Levelling the field?

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Supporters of a radical new approach to funding claim that it would balance out social inequalities between schools and reduce social exclusion. Could it become government policy?

A new report argues that the existing system of school funding is too complicated for heads to understand, making the job of decision-making very difficult. It is mired in intricate formula and the amount of cash that actually makes it to individual schools is subject to enormous variation by local authorities. The answer, according to the report authors, Sam Freedman and Simon Horner, is the Pupil Premium.

Some children are harder to teach than others, and they come, disproportionately, from disadvantaged backgrounds. Schools, consequently, have an incentive to try to avoid taking these children because they will adversely affect their performance in examinations without bringing in any extra funding.

Schools in wealthier areas, however, are helped in this by the current admissions system, which in most cases sees places allocated on the basis of distance from the school.

House prices are higher near successful schools, which mean that the children accepted to the school tend to be less challenging to teach – which reinforces the success of the school. It stands to reason that there is absolutely no incentive to widen admissions procedures to take in those from poorer areas further afield.

The result is that those from poorer areas are often segregated into their local schools – some of which are highly successful, often because of inspirational leadership. But where schools do end up taking considerable numbers from disadvantaged backgrounds their performance often suffers and this can be reinforced by the difficulty of hiring good staff, who can receive the same pay working in a much more pleasant environment.

The effects of this segregation are powerful. The Sutton Trust have shown that the top 200 comprehensive schools have an average of just 5.6% of children on “free school meals” (FSM – a common way of identifying the number of poorer children in a school) compared to 14.3% nationally.

Of the 638 schools recently identified by the Government as ‘failing’ because fewer than 30% of their pupils achieve 5 A*-C GCSEs including English and Maths, 85% (542) have above average numbers of pupils on FSM.

Academics from Bristol University have shown that in a typical local authority in England a child from a poor family is half as likely to attend a good secondary school as a non-poor child.

In attempting to address the problem, the government has tried to balance admissions by bussing or lottery. As the furore caused by the recent introduction of an admissions lottery in Brighton has shown this kind of top-down interference from government is both politically and psychologically unhelpful.

The result, according to the report, is that England's school funding system is a "disorganised mess" which can penalise schools in disadvantaged areas.

So what can be done to give parents some control over where their children go to school? The Policy Exchange report suggests an alternative school funding plan that would make spending on education fairer.

The pupil premium

In the 1980’s Julian Le Grand first came up with the idea of ‘the pupil premium’. The idea is simple: parents should choose their schools, public money should allow for that choice, and part of the money should include a premium for children from poor families or areas. This would give the schools both an incentive to take such children and the extra resources to help with their education.

In other words, it’s a way of creating positive discrimination whilst serving social justice.

In theory, the pupil premium would help to balance admissions while still allowing parents to choose the right school for their children. It would see additional money attached, per capita, to children from deprived backgrounds.

According to the report by independent think tank, Policy Exchange: "The pupil premium is particularly relevant to the current education debate because all three main parties are advocating opening up the school system to alternative providers. The Labour party continues to promote the academies scheme which sees failing schools handed over to sponsors. The Conservatives and Liberal Democrats have more radical plans that would see new suppliers opening up schools wherever they saw demand. Under the current funding system new suppliers might focus on wealthier areas, with easier to teach pupils. A pupil premium could help skew the market so that alternative provision is focussed on more disadvantaged areas where it is needed most.”

Both the Conservatives and the Liberal Democrats have said that they will go into the next election pledging to introduce a pupil premium. In both cases the aim is to make sure that their plans to open up the schools market to new suppliers does not lead to greater segregation. The hope is that the pupil premium will encourage these new suppliers to set up schools in more deprived areas.

National Formula

Up to now, ministers have ignored the pupil premium because, they argue, that additional money is already distributed to schools with high numbers of pupils from disadvantaged backgrounds. However, the extra money does not operate as the pupil premium would for three reasons:

  1. First there is no consistency in the way that it is allocated between schools – local authorities can hold back part of the schools budget, anything from over 20% to less than 5%.
  2. Secondly, the funding system does not respond quickly to changes in pupil population, so there is no incentive to recruit pupils from disadvantaged areas (the Designated Schools Grant [DSG] is awarded in three year chunks and the per-pupil amount does not change within those three years).
  3. Finally, the system is so complex that few headteachers understand how their budget is allocated, making it hard to develop long-term plans, and meaning that it can have no impact on their admissions decisions.

Interestingly, of the fifteen headteachers interviewed for the Policy Exchange report, the majority had a very limited understanding of why their school received the money it did. Almost none had any knowledge about how the original DSG was worked out. There seemed to be greater awareness of their local authority formula, but even this was limited and often out-of-date.

As the head of a secondary community school in London admitted: “To be honest with you, we’re more interested in the outcome of the formula than how the formula actually works, so we wouldn’t spend a lot of time looking at how the formula is constructed, but clearly how the formula is constructed makes a big difference to what we get in school”.

For a pupil premium to work, national funding would have to bypass local authorities. As local authorities would be prevented from reallocating money according to their formula it would be clear what schools would lose or gain by changing the mix of pupils over time.

Through pupil premium, schools in wealthier areas would have an incentive to take disadvantaged pupils on as they would be properly resourced for the more difficult job of providing an education for them.

Over time, intakes would become more balanced. At the same time schools which took a lot of children from disadvantaged backgrounds would be richer. They would be able to use the money, for example, to pay top rates to attract the best teachers or reduce class sizes to make discipline problems more manageable.

Furthermore, if the school used the money well, results would improve and middle class families would be more inclined to apply.

The main findings of the report on pupil premium are that:

  • Segregation between well-off and deprived communities remains a huge problem in the English education system. A “pupil premium” would see extra money attached to students from deprived backgrounds.
  • Schools that take large numbers of such students would be better off, giving them some additional resource to educate harder to teach children.
  • If the resources suggested in the report were used successfully to boost attainment, middle-class families would start to be attracted to the school, reducing segregation. Additionally, schools in wealthier areas might be incentivised to broaden their admissions criteria to attract higher value pupils.
  • The report recommends that the current system should be scrapped and replaced with a pupil premium, under which schools get an extra £3,000 for every child from the poorest postcodes. Headteachers would be encouraged to recruit those pupils - traditionally among the toughest to teach - instead of avoiding them and schools would become more socially mixed.
  • Government money for each pupil should be paid directly to schools, bypassing local authorities. Schools would get a £3,000 annual premium for teaching those from the poorest homes, £2,000 for those from the next category and £500 for the third-lowest. In all, 46% of pupils would qualify for extra money.
  • A small proportion of schools would get less money, including the highly selective grammar schools.

The report estimates that the scheme would cost £4.5bn, which it suggests could be met by making cuts elsewhere in education budgets. These include axing the £30-a-week Education Maintenance Allowance, a means-tested
grant which encourages 16- to 19-year-olds to remain in education.

The report School Funding and Social Justice – A Guide to the Pupil Premium by Sam Freedman and Simon Horner
is published by Policy Exchange.

Taken From Managing Schools Today Issue 18.1