70% of secondaries face cuts to fund the pupil premium: but will it work?

The Institute for Fiscal Studies report on Trends in education and schools spending (pdf) cuts through the coalition's dissembling about what is being spent in education. Its findings - that most schools will experience real terms spending cuts from 2011-12 - will come as no surprise to headteachers and governors, but gives the lie to the idea that education expenditure has been 'protected' under the coalition.

Of course, after real terms growth of 5.1% a year from 1999-2009, it would be unsurprising were education spending to be frozen at a time of economic austerity. But the IFS says that it will be cut by 3.5% per year between 2011-2014, the largest cut in education spending since the 1950s. Indeed education as a share of national income will fall to 4.6% by 2014-15, its level in 1999. Of course, the coalition has been careful (most of the time) to distinguish between education and schools spending. And the IFS concedes that schools spending will only fall by 1.2% in total whereas government spending on higher education will fall by 40% as fees replace HEFCE funding, and spending on early years and youth services will fall by 20%, even though early years education has the greatest impact on a child's development. The decision to scrap EMA and reduce sixth form spending to that of colleges means that 16-19 funding - particularly in schools - will fall by 20% in real terms. Education is clearly no longer regarded as an investment in the future, and its contribution to economic growth is being actively discounted.

But it is worth reflecting further on the impact on schools spending, because it is here that that coalition has been unequivocal in its commitment to maintain expenditure. There is a cash freeze on per pupil spending, which, with inflation at 5%, equates to a cut of 5% in real terms, although this is somewhat mitigated by a freeze in teachers' pay. But the commitment to 'maintain' schools spending is only achieved through the pupil premium, which is being funded by the raid on early years (including Sure Start), 16-19 and youth services. It is clearly not being funded from outside the education budget, as the coalition claimed would happen. The pupil premium is universally regards as a good thing but the IFS drily reflects that "this will add somewhat to the already considerable additional money provided for the poorest pupils by the current school funding system." Having dropped plans for a proper National Funding Formula, the pupil premium could simply add an extra layer of funding for the very poorest schools, but will leave significant regional and local funding disparities untouched.

So, the one area of growth is the pupil premium. And it is here that the coalition is on shakiest ground. Although the premium is presented as a great Liberal Democrat advance, it was actually in the Conservative manifesto too, but what both parties lacked was a clear idea of how the premium would advance the goal of improved attainment for the poorest pupils. Some changes have been made to admissions rules to allow schools to recruit more pupils entitled to free school meals, and to show in the league tables how effective they are at narrowing attainment disparaties. But the premium suffers from a potentially fatal flaw: there are no plans to reward success or penalise failure. In other words, there is no real incentive or leverage behind it.

This makes the IFS analysis all the more important in this aspect of coalition policy. They point out that extra funding in the current system attached to deprived pupils amounts to £2000 in primary schools and £3000 in secondary schools, funding almost double that attached to non-deprived pupils, on average. Without leverage or incentives linked to the premium, it is unclear how a premium currently worth £488 per pupil, rising to £1600 by 2014-15 will provide the right incentives. The absence of a national funding formula means that it will be some time before the existing deprivation funding is consolidated within the pupil premium, thereby allowing a more substantial identified sum for each child. Even then, the first year of the premium, where take-up was less than expected, has shown the flaws in using the FSM measure, which has a considerable stigma attached to it in some communities. If the pupil premium is to achieve what is intended for it, ministers should allow it partially to reflect success in narrowing attainment gaps, and they should look at an alternative measure for its distribution.

But what it will mean, according to the IFS analysis, is that around three-quarters of primary schools and 90% of secondary schools will see real terms cuts over the next four years, though with lower salary inflation, the figure falls to 55% of primaries and 70% of secondaries assuming the same inputs. Only those with substantial numbers of poorer pupils - especially primary schools - will see any increase. In other words, the pupil premium is partly funded by cuts in the majority of schools. This could certainly be presented as redistributive. But inputs are not enough: if the premium is to succeed, it must clearly show substantial improvements among the pupils to whom it is attached. After all, there are a lot of losers helping to fund those inputs. And the least they can ask for is that their sacrifice produces results.

Hidden by the hacking: end-of-term education manoeuvres

With the eyes of the world turned elsewhere, the education department has been performing a few subtle U-turns that could save it further embarrassment later on.

First, they effectively ditched the whole idea of a National Funding Formula yesterday, as they bowed to the local government lobby and launched a consultation to continue using local factors, effectively a simplification of the existing formula. While many headteachers favour a formula that reduces the extraordinary anomalies that exist between schools in similar circumstances, but across council boundaries, it was always going to be a tall order to introduce the change at a time of funding cuts. There would, of course, have been many howls of outrage if the cuts had been even more severe. But now, even academies and free schools will have their funding tied to local formulas, albeit with the more generous funding that comes from not taking local authority services. Sensibly, they propose to strengthen school forums, but this will need to be more than cosmetic and to avoid gaming, it should have to gain support from a majority of secondary and a majority of primary schools for anything beyond the basic formula. The shift was obscured by a more contentious statement on Building Schools for the Future, where Michael Gove said he would do what he intended all along.

Second, while ministers have clung to the English Baccalaureate in its current form in the league tables, they have announced that the existing vocational equivalences for GCSEs will continue for two years. Had they dropped them quickly, there would have been huge problems for schools adjusting, akin to the outrage caused when the EBacc was introduced retrospectively. However, they have missed a chance to add a Technical Baccalaureate to the mix, something that Kenneth Baker and Andrew Adonis have joined many heads in arguing for. The two year vocational hiatus should allow time to think again on this: but students starting their GCSE options in September need to know what their qualifications will be worth, as do their schools.

Schools face big cuts not budget protection

Until I saw yesterday's schools settlement, I knew school budgets would be cut next year, but expected them to be mitigated by a Minimum Funding Guarantee, probably set at zero per cent. Having seen what is actually proposed - a flat Dedicated Schools Grant at local authority level and an MFG of -1.5% at a time when schools are likely to need at least 2% to stand still even with a pay freeze (to cover inflation, increments, 2010-11 pay rises and national insurance) - it is clear that schools that are not cushioned by a significant pupil premium will face cuts of around 4% in their 2010-11 budgets. There will be additional cuts in school sixth form funding that are not protected by the MFG.

This is not the real terms protection that the Chancellor promised in his spending review. Far from it. What it will mean in reality is that a typical secondary school with a £5-6 million budget and limited numbers of FSM pupils will lose around £200-250,000, the equivalent of around five or six teachers' jobs or 10-12 support staff. Primary schools will lose a similar proportion of their budgets, and potentially of their staff. If a 1500 pupil school has 15% of its pupils in receipt of free school meals, it will be mitigated to some extent: it will only lose £116-£166,000, or three or four teachers, or 6 or 7 support staff. Some schools may be cushioned by reserves this year and may make savings through shared services, but the impact is still likely to be harsh. There are also big cuts in funding for 'early intervention' including Sure Start, despite promises to protect under-threes funding.

Across the country, it could still mean the loss of tens of thousands of school staff, since over 80% of school budgets are spent on staffing. At the same time, schools' formula capital is being slashed with just £195 million to be allocated across all schools compared with £959 million this year, which is a cut of 80%. That is the cruellest cut of all: formula capital had allowed schools to undertake vital repairs, a crucial lifeline with Building Schools for the Future sidelined.

To imagine that schools will now joyfully be using their pupil premium for anything other than plugging the gaps in funding caused by these cuts is fanciful, especially in the absence of any ringfencing for the money. It is a bad settlement for schools, and the poorest pupils will suffer too, with fewer teachers and crumbling buildings.

Perhaps it would not have appeared quite so bad if ministers had been straight during the spending review. They weren't: they misled schools into believing that their funding would be protected in cash terms, assuring specialist schools and school sports partnerships, for example, that the removal of ringfencing simply meant they would have the chance to spend the cash as they liked. They said nothing about formula capital or Sure Start cuts. Now all we see is yet another Liberal Democrat and coalition promise broken.

This post also appears at Public Finance.

The rocky road to a National Funding Formula

Education Secretary Michael Gove is right to aim for a National Funding Formula, where schools are directly funded by Whitehall. When it is in operation it will bring greater clarity to school funding, remove unjustifiable anomalies and make it easier to ensure that specific funds like the Pupil Premium get directly to schools in a manner that is fair. But getting there will be a huge problem, and the obstacles en route could derail the policy. Gove will need to model the effects very carefully - and insist that his civil servants produce such models - to ensure that as some schools gain, other schools don't have their budgets cut.

In government, Labour took several steps towards a national formula. Local management of schools was extended so that schools now typically receive 87-90% of all funding (with the remainder for local authority services) delivered through a Dedicated Schools Grant (DSG). The only reason Tony Blair did not go further was because of opposition from both John Prescott and Gordon Brown to the loss of local authority responsibilities. However, while the DSG must go to schools, local authorities have the freedom, in agreement with local heads and governors through the Schools Forum, to impose their own formula on how it is distributed between local schools. In addition, schools have benefited from other funds outside the DSG including formula funding for revenue and capital, money to improve standards and money for specialist schools. The coalition said it plans to wrap these grants into the DSG to create a single revenue pot for schools. The assumption until today had been that this money would be distributed by the local authority according to its own formula. That will still apparently be the case in 2011-12.

And that's where the trouble could start.

The coalition will have at least two years of major funding upheaval at a time when budgets are likely to be almost frozen. In 2010-11, the misguided decision to scrap specialist school and other budgets will see these funds redistributed by local authorities on different formulae, while the first tranche of pupil premium funding will also start to filter through. If the coalition has any sense it will impose a rigid Minimum Funding Guarantee so that school receive at least an extra 1% extra per pupil (jncluding the pupil premium). Otherwise, the whole raft of changes will make Charles Clarke's troubles in 2003-4 seem like a picnic.

Moving to a National Formula a year later will require much greater skill. And while head teachers' leaders may welcome the principle of the NFF, their support will be sorely tested when schools that have done well out of the existing formula start to lose teachers. Put simply, if two similar schools are receiving funding that differs by as much as £1000 a pupil, then any equalisation will require one school to lose £500 for the other to gain £500 at a time of limited funding growth. The only way to make the change will be to freeze the better off school's budget while gradually increasing that of the less well off one. That is much harder in the current climate, as there is little spare money to achieve such growth or fund any damping measures. Changes will also be needed at sixth form level, as colleges get less per student than schools, and there can be no further reason for continuing this anomaly. And then, in inner city areas which currently receive far more for poorer pupils than the maximum pupil premium, will schools see their funding slashed to equalise funding, and how will that affect coalition claims of fairness?

Nevertheless, I'm all in favour of a National Funding Formula. Labour should have introduced one in government. But there will be a very rocky road getting there. And as Sir Humphrey has no doubt advised, it is a very brave minister indeed who tries to introduce one at a time of virtually no spending growth.

This posting also appears at Public Finance.

The dangers of a paltry pupil premium

I've written this piece for the Public Finance blog on the problems that could arise if the Government gets it wrong on the pupil premium and school funding:

Today’s reports about Departmental warfare with the Treasury over the cuts are hardly a great surprise. But what will disappoint many in schools is the suggestion in The Guardian that the pupil premium, the Lib Dems’ flagship schools policy, may be less than £1000 a year – compared with the £2500 promised in the Lib Dem manifesto – and that the Treasury is expecting the Department for Education to stump up much of the cash itself.

This should not be a great surprise at all. While ministers have set great store by David Cameron’s declaration at PMQs, early in the coalition’s tenure, that the money would come from outside the education budget, the department’s consultation on the Pupil Premium suggested that a number of existing pots currently going direct to schools were for the chop. The Treasury was never likely to allow a substantial premium without DFE paying a large part of the cost.

The July consultation document suggested that the government would ‘mainstream relevant grants’ into the dedicated schools grant, leaving local authorities to decide on its ultimate distribution. This would likely include at least the School Development Grant, School Standards Grant and School Standards Grant (Personalisation). For many schools, the value of these grants is already significantly more than the value of a likely pupil premium. At the same time, the consultation is clear that the Government wants to ensure that the real beneficiaries of the premium are outside inner city areas, where funding may be kept down over time as the government moves towards a national funding formula.

A pupil premium is a good idea, as is a national funding formula. But trying to introduce the latter and move towards the former in these cost-cutting times is a recipe for political disaster: the vociferous losers will shout louder than the relieved winners. And the row over BSF funding may pale by comparison.

Delivery issues

I have written this piece for today's Independent on the parties' education policies:

When the Tory leader of Kent County Council, Paul Carter, warned that the Conservatives' free schools policy threatened funding for local authorities and other schools, he had a rare success highlighting a hidden truth behind the parties' education policies: they are making promises in today's election that they can't really keep.

Free schools are affected by a black hole in Tory school funding. The Liberal Democrats can't guarantee lower class sizes, and Labour has published pupils' and parents' guarantees with no real means of enforcement. Michael Gove tried to bat off suggestions on Radio 4 last week that there was no money to fund his flagship policy. But while the Conservatives have said that they would raid Labour's school building fund to pay for capital costs for parent-led schools, they have not said how they would cover extra day-to-day costs.

Instead, as Mr Carter rightly recognised, they have promised to top-slice local authority budgets to fund pupils at the new schools. However, there would be costs in maintaining surplus school places to increase choice and in continuing to fund local authority schools functions, such as admissions, school buses, truancy wardens and special needs. Gove is likely to need £1bn a year for revenue costs extra if his policy is to succeed.

All three parties propose some form of pupil premium which would give schools extra money for pupils from poorer backgrounds. At present, many schools get more money in deprived areas, but good schools in more affluent areas get little extra to attract poorer pupils. The pupil premium would overcome this. However, as it will effectively provide new subsidies to schools in the suburbs and shires, the Liberal Democrats have said it will cost £2.5bn a year, and they have suggested ways they might fund it.

The Tories have given no details of how they would fund their premium. With the free schools shortfall this means there is likely to be a £3.5bn black hole that Gove says will come from cuts in areas not part of the schools budgets. While some may come from axing quangos like the curriculum authority, it could also mean cuts in youth services, education maintenance allowances for sixth formers, the teachers' pension fund and teacher training budgets if there is to be no new money for the education department.

But the other two parties have their own credibility gaps too. Nick Clegg, the Liberal Democrat leader, insists that his party will cut class sizes and introduce one-to-one tuition for struggling pupils. He has described it as one of his top priorities. What he really means is that his £2.5bn pupil premium, once it is distributed to schools, could be used for these purposes. Or it might not: it may instead be used to prevent cuts in basic staff budgets at a time of increasing austerity.As the Liberal Democrats have an aversion to central prescription, they have no idea what the money will actually be used for. The Scottish Nationalist Party promised to cut infant class sizes to 18 in 2007. As good localists, they gave the money to local authorities with few strings. The result was that councils spent the money elsewhere, teacher numbers fell and there was no improvement in infant class sizes. The minister responsible was demoted.

Labour has suffered from the opposite problem. It has adopted a more centralised approach to schools of which the pupil and parent guarantees are its flagship manifesto commitment. Intended to support parent power, the guarantees on everything from pupil detention rules to one-to-one teaching were included in Labour's last schools bill but ran out of time in the Lords once the election was called. But the schools department had already issued an 80-page blueprint, the detail of which had spread alarm among head teachers who have grown used to growing autonomy. In reality, the guarantees are more likely to frustrate parents as there is little indication of how any of their new commitments can be enforced: they are unlikely to stand up in court.

The parties' problematic promises owe a lot to two factors that will affect the direction of education policy, whoever wins today. The first is that budgets will inevitably be much tighter as public spending is cut to rebalance the books. And the second is that all three parties support school structures – including academies – where heads and governors call the shots rather than ministers or councils. These are the realities that will really decide schools policy over the next four or five years

Playground politics

I have the cover feature in this week's Public Finance on the battle between the parties on education:

The economy might be the big election issue but another equally bitter battle is being fought over education, as two Oxford contemporaries traduce each other’s policies. Schools Secretary Ed Balls scorns his Conservative shadow, Michael Gove, for planning a ‘free for all’ and ‘spending cuts’, while Gove denounces his opponent’s ‘bureaucratic’ policies and ‘dumbed-down’ curriculum.

In truth, both policies throw up serious questions. There are differences in approach. Balls warms to local authorities more than Gove. He has chipped away at the freedoms of academies – the state-funded independent schools that were the centrepiece of former prime minister Tony Blair’s school reforms – while rapidly expanding their number. His legislation would entrench Labour policies in ­‘guarantees’ to parents. Gove has pledged to ‘break down barriers’ – often set by local authorities – to allow new schools and free academies. His ‘draft manifesto’ on education confirmed plans to support 220,000 new school places in the poorest communities.

In fact, many of Gove’s ideas build on Labour’s policy architecture. Allowing ‘outstanding’ schools to become academies provided that they support weaker schools replicates a model already adopted by Outwood Grange College in Wakefield and Greensward School in Hockley, Essex. A requirement that failing schools become academies within a year unless they improve echoes Labour’s National Challenge, aimed at lifting the minimum achievement in secondary schools. Even Gove’s plan ‘to break down barriers to entry so that any good education provider can set up a new academy school’ reflects a growing role for not-for-profit sponsors in academies and trust schools. So much so that Gove’s internal critics argue that unless he allows profit-making providers, as in Sweden, he will find it hard to effect the radical change he seeks.

According to Anna Fazackerley, head of the education unit at centre-Right think-tank Policy Exchange: ‘A significant number of potential multi-academy sponsors say they have been put off by the inability to make a profit.’ However, Gove is keen to avoid charges of ‘privatisation’ in an election campaign.

Equally, teacher training reforms dubbed ‘brazenly elitist’ by Conservative leader David Cameron are less radical than their sales pitch. The headlines focused on a plan to bar the dwindling number of third-class degree holders from teaching but the main pledges echo Labour ideas. Paying off the student loans of top mathematics and science graduates is worth around £2,000 a year to a new teacher, but would replace £5,000 golden hellos. The Tories would also expand ­Labour’s Teach First programme for top graduates and rebrand existing programmes to attract experienced ­graduates as Teach Now.

Bigger differences lie in the parties’ approaches to funding and accountability. Labour has significantly increased spending on schools: real-terms funding per pupil has risen by 85% since 1997, while capital spending has grown six-fold. And, although this spending spree is coming to an end, Chancellor Alistair Darling was persuaded by Balls to announce that school spending would increase by 0.7% a year in real terms in 2011/12 and 2012/13. Balls doesn’t rule out cuts in quangos or in other education programmes, though he has yet to emulate Lord Mandelson’s university and college cuts. The National College for the Leadership of Schools and Children’s Services has urged efficiencies in schools through federations and structural change, and the Department for Children, Schools and Families has ­published its own money-saving guide. This has angered heads’ leaders. Mick Brookes, general secretary of the National Association of Head Teachers, says: ‘Heads, quite rightly, feel insulted by this attempt to decapitate schools.’ A freeze on teachers’ pay and lower employer ­pension contributions also seem likely.

Yet while Labour has given some commitments to school spending, the Tories have not. Without such guarantees, they are likely to require even bigger cuts than Labour, which will make it harder to afford their two main commitments – the extra school places in poor areas and paying schools a premium for disadvantaged pupils.

The Tories say they need to make these pledges because Labour has failed on social mobility. A Higher Education Funding Council for England report did show that a fifth of the poorest youngsters now go to university, compared with an eighth in 2004. But the proportion of better off undergraduates has grown slightly faster, so the gap has not narrowed.

In terms of secondary schools, Balls says his National Challenge programme is making a difference. Its target is that by 2012, 30% of pupils in all schools should gain five good GCSEs, including English and mathematics. In 1997, 1,600 schools (half the total) did not achieve this. By 2009, the number had fallen to 247, and schools in the poorest areas are improving twice as fast as those in better-off areas. However, Gove argues that Labour’s approach is not feeding through into university success. Despite the reported improvements, he calculates that the number of boys at Eton public school with three As at A-level in 2009 – the minimum required for elite university courses – is still greater than the total number of boys in the state school system on free school meals who gain three A-levels.

His concerns are shared by Alan Milburn, the former Labour Cabinet minister. In a December report, he said: ‘If the growth in social exclusivity is not checked, it will be more and more middle-class children, not just working-class ones, who will miss out.’ He wants radical measures to improve social mobility, such as the pupil premium and vouchers for parents in areas with lots of failing schools. Prime Minister Gordon Brown rejected Milburn’s more controversial ideas, but backed other proposals, such as paid internships to improve access to professional jobs.To be fair, more poor pupils – ­measured as those receiving free school meals – are going to good state schools, according to a 2008 study by the Sutton Trust. The number attending the top 200 comprehensives has risen by 44% in the past ten years, although the overall number of children receiving free school meals has fallen by 18%. However, while the numbers are up, the proportion of poor pupils in those schools is still only 7.6%, against the national average of 13.6%.

Gove argues that a pupil premium would encourage good schools to ‘work particularly hard to attract’ poorer pupils. The Liberal Democrats agree: their leader Nick Clegg confirmed last week that he would spend £2.5bn on the premium, funded from ‘savings’ in the education budget and limiting tax credits. But there are big questions over how the Tories would fund the premium and their other ambitions. They have said they would divert funding from Labour’s Building Schools for the Future programme to pay the capital costs of their 220,000 new school places.

But this would be a costly intervention. Primary rolls are starting to rise again, but secondary rolls are set to fall by 55,000 until 2015 before rising again. Gove has confirmed that he plans to take school place planning out of local authority hands, and approve new schools directly in Whitehall. This will effectively encourage surplus places, so the extra ­revenue costs could exceed a billion pounds a year. The pupil premium could prove even more expensive, as many believe even the Clegg figure underestimates what it would cost. At present, schools in deprived areas or with large numbers of deprived pupils get the extra funds based on national and local formulas, whereas other schools with a smaller proportion of disadvantaged pupils get nothing extra to pay for them.

This means there are only two ways to fund the policy: find extra money at a time when cuts seem likely or redistribute existing budgets away from disadvantaged inner-city schools to more prosperous suburban and shire schools and local authorities. The Conservatives have not said how big their premium would be, but if it is to be introduced at any meaningful level – many say this should be an extra £2,000 or 50% of per pupil funding – the redistribution could be substantial. Such changes can produce a huge outcry from the ­losers and little thanks from the winners, as Charles Clarke found as education secretary in 2003 when he made more modest reforms to make school funding fairer. So significant financial compensation would be required to reduce such losses. Doing this at a time of financial restraint would be no easy task.

Alongside funding, an ideological battle is taking place over how to make schools accountable for pupil performance. The National Union of Teachers and the National Association of Head Teachers are balloting their members to boycott this year’s English and mathematics tests for 11-year-olds. Both Balls and Gove have tried to appease the unions with respective proposals to increase teacher assessments and test children at the start of secondary school instead. But whoever wins the election, schools will have to be more accountable to those they serve.

Labour’s Children, Schools and Families Bill proposes minimum ‘guarantees’ for parents and pupils in everything from ‘good behaviour, strong discipline, order and safety’ for pupils to opportunities for parents to be involved in their child’s learning. Many of the proposals included in the 88-page consultation document ­issued after the Bill’s second reading reflect existing entitlements. Those that are new include a promise of one-to-one ­tuition, tougher home-school agreements and a report card on the schools for parents to supplement existing league tables.

However, many schools believe that the legislation is too bureaucratic and lacks the money to fund the guarantees or the means to enforce them. Dr John Dunford, general secretary of the Association of School and College Leaders, told MPs: ‘[There is] potential in an increasingly litigious society for parents to take up an awful lot of head teachers’ time in disputing what are rather uncertain and woolly guarantees.’ The Tories would rely instead on published data, including results from new reading tests for six year-olds, and tougher Ofsted inspections. But an absence of legal levers could prove problematic when it comes to what schools teach. The headmaster of ­Harrow public school, Barnaby Lenon, echoed Gove recently with claims that too many state schools were cramming their pupils with ‘worthless qualifications’ to boost their league table rankings. And the Tories have argued that the increase in the proportion of pupils gaining five good GCSEs, including English and mathematics, from 35% in 1997 to 50% in 2009 is devalued because pupils are ­taking easier exams.

The Conservatives would exclude vocational qualifications from league tables and could give extra credit to harder subjects. Yet despite arguing that schools should teach all pupils languages and history to age 16, they would not require them to do so. Instead, they hope a combination of league table, Ofsted and ­parental pressure would do the trick. Some schools would choose a more academic curriculum, but a growing number prefer to focus on employability and research skills.

And the fate of ­languages provides a cautionary tale. When Estelle Morris, as education secretary, decided in 2002 to give schools the freedom to drop modern language lessons for 14 to 16-year-olds, she urged them to apply the change selectively as a way of enabling a minority of pupils to do more vocational subjects. In fact, the proportion of pupils sitting a language GCSE has fallen from a peak of 78% in 2001 to 44% in 2009. Recent pressure from ministers and published data have not increased the numbers. ‘The lesson,’ says Morris, ‘is that the consequence of giving schools greater freedom – on this or on anything else – is that they will sometimes make decisions with which the rest of us might not be thrilled.’

Both parties face problems with their attempts to create dividing lines. Balls’ bid to win parents’ support risks unleashing new bureaucracy on schools at a time of tough spending choices. Gove might find that exhortation is not enough to promote freedom and tougher standards simultaneously. And as both parties’ plans come under increasing scrutiny, they will face growing pressure to explain exactly how they will fund and achieve their ambitions.

The right balance?

I see that the schools minister Vernon Coaker is berating schools once again for keeping too much money in reserve, what a DCSF press release calls 'excess balances'. His predecessor Jim Knight had to retreat from a wholly unfair tax on school balances. Yet schools must cut these balances now, declares the minister. Why? Many schools save some money from one year to the next so that they can fund a particular project or guard against cuts in future years - something that can hardly be ruled out.

The fact that thousands of schools manage to budget a modest surplus - the government regards a 5% surplus in a secondary school as 'excessive' - should be a cause for celebration rather than deprecation, given the tighter finances that will start to hit schools soon. Surely, Mr Coaker would be better directing his ire at those 1,848 schools that are in deficit rather than those that find themselves able to budget efficiently and save for a (surely imminent) rainy day?

No strings attached

So it was a boring budget, as the minister with a reputation for being a 'safe pair of hands' emerged with his reputation intact. Forgive me as a non-driver if I don't get worked up about showroom taxes on gaz guzzlers; even as a drinker, I doubt that 14p on a bottle will bring an end to my Rioja-drinking habits. So boring was the budget that even the columnists had little interesting to say this morning. But this didn't stop Alice Miles. In the absence of much else to write about, she used her Times column to recall the days when Gordon Brown used to keep budgets secret from the Prime Minister (and much of the cabinet). But she was picked a bad example when she claimed

Mr Brown not only told the ministers the amount they were getting, he would publish a slew of targets telling them what to prioritise, and even directly order them how to spend it - he told David Blunkett, for instance, in March 2000 that the extra £1 billion for schools was to be sent directly to head teachers, bypassing local education authorities.

Not true. In fact, the direct funding was devised by David Blunkett and some of us who worked with him precisely to avoid all of the education spending being tied up in Treasury targets. Brown took a lot of persuading initially, though the 'direct grants' were to become a popular feature of later budgets (and a similar budget was introduced, at Blunkett's behest, for school capital). Indeed it was Brown's and John Prescott's opposition that prevented Tony Blair and Charles Clarke from moving to a national funding formula for schools that would bypass local authorities. And, in 2006, there was a return to form, when the Treasury started to link increases in what became known as the School Standards Grant to poverty indicators. The result has been that the one grant that benefited schools in every part of the country (and every constituency) has lost its simplicity and popularity. As Brown 2008 embraces reform and independence for schools, he should restore the simplicity of this direct funding, and use other resources to target the poorest schools. Better still, he could move to a national formula and funding agency for all secondary schools.

Prudence has won out

I'm delighted to see that Jim Knight (left) has reversed the very silly plan to tax schools 5% of their surpluses. It was always a daft and unfair idea, though NASUWT, who have long supported the proposal are bizarrely blaming 'vested interests' for the change of heart. But, as I predicted here and urged here, ministers have bowed to the inevitable. Let's hope the Treasury have learned their lesson on this occasion.

Prudence will win out

After today's move by David Cameron to turn the government's consultation on school funding into a major national story, it would be astonishing if No 10 didn't order a retreat in the school surpluses row once the consultation on the regulations has come to an end. The idea was certainly not popular in the consultation about the concept, which ended in June. Of course, this silly idea would never have seen the light of day had the Treasury not been so keen on it in the first place. But it has a long history: Nigel de Gruchy, when he was running the NASUWT teaching union used regularly to complain about the surpluses. The idea was never taken up before because it is hard to justify why a school which puts aside £60,000 or £70,000 for a rainy day should be fined £6,000 for doing so, while a school that goes into deficit can often end up seeking a bailout. But Gordon Brown is also right to point out that it is on his watch that - in an idea originally proposed to a sceptical Treasury - schools have received significant sums through School Standards Grant and Formula Capital for schools to spend as they choose on revenue and capital, which were not available in the Tory days.

Penalising prudence

The government is simply wrong to impose a blanket 5% levy on school surpluses. It is true that some schools have sizeable surpluses that are hard to justify. There is a case for taxing large surpluses, especially where they are not being kept for a capital project, but there is no good reason apart from Treasury intransigence why every school that has planned for a modest 1 or 2% surplus to cover unplanned costs or is saving for a new classroom, should be penalised while a school that is profligate is not. Ministers should either scrap this silly scheme or refine it to something more targeted.