Storm Warning

25 January 2016

L89_CSR_pic WEBThe results of the government Comprehensive Spending Review, the first under a majority Conservative government since the 1990s, were announced by Chancellor George Osborne in November 2015. The review, carried out every three years or so, determines the spending for each government department from scratch and without any reference to past plans.

Now that we know more about what this government has in store for education over the life of this Parliament the big questions are: what is going to change, what can we do to influence the future and what can leaders do to make sure that their school or college is a successful part of the future and not a victim of it?

The chancellor confirmed that, as part of the Department for Education’s (DfE’s) settlement, the dedicated schools grant and the Pupil Premium grant will be protected. The revenue spending for the department is, however, set to rise by £3.5 billion by 2020. All of us in the sector are aware of the growth in the pupil population and undoubtedly most, if not all, of this increase will be required to meet the need for extra places.

Education Services Grant
There was not good news about the education services grant (ESG), which provides academies with funds to purchase the services that the local authority (LA) provides for maintained schools. The grant was the subject of significant cuts in a previous spending review and in this round the total grant fund will be cut by £600 million.

The suggestion that it will disappear altogether over the next five years is a grave concern to both academies and maintained schools. If the government is pushing forward on phasing out LA statutory duties, currently covered by the LA strand of the ESG, and therefore reducing their role in the running of a school, where will maintained schools find the money to provide services such as welfare, human resources and internal audit? At a time when unfunded cost increases are crippling school budgets the concept of cutting the ESG will fill all school leaders with fear. The per-pupil rates for the ESG in 2016–17 should have been announced by the time you are reading this issue of Leader.

Sixth-form colleges
The spending review signals a positive step for sixth-form colleges. These institutions can now apply for conversion to academy status and therefore will be able to claim back VAT on their non-business expenditure. This is likely to represent a saving of about 3.5 per cent on the bottom line.

It’s a relief that the base rate per student for 16–19 year olds has been protected at £4,000 but this won’t be enough to halt the reduction in courses that schools and colleges are able to provide to post-16 students.

National funding formula
The commitment to a national funding formula for schools has been consigned to the ‘too difficult’ drawer for far too long. ASCL has been campaigning for a fair funding formula for more than 20 years and it is disappointing to note that previous governments didn’t seize the opportunity to tackle this when budgets were on the increase. It is a much more difficult exercise to do when budgets are tight. However, it is good to know we have been listened to and ASCL is looking forward to working even more closely with government during the consultation on fair funding early this year.

The ASCL Blueprint for a Self-Improving System calls for an education system in which all children and young people achieve and in which institutions are funded sufficiently, equitably and sustainably. Our persuasive argument will always be for a formula for distribution that enables equality of opportunity for every child and young person in this country but the call for equity must not detract from the need for sufficiency. Only if these two are carefully combined will the formula be sustainable and enable our education system – and most importantly the young people who are in it – to flourish and reach their potential.

The chancellor’s statement indicates that the national funding formula, which will include high needs and early years, will be implemented in 2017–18. It’s encouraging to have a date to focus on but part of the consultation process will need to carefully consider the period of transition required for full implementation and must also include the cautious phasing out of the ESG.

The DfE capital funding settlement for 2015–20 is £23 billion. This is phased over the life of the Parliament and will be targeted towards the completion of the Priority Schools Building Programme (phases 1 and 2). In addition to addressing the condition of the current school stock the government made a pledge in their election manifesto to open 500 new free schools. In some cases a free school will be the solution to address the increased demand for school places, but we will continue to urge our colleagues at the DfE to make sure that schools with existing spare capacity are also part of the solution.

Hot on the heels of the spending review the government has announced two grant schemes to support primary schools that are applying to convert to academy status or wanting to join an existing academy chain. For more information, go to http://tinyurl.com/gwxhwco and http://tinyurl.com/z47dyrv

Collaboration
Collaboration is increasingly a feature of the landscape in the education sector and ASCL has worked with Browne Jacobson LLP and the National Governors’ Association to put together guidance on how to approach such a significant change. The guidance, Forming or Joining a Group of Schools: Staying in control of your school’s destiny (see www.ascl.org.uk/help-and-advice/guidance-papers) is for senior leaders and governors of stand-alone schools (maintained schools or academies) as they consider whether to form or join a federation or multi-academy trust (MAT).

The benefits of collaboration are many but include sharing good practice, access to high-quality staff, resilience in addressing the stark realities of teacher recruitment in the current climate and financial efficiencies resulting from economies of scale and collective purchasing.

Financial efficiency
Financial efficiency has always been a key driver for school leaders but now and in the future it will be essential for any school or college to survive the stormy financial waters that we are required to navigate. The 2015 spending review hasn’t changed this but its impact on funding in the sector make it imperative that financial efficiency is high on the agenda at every strategic planning meeting.

Evaluating efficiency
Evaluating financial efficiency is not easy and must give some allowance for local economic and social factors. Equally, there needs to be a culture of realism and courage if the outcome of evaluation is going to result in improvement.

Characteristics of a highly financially efficient school include:

  • strategic financial planning and risk management embedded into the annual business cycle

  • having a skilled business manager on the leadership team or access to a skilled business manager

  • collaborative working between the curriculum lead and the staffing and finance leads

  • courage to make difficult decisions in hard times

Budget scrutiny is an obvious starting point for evaluating the efficiency of a school. By looking at trends in key areas of expenditure you will be able to benchmark your efficiency against other similar institutions both locally and nationally. It’s a good idea to start with high-level key performance indicators (KPIs):

  • staffing costs

  • premises costs

  • expenditure on curriculum resources

If your spending in these areas varies dramatically from your statistical neighbours then dig deeper to try to find out why.

Related CPD
You may be interested in attending our course on Strategic Financial Planning and Staff Deployment on 24 February or 29 June – for more details or to book on, see www.ascl.org.uk/sfpsd24feb

In addition, although our popular sessions on How to Weather the Financial Storm are now full, you can register your interest in any future sessions by emailing pd@ascl.org.uk

Financial efficiency has always been a key driver for school leaders but now and in the future it will be essential for any school or college to survive the stormy financial waters that we are required to navigate.

Julia Harnden is ASCL Funding Specialist