Just how fair will Fair Funding be?;Briefing;Governors

12th February 1999 at 00:00
In the first of a two-part series, Jack Morrish asks how the new financial arrangements will work in practice

Governors are having to grapple with a "new" system of school funding, one which purportedly replaces local management with delegated funding within a framework heavily dictated by central government.

In practical terms, the change to Fair Funding - as the new system is called - is more one of form than of substance. There are new titles and new acronyms, but how much new fairness is there?

Governors congratulate the Secretary of State on securing the "extra pound;19 billion for education" (pound;16 billion for England) - even if spread over three years.

Smaller classes, the elimination of outside toilets, repairing school buildings, the National Grid for Learning, initiatives for improving standards and (potentially) a better deal for our teachers whose pay has not kept up with that of other graduates - what good news.

But before throwing our governor hats too high into the air, we need to put this money into its three-year context and see how it is spread and distributed. Significant slices of the English pound;16-billion cake go to further and higher education, and to capital projects. How much goes to local authorities? A significant sum is retained by the Secretary of State for distribution. The year-on-year increases allocated via the Revenue Support GrantStandard Spending Assessment (SSA) (see box) route actually amount to pound;3.6 billion over three years. But in the calculation leading to pound;16 billion, these yearly increases are aggregated cumulatively to present the increase as pound;6.8 billion.

Distribution of the remaining pound;9.2 billion (cumulative) is in the hands of central government. A significant proportion will find its way into specific grants, including the new Standards Fund. On the basis of announcements so far made, the latter could amount to as much as pound;3.4 billion over three years. Local authorities have to find 50 per cent of most of these grants, with consequently less to give to schools.

If the total amount allocated in this fashion over the three-year period exceeds pound;5 billion it will significantly affect how much money authorities allocate to education. Some local councils have, in response to the cash coming directly from Whitehall, refused in recent years to pass on to their education committees the full benefit of the year-on-year education SSA increase.

A recent Government (DETR, see box) analysis of the 199899 expenditure plans for English authorities reveals that 48 authorities out of 150 in England now spend less on education than their Education SSA (ESSA). A few years ago almost all spent more than their ESSA. And early indications for 19992000 suggest that many more are failing to pass on the whole of their ESSA increase.

Central government needs to ensure that the extra money distributed by the Secretary of State, much of it in response to LEA bids, does not widen the gap in the level of funding per pupil between areas and between different schools in the same area. The most striking recent example is the way in which the "not more than 30" class-size target for key stage 1 classes is being delivered.

So far, some LEAs have received nothing; they have used normal resources to restrain too-large classes. Others have received large sums for not in fact doing so; it varies from pound;50 extra per pupil in one north-east authority to more than pound;500 per pupil in an inner-London authority. There is a real danger that such a "prodigal son" method of distributing resources will run counter to Fair Funding.

By the middle of January, all but pound;1 billion of the pound;19 billion had already been allocated or earmarked. That leaves very little to implement the Green Paper on a new deal for teachers. Even 50 per cent of teachers passing through the "competence threshold" hoop in the next three years to gain an extra pound;2,000 per annum, will cost pound;800 million. Team bonuses for particularly successful schools will bring the cost to pound;1 billion.

That sort of money can't come from the normal school budget, even with the projected average increase of "six per cent annually for the next three years". Normal payprice inflation, initiatives to improve standards and partially to repair the damage of earlier cuts, will use up those increases. There will be nothing of the Secretary of State's remaining pound;1 billion in his kitty for fresh initiatives.

All the more necessary, then, to ensure greater parity of funding between schools. How to do it?

* Standard Spending Assessment (SSA): The amount which the Government considers that local authorities should spend in any year.

* Revenue Support Grant (RSG): For each authority in each year, the centrally allocated RSG, together with a proportion of the nationally collected non-domestic rate (NNDR) and the locally collected council tax make up the whole SSA. The council tax usually forms about 20 per cent of the council's net spend.

* The Department of the Environment, Transport and the Regions (DETR) calculates the SSAs, RSGs and collates local authority returns of expenditure.

Jack Morrish is a governor at a Somerset middle school and a past executive member of the NGC. The views expressed here are his own.

Part 2 next week

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