IFS on Tories’ pupil premium policy: one in 10 schools could suffer 10%+ budget cuts

by Stephen Tall on March 4, 2010

The ‘pupil premium’ – the Lib Dem proposal to invest an extra £2.5bn in schools which could be used to cut class sizes, offer one-on-one tuition and provide catch-up classes – is a policy which Nick Clegg has passionately advocated for over seven years. It is now one of the party’s four key policies emphasising fairness – in this case, A fair start for every child – for the coming general election.

This week, the Institute for Fiscal Studies – the independent financial research institute often quoted by the party to validate its economic policies – published an analysis of the pupil premium, and the impact it might have. They gave a cautious welcome to the Lib Dems’ proposal:

There are a number of options in designing a pupil premium. One could implement a pupil premium on top of all existing funding that schools receive, as proposed by the Liberal Democrats. Of the options we consider, this approach tends to benefit schools the most financially and would naturally weight funding more towards disadvantaged pupils. This option would clearly avoid any school losing its existing funding. However, funding must be found from other sources: the Liberal Democrats have proposed cutting tax credits to above-average-income families, as well as reducing other areas of spending. The gains in terms of extra funding for disadvantaged schools need thus to be set against the impact of the measures required to pay for them.

Here, though, is what the IFS says about the Tories’ preferred method of implementing the pupil premium under which local authorities’ role in school funding decisions would be replaced with a single national formula determined by central government. (So much for the Tories’ much-vaunted localism agenda, eh?)

… depending on the exact option chosen, around one in ten schools could still experience cuts in excess of 10% of their existing funding. More detailed analysis of a national funding formula also illustrates a key problem with such a reform: the concentration of gains and losses in particular local authorities. This pattern does not show up as an urban/rural split; instead, it is likely to reflect local authority choices over services provided centrally, the relative priority given to primary and secondary schools, and historical factors.

As David Laws, the Lib Dems’ shadow schools secretary, points out:

This independent report confirms the Tories’ proposals would be disastrous for thousands of schools, wrecking opportunities for millions of children. The Conservatives’ plans will mean many schools have their budgets slashed.”

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