Following the inconclusive Consultation, government says that further design work needs to be done on the funding mechanism


In The Future of Apprenticeships in England: Funding Reform Technical Consultation (March 2014), the government sought feedback on implementation of the principles underpinning the new funding model for Apprenticeships. It also consulted on two mechanisms for directing payments to employers: the PAYE system, which would deduct the Government contribution from an employer’s PAYE payment; and an Apprenticeship Credit model, which would automatically top up an employer’s payment with the Government contribution. The analysis of results to this consultation   shows there was no clear preference for either of the proposed options presented in the consultation for directing payments to employers.

The government says that ‘Giving employers direct control of apprenticeship funding remains a central and fixed part of  its funding reforms. And it will   ‘continue to work closely with employers and other major stakeholders to achieve the most effective way of doing this.’

The government added that giving employers direct control of apprenticeship   ‘is central to driving the right behaviour in the system’ and that ‘ based on the feedback to the consultation, we have concluded that further detailed design work is needed before we can reach a final decision on which funding mechanism will be taken forward to meet our shared aim of more high quality apprenticeships, where employers hold the purchasing power. We will continue to undertake this further work with you, in an open and collaborative way.’

The Skills minister Nick Boles, giving evidence recently to the Education Select Committee on 14 January, said that he has in mind a simple third solution. BIS is working flat-out on its design but the minister could not promise that it would be put forward before the general election.

Boles couldn’t go into details about the solution but he did start talking about employer cash contributions which he still supports in principle. He said that new employers should not have to contribute in the apprentice’s first year but thereafter they might pay a third of the cost. A minute or two before saying this, he talked about ‘ramping up’ contributions over time. But the new funding system may not be fully implemented until 2018-19.He was pressed quite hard by the committee chairman on whether there was a policy tension between demanding cash contributions and growing the number of employers engaged in the programme.  He acknowledged the role of providers in selling apprenticeships to employers, saying that this was no different from many other services or products.

The minister defended Level 2 apprenticeships pointing to the earnings premium that BIS research had found, although he added that ideally we should have more at Level 3. Better destination data after leaving school is a government aim although at the moment this data is too crude and needs to be , in his words, more “granular”. On careers advice, the minister said that schools are mandated enough, although, unlike the Secretary of State, he would like to see schools marked down a grade by Ofsted inspectors if they are not taking their duty to provide good professional careers advice seriously enough.

A video recording of the two-hour evidence session can be watched at:






How extra funding is spent remains key


In 2011/12 the Pupil Premium was set at £488 per pupil, rising to £600 in 2012/13, and £900 in 2013/14.

Between 2011-12 and 2012-13, the pupil premium budget actually doubled in size. As a result, the government could extend the eligibility criteria so that a pupil who has claimed free school meals at any point in the previous six years became eligible

Schools are free to spend the allocated funds as they choose, though they are held accountable for the decisions they make through performance tables which show the performance of disadvantaged pupils compared with their peers, and through the Ofsted inspection framework. In short, schools will be held to account on how they spend the pupil premium, although disaggregating Pupil Premium funding from other funding that a school spends on disadvantaged pupils will be a challenge.

If the Pupil Premium is to succeed in achieving its ambitious goals, the choices that  schools make in allocating the money are of vital importance.’ so said the respected  Education Endowment Foundation. The EEF has helpfully provided a toolkit which acts as a guide on the most effective evidence based interventions.

A recent evaluation of the programme noted that whilst it was too early to measure the  impact of the Pupil Premium on attainment, over half of all schools had introduced new  support for disadvantaged pupils as a direct result of the Pupil Premium., which is encouraging . But it also found that over 90 per cent of schools had focussed on supporting disadvantaged pupils before the Pupil Premium was introduced. And, significantly,over 80 per cent said that the Pupil Premium was not enough to fund the support they offered. Furthermore, many schools are not spending the funding as effectively as evidence suggests they could. For example, over two-fifths of school leaders surveyed said they used the money to fund teaching assistants. The Centre for Social Justice in its report ‘Requires Improvement’ (September 2013) says that this ‘ is deeply concerning  given that teaching assistants are amongst the least effective ways of improving outcomes’. The report adds ‘There are also concerns the Pupil Premium does not represent ‘additional’ funding, and instead that it is being used to plug gaps left by funding cuts rather than specifically to support the learning of disadvantaged pupils. Although the pressure on budgets would have been  worse in the absence of the Pupil Premium, it forms a relatively small proportion of schools’  total income – on average, between 3.8 per cent for primary schools with high levels of FSM  and only one per cent for secondary schools with low levels of FSM’. Ofsted found that only one in ten school leaders said the Pupil Premium had significantly changed the way they worked. Whilst many schools do monitor the impact of support provided, improving accountability is an important next step. Schools must now publish a statement for the previous year confirming their allocation, spend and impact. The new Ofsted inspection framework also focusses on how well gaps are narrowing within the school and in comparison to nationaltrends. Centrally, schools will no longer be rated outstanding unless they close their attainment  gaps – and if they fail to improve, a headteacher from a school that has closed the gap will  be brought in to advise them.

Another headteacher told the CSJ that they spend their allocation on need – even if this benefits children who did not themselves attract the Pupil Premium. At the end of the year the school is then forced to lie about what their allocation is spent on. In a recent survey, most schools  surveyed (91 per cent of pupil referral units, 90 per cent of special schools, 84 per cent of  primary schools and 78 per cent of secondary schools) aimed their support at all disadvantaged  pupils, according to their definition of disadvantage, of which FSM was just one part.

This is a sensitive issue for the government. They have given schools autonomy and schools have to operate within an accountability framework. But if the Pupil Premium is not being used effectively, it will not raise the attainment of FSM pupils. Raising the attainment of FSM pupils and narrowing the achievement gap between them  and  other  pupils is one of the benchmarks against which this governments education policy will be measured.  Remember that when Gove was shadow education secretary this is the area where he targeted most of his attacks on the Labour  government, in the Commons, and through PQS.

Sources: Office for Standards of Education, Children’s Services and Skills, The Pupil Premium: How schools are using the Pupil Premium funding to  raise achievement for disadvantaged pupils, Office for Standards of Education, Children’s Services and Skills, 2012

Carpenter C et al, Evaluation of Pupil Premium: Research Report, London: Department for Education, 2013

Centre for Social Justice Report-Requires Improvement-September 2013



What happens when there are concerns over the financial  management  of an academy?


The recent Public Accounts Select Committee report on Academies financial management proved embarrassing to the government. The report describes a system peppered with overspends and errors, but subject to little oversight. Millions of pounds were wasted on the rapidly growing academies programme because of over-complex and inefficient funding systems, according to the report. Financial mismanagement, of course, is by no means the preserve of academy schools, as recent scandals have shown.

Where a chain or multi-academy trust has failed to address financial weaknesses in its operation, a financial notice to improve can be issued, requiring the trust to take action to address the underlying cause(s) of its financial weaknesses. The financial notice to improve is a set of conditions that the Education Funding Agency (EFA) would require the trust to meet. Ultimately, if a chain or multi academy trust fails to address the financial weaknesses the Secretary of State for Education has intervention powers which are set out in the individual funding agreements, and in the most serious circumstances, include the ability to terminate the funding agreement. The Education Funding Agency has issued two financial notices to improve since May 2010 to academy trusts.

The academies financial handbook sets out the duties and obligations on academy trusts and this  includes personal responsibility  on the academy trusts accounting officer (each trust has to appoint an accounting officer) for  ‘high standards of probity in the management of public funds’.

Source-Hansard 25 April 2013


Committee expresses concerns over poor cost controls and financial oversight


A Public Accounts Committee report on the Academies programme describes a system peppered with overspends and errors, but subject to little oversight.

Millions of pounds were wasted on England’s rapidly growing academies programme because of over-complex and inefficient funding systems, according to the Select Committee report.

It urges the Department for Education to tighten its financial grip on these privately run but state-funded schools.

Committee chairman Margaret Hodge, who has gained a reputation for her forthright attacks on government waste,  said inefficient funding systems and poor cost control had driven up the cost of the programme.

“Of the £8.3 billion spent on academies from April 2010 to March 2012, some £1 billion was an additional cost which had to be met by diverting money from other departmental budgets.

“Some of this money had previously been earmarked to support schools struggling with difficult challenges and circumstances. £350 million of the extra £1 billion represented extra expenditure that was never recovered from local authorities.”

A DfE spokesman said the report failed to acknowledge “the significant progress that we have made in improving our systems.

“The academies programme has been a huge success. There are now almost 3,000 academy schools – more than 14 times as many as in May 2010 – with more than two million children now enjoying the benefits that academy status brings. The programme is proven to drive up standards. Sponsored academies are improving far faster than maintained schools.

“We make no apology for the fact that so many schools have opted to convert, and no apology for spending money on a programme that is proven to drive up standards and make long-term school improvements.

“The Department for Education has made significant savings in the last two-and-a-half years and has also set aside significant contingencies, which have been set against the growth in academies.”

He added that the costs of converting academies have already fallen by more than half per academy and that further savings were expected in the future.

Conclusions and recommendations

1.  The value for money of the Academies Programme will ultimately depend on its impact on educational performance relative to the investment from the taxpayer. The Department has chosen to expand the Programme rapidly, incurring an additional cost of £1 billion since April 2010. While it is too early to assess the impact of the expansion on school performance, the Department will need to be able to demonstrate whether value for money has been achieved. It has yet to state how it will do so, or when. The Department should set out what outcomes it aims to achieve from the expansion of the Programme, and how and when it will demonstrate whether progress is on track and value for money has been achieved.

2.  Inefficient funding systems and poor cost control have driven up the cost of the Programme. A large part of the £1 billion additional cost since April 2010 has been caused by the excessively complex and inefficient academy funding system which has reportedly led to overpayments and errors in payments to Academies There was around £350 million extra paid to Academies which was not recovered from local authorities. This system does not operate effectively alongside the local authority system, and makes it hard for the Department to prove that academies are not receiving more money than they should. The Department has not yet brought other types of cost growth under control, for example academy insurance. It should report back to us by the end of 2013-14 on how its funding reforms have reduced systemic problems such as the under-recovery of academy costs from local authorities, and on how far it has brought down other additional costs.

3.  We are not yet satisfied that individual academies’ expenditure is sufficiently transparent to parents, local communities or Parliament. Despite some improvements, key information on what academies actually spend is still only available at trust, rather than individual academy, level. This limits the ability of parents to scrutinise how their child’s school is spending its money, and of communities to hold their local school to account. The Department must publish data showing school-level expenditure, including per-pupil costs, and with a level of detail comparable to that available for maintained schools, so that proper judgments can be made and comparisons drawn to assess value for money. The Department should state how it will make robust, line-by-line information on individual academies’ expenditure publicly available in the most cost-effective way.

4.  New governance, compliance and oversight arrangements for academies remain vulnerable to failure. Some serious cases of governance failure and financial impropriety in academies have gone undetected by the Department’s monitoring, raising concerns that central government may be too distant to oversee individual academies effectively. Irregular expenditure by academies and gaps in the oversight framework led the Comptroller and Auditor General to qualify the 2011-12 accounts of the Department and the Young People’s Learning Agency. Academies’ compliance with mandatory monitoring is not good enough, and it is not yet clear how well revised audit arrangements will address these issues in future. The Department and the Education Funding Agency should review the operation of the new audit and oversight regime put in place this year, and assess whether it is reducing risks to regularity, propriety and good governance.

5.  Forthcoming staff cuts at the Department and its agencies may threaten effective oversight as the Programme continues to expand. We are sceptical that the Department has sufficient resources to properly oversee the expanding Programme, especially as schools now joining are less high-performing and may require greater oversight and scrutiny. The Department should review the Programme’s central resource requirements, and the extent to which efficiency savings expected from new IT systems and assurance processes are being realised, and are sufficient to offset the need for further resources.

6.  The Department has still not made completely clear the roles, responsibilities and accountabilities of different organisations across the changing schools system. Roles previously carried out by local authorities around accountability, performance monitoring and intervention are unlikely to be operating consistently and effectively across different localities and academy structures. We are particularly concerned that interventions in failing academies may be delayed if the respective roles of central and local government, as well as academies and academy trusts, are not clear. The Department should clarify and properly communicate the roles and responsibilities of local authorities, academy sponsors, the Education Funding Agency, the Department, the Office of the Schools Commissioner and Ofsted regarding these aspects of the Programme.

Department for Education: Managing the expansion of the Academies Programme – Public Accounts Committee-April 2013



These are telling criticisms. They suggest the need to rethink the scrutiny and oversight of academies, while preserving the principle of school autonomy. Surveys suggest that around a third of converter schools opted for academy status for financial reasons. As part of the Budget Statement 2013, the Government announced that it would conduct ‘a review of school efficiency’. To inform that review, the government said ‘we have launched a call for evidence to learn more about how schools and academies make financial decisions and the techniques that they find particularly useful. We particularly want to hear your experience of how academies make financial decisions and your opinions/ideas of how academies can improve their efficiency.’ This suggests some concerns in government over the financial management in schools (not just academy schools by the way)  and the additional risks that autonomy might bring.  There is an on-going debate on the accountability of autonomous schools and whether or not another tier is required to ensure greater accountability, given the reduced role of local authorities.Academies are directly responsible  of course to the Secretary of State, through individual funding agreements. Critics say that the Secretary of State , along with a slimmed down education department, cannot possibly  hold these schools  properly to account , even with Ofsteds support.



The Pupil Premium

Government and Ofsted  know that how the Pupil Premium is spent by schools really does matter


Total pupil premium funding will rise from £1.25 billion in 2012-13 to £1.875 billion in 2013-14. This will enable the level of funding for the deprivation and looked after child premium to increase to £900 per pupil and the service child premium to increase to  £300 per pupil.

Ministers see the Pupil Premium as the means to improve the performance of the most disadvantaged pupils, to address the long tale of underachievement and to close the achievement gap. The achievement gap is the difference in GCSE achievement between the average for pupils who are eligible for free school meals and the average for those who are not.

Research from the Sutton Trust  suggests that given  that Pupil Premium funding is not  ring-fenced (and in a challenging budgetary climate for schools), in many schools the money is being  used to fill budget deficits in other areas rather than being spent directly on the children that  generated the funding in the first place.  Self -evidently this is worrying. An Ofsted report in 2012  also found that only 10% of school leaders said that the Premium had changed the way they worked. And only half of schools said that it was having any positive effect on pupil achievement. Indeed, many schools were not even disaggregating the Pupil Premium from their main budget and were using it to enhance existing provision, rather than doing anything new with this extra funding. Ministers have been loth to intervene because they champion school autonomy.

Schools do now have to publish online information about the amount of pupil premium money the school receives and how it is being spent, as well as its impact. David Laws ,the schools minister, in a speech this month ,also  made in very clear that the government will keep an eagle eye  on   how individual schools, and  ,indeed ,chains of schools, are using the pupil premium to help improve outcomes for disadvantaged pupils and to narrow the achievement gap. Most recently Laws said (at the ASCL conference) that schools  must focus “relentlessly” on closing the achievement gap. Indeed  he ratcheted up the pressure by  announcing that  schools in England will no longer be rated as “outstanding” by inspectors if they fail to close the attainment gap between poor and affluent children. And Schools must use interventions that are known to  work.

This is a sensitive area. When Michael Gove  was  in opposition he relentlessly attacked the then  Labour government  for  failing to improve the lot of  pupils on Free School Meals pointing out that , if anything, their performance, despite significant levels of   new investment, had declined and  the attainment gap had increased.

Sir Michael Wilshaw is at one with the government in paying greater attention to the premiums use. Inspector’s judgments on schools’ leadership will consider the use of both the premium and other resources to overcome barriers to achievement for their pupils. In his annual report published in November, Sir Michael committed Ofsted to paying particular attention to attainment gaps affecting disadvantaged pupils in schools where they form a minority of less than 20% of all pupils

But not everyone believes that the funds available under the Pupil Premium  are sufficient for their purpose.  Some critics suggest   that the sums allocated for the Premium do not reflect the estimated costs necessary to equalise disadvantaged pupils’ educational needs, with those of their peers (Sibieta, IFS  2009). The OECD (2010) observes that the premium is ‘relatively low in an international perspective and it is not clear that it will cover the extra costs of admitting disadvantaged students. As the OECD notes, this risk of insufficient funding is exacerbated by the counter-incentive of high stakes accountability measures in the UK context.

What does that mean?

In short, League tables and other performance indicators, along with the recently announced rising floor targets, (see David Laws speech) mean that there are very strong potential consequences for schools whose exam achievement dips. Pupils from disadvantaged backgrounds and other vulnerable groups may then  be viewed   by schools not as a source of much needed extra funding but ,instead ,as a risk. Hence  disincentives (driven by accountability measures) may in practice  outweigh the pupil premium incentive in admitting such pupils.   Indeed, an OECD working paper on reforming education in England (Braconier, 2012,) warns  that if the “perceived deprivation funding is lower that schools’ perceived costs, they may engage in  ‘cream skimming’, trying to dissuade disadvantaged students and recruit more able students.” This is why some are warning that schools admissions policies, and in particular academies admissions (given their autonomy), should be more carefully monitored.  The Government is seeking to improve transparency by publishing data on the progress of individual schools in closing gaps in attainment for FSM pupils; a move welcomed, incidentally, by Braconier (2012).

We know that, historically, there have been some perverse incentives within the accountability framework, particularly league tables. So the government’s efforts to reframe school league tables to mitigate perverse incentives, evident in  the current system, is  welcomed by many (Laws  recent speech was well received). But it remains to be seen what effect this may have on narrowing the achievement gap.

One thing is absolutely clear, though- schools will be held to account for how they use the Pupil Premium and their grade from Ofsted will depend on how much they have managed to close the achievement gap.  Empirical evidence about what works is available, and should be used.And there are a number of interventions from which to choose.Rumour has it that technology companies are making big  pitches to schools  seeking to persuade them  that they have what it takes to make a real difference to outcomes  . But experts  urge caution. Evidence is  mixed. Remember use of technology should be driven by learning and teaching goals rather than a specific technology: technology is not an end in itself. And don’t take, at face value, what the salesmen tell you. See past the bells and whistles of a new piece of tech hardware or software  and work  out exactly what it does to help disadvantaged pupils. And ,crucially, seek independent,  ‘disinterested’  sources of advice and evidence.

‘Caveat emptor’ ,as Michael Gove might say.





Use Interventions that are known to work


The Pupil Premium was introduced in April 2011 to target support for the most disadvantaged pupils.

Pupil premium funding is provided to schools which have on roll pupils known to be eligible for free school meals (the deprivation premium); children in care who have been continuously looked after for at least six months (the looked after child premium); and children whose parents are serving in the armed forces (the service child premium).In 2012–13 schools were allocated a total of £1.25 billion funding. In 2012-13 the pupil premium  has been worth £600 per child,  rising to £900  next year and by 2014-15 this is expected to rise to approximately £1,200 per child. From this September, schools have to publish details of how they use their premium. The DFE also publishes in the school performances tables information about disadvantaged pupils’ achievement. Ofsted has a closer focus on how the premium is used and on how it benefits pupils. The principle the government is adopting generally, in introducing the pupil premium, is to leave discretion on how it is spent as much as possible to individual heads because they will know the circumstances of the children for whom they are responsible. But there are concerns that some schools are simply using the premium to fill shortfalls in school funding or are using interventions that are ineffective. The Education Endowment Foundation, which was set up specifically to spread good practice and help other schools learn the most effective ways of tackling disadvantage has published a tool kit  which provides evidence of the types of intervention that work.  An Ofsted  survey  this year  based on the views of 262 school leaders found most said that the introduction of the Pupil Premium had had some impact on the way that they did things. However, school leaders in only one in 10 schools said that it had ‘significantly’ changed the way they worked – all of whom were in more deprived areas. Very few schools said that it had had any impact on their approach to admissions or exclusions. Around half of the schools that responded to the additional inspection questions thought that it was having a positive impact on raising pupils’ achievement, but relatively few could as yet provide evidence to substantiate this. Clearly it is disappointing that so many school don’t at this early stage believe that it is having much impact.

Unions have warned that some schools are using the Premium to meet perceived  funding shortfalls-which is  clearly  not how the Premium should be used.

The Education Endowment Foundation stresses how important it is to apply approaches that are known to work. The research summarised in their Toolkit suggests that different ways of using the premium are likely to have very different impacts on attainment.

The Government  has commissioned  two evaluations  of  the Pupil Premium — from Ofsted and its  own external evaluation of the premium’s first year. The findings of both reviews will be available next spring





Academies  have been  getting extra funding-so why the smoke and mirrors?


Half of all secondary schools in England are either Academies or in the process of converting- over 1400 in all.

Last September Chris Cook of the Financial Times  asked one school Headmaster why his school was converting to Academy status. He said: “A conservatory”.

This is not an apocryphal story and manages to sum up why some  schools have converted to Academy status. Extra money. This was  confirmed by  a  recent survey conducted by the Reform think tank and published in March this year. It found that  more than one-third of schools in the government’s academy converter programme have cited additional money as their primary reason for taking part.  Also, in  a survey of almost 1,500 schools carried out last year by the Association of School and College Leaders, seven out of 10 cited financial gain as a reason for converting.

The stated purpose of the Academy scheme has never been to grant schools additional funds. It has been to give them new freedoms and   real autonomy,  so they can manage their own affairs, free from Local authority bureaucracy, to help raise performance. (and not to disadvantage other neighbouring schools through a two tier funding system)

The findings are in marked  contrast to the government’s claims that schools were not converting to academy status to receive this extra funding. Academy institutions, funded directly by the central government as opposed to local authorities, are supposed to be financed at the same level as other local schools. The principle behind academy funding is  pretty straightforward: every child gets the same spending, whether they attend an LA school or an academy. But  Heads and governing bodies know that this has simply not been the case.  Many who support the Academy scheme  and who believe that academies really do represent a lever to bring about systemic change and improvement , fear that schools which jumped to become academies for the cash windfall may not have the strength or depth  of leadership required to stand alone and so  may serve to undermine the whole reform programme.

Chris Cook , of the FT ,explains the funding  system as follows:

‘LAs spend money on things for LA schools, like pupil transport: so-called “central services”. If you are an academy, however, you have to provide some of these services yourself. So you get grants in lieu of those services which should equal the amount paid for those services: the Local Authority Central Services Equivalent Grant – or Lacseg. The problem arises because, for reasons that are unclear, the DfE sets these totals months before it knows how much LAs will actually spend in each area .Then, even if it discovers that its estimates are clearly wrong, it refuses to correct them’

Cook gives an example. Islington. He writes ‘So we know that the DfE estimated the Lacseg should be £551 for a pupil in Islington in 2011-12. But, in truth, the LA was only spending £219. This means a 1,000 pupil secondary would enjoys a £332,000 overpayment from converting to become an academy.’

Cook adds that the uplifts were bigger generally  for schools that converted in 2010-11 — and were sometimes so large that the DfE decided it could not correct them in one go. Those schools are continuing to be overpaid. Cook suggests that this  is ‘daft’ and if the DfE paid a flat fee of about £200 to all academies, it would be a more accurate mechanism with smaller errors than their attempts at localised estimates.

This, of course, raises a number of issues. First, the reality is that if you convert to Academy status, you get more funds,  and that has been  the case until now . Secondly the the funding system is very complex, unfair and wasteful, at a time when funding  is  particularly  tight. Some schools feel rather hard done by.

Most worrying perhaps, for reformers at least, is what motivates schools to convert. If it really is just about getting access to more funds, rather than winning and using new freedoms and autonomy, then isn’t there a danger that schools will simply continue as usual  rather than bring in changes and innovative approaches  that might serve to   improve their schools and the system as a whole?

And the funding system seems already to be changing.  Academies look unlikely to receive, in the future, as much as they have in the past.  Local authorities have changed the way they do their annual spending returns – known as ‘section 251’ returns. As Fran Abrams writes in the Guardian this week ‘councils have quickly adapted to this new use of their existing data, and have started to make their calculations differently. Broadly, what they have done is to remove money from the central, catch-all pot and label it instead as being for a specific purpose, thereby reducing the total amount from which academies get their cut.’ So it  may  well be the case  that the financial benefits of converting to Academy status are already on a downward trajectory.

But , crucially, they will still have their new freedoms.   And, by the end of this Parliament, a substantial majority of secondary schools will be Academies.