Costs and consequences questioned in new report


Both   the main Opposition  parties have proposed introducing a ‘pupil premium’ in England, with the aim of narrowing the educational achievement gap between rich and poor pupils by attaching greater school funding to those from disadvantaged backgrounds. The former Minister Alan Milburn MP has also declared his support believing that a pupil Premium might aid social mobility. But a new report from the Institute for Fiscal studies ‘The pupil premium: assessing the options’ (March 2010) raises  important questions over the Premium  and the options related to funding   while challenging  a number of assumptions.

The idea of a pupil premium is to provide a fixed extra amount to state schools for each pupil from a disadvantaged background that they admit each year. The current system already weights funding towards deprived pupils to some extent.

The report states ‘The current system of school funding in England does effectively already provide extra funding for schools with more pupils from disadvantaged backgrounds. However, the system is complex and rather slow to respond to year-on-year changes in a school’s intake, with a large amount of funding apparently dependent on historical rather than current deprivation.’

The proposals for a pupil premium could serve to simplify this system, and weight funding even more towards disadvantaged pupils. It might also adjust school funding levels more quickly as the make-up of their student body changes.

But there are a number of questions that need to be asked about the pupil premium and how its funding might be structured.  Do you, for instance, implement a pupil premium on top of all existing funding that schools receive?  Or, would you finance a pupil premium by abolishing specific grants from central government and streamlining them to form a pupil premium. Alternatively, you could go for the ‘ full monty’ option, that suggested by the think tank Policy Exchange in its report School Funding and Social Justice Report (2008) (Shadow Education, Secretary Michael Gove, co-founded the think-tank)  – the creation of a single national funding formula incorporating a pupil premium. Under this policy, local authorities’ role in school funding decisions would be replaced by a single national formula determined by central government.  (Significantly a 2008 report from the IFS found that the current school funding regime was too complex, lacked transparency and failed to support the choice, equity or performance agendas implying a need for radical reforms.(there is an on-gong review of school funding)

And the key question -will the anticipated gains from implementing a pupil premium – such as greater levels of funding for deprived schools, a reduction in the achievement gap between rich and poor pupils, as well as greater simplicity and transparency – outweigh the potential costs which the IFS report suggests are-a loss of local discretion and significant levels of cuts to per-pupil funding across some schools.

The IFS found that there is some evidence that extra resources for disadvantaged pupils would reduce the attainment gap to a modest degree, although this will depend on how those resources are used by schools. It also found that schools are unlikely to actively recruit more disadvantaged pupils as a result of the pupil premium. It may also lead to a small reduction in covert selection by schools, but is unlikely to significantly reduce social segregation between schools.  New schools it found might be established in disadvantaged areas, but without allowing schools to make profits it concluded it is unlikely that the UK would see the same level of expansion that other countries have seen.

But it’s the possible costs implications that seem to at the core of the concerns. Against the backdrop of cuts to public service budgets what will be the cost implications?  Self evidently the premium would need to be very high to sufficiently reduce the disincentive for schools to attract such pupils. And the IFS analysis of a national funding formula illustrates a key potential problem with political implications-the concentration of gains and losses across particular local authorities. This pattern does not appear to simply follow an urban/rural split; instead, it is likely to reflect local authority choices over central services, prioritisation of primary or secondary schools and historical factors.

Policy Exchange suggested a pupil premium worth around £3,000 per student for the most deprived communities. It would cost £4.6 billion to implement. This money could come, it suggested, from the existing education budget by rolling central grants (like the School Standards Grant) into one revenue payment and scrapping wasteful programmes like the Education Maintenance Allowance and the National Challenge. The premium Policy Exchange recommended should be allocated using “geodemographic” analysis of postcodes as this takes into account cultural as well as financial deprivation.

American researchers at the University of California (Equalizing Opportunity for Racial and Socio Economic Groups in the US through Educational Finance Reform 2005) used estimates of the effect of spending on the attainment of black children to say that nine times as much needed to be spent on black children to get their attainment up to the national average. Closing ethnic gaps and gaps in attainment by socio-economic status might not be directly comparable, but if the cost for getting the attainment of poor children up to the national average were just five times the current spending per pupil, the pupil premium would need to be set at err… over £25,000. But the Liberal Democrats and Policy Exchange (propose a premium in the range of £3,000.

The devil does seem to be in the detail on the pupil premium. The principle of incentivising good schools to take disadvantaged pupils seems sound. What the IFS is saying is that   with fixed overall budget, premium payments in some classrooms must translate into cuts in others. The IFS report delivers a timely warning about the possible limitations and financial consequences of such an initiative.


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