detr.gov.ukgreenpapindex.htm