Schools and Colleges (Funding Formula) (Hansard, 21 October 1998)

§ Mr. David Chaytor (Bury, North)

I beg to move, That leave be given to bring in a Bill to make provision for a common funding formula for 16 to 19-year-old students in schools and colleges. The Bill requires the Secretary of State for Education and Employment to establish a common funding formula for school sixth forms, sixth-form colleges and further education colleges, so that students pursuing the same or similar courses in different institutions receive broadly the same level of public funding. At present, 60 per cent. of full-time 16 to 19-year-old students now study in the college sector, with only 40 per cent. in school sixth forms.

The need for the Bill lies in the increasing evidence that in recent years a funding gap has opened up between school sixth forms and colleges that could now be of the order of 20 per cent. That is to say that most sixth forms receive up to 20 per cent. more funding per student than their neighbouring colleges. We are used to differential levels of funding between private and state schools, but here there are unacceptable differentials within the state sector.

The Bill does not deal with the related issue of differential funding between colleges and training and enterprise councils, but that may be an issue that other hon. Members wish to pursue. Nor does it deal directly with the anomalies of differential funding between local education authorities or between colleges funded by the Further Education Funding Council.

The nature of the current problem is that there is essentially one curriculum for students aged 16 to 19, but two distinct sectors, two financial systems and two funding regimes. The issue has been widely discussed within the profession during the last five years, particularly since the incorporation of colleges in 1993 and the establishment of the FEFC, although it has been difficult to reach agreement over the exact methodology for calculating comparative costs.

I remind the House of the different funding regimes that apply to school sixth forms and colleges. Schools receive their funding through local education authorities. I am delighted to say that the formerly opted-out schools will be brought back within the remit of local authorities in due course. There is wide variation between LEAs. Funding for 16 to 19-year-olds is distributed according to the LEAs local management of schools scheme, mainly according to pupil numbers: on average, 16-year-olds are worth about 140 per cent. of an 11-year-old funded through the average weighted pupil unit. Up to 20 per cent. of the budget may not be related strictly to numbers, but the numbers of students are determined on a single census day, no account is taken of drop-out, and there is no allowance for achievement.

1292 By contrast, colleges are funded through the Further Education Funding Council. The funds are distributed according to the number enrolled, the number continuing to participate and the results at the end of the course. There is a weighting for the different curriculum areas. The funding reflects the real cost of delivering the courses. High-cost areas such as science achieve more than lower-cost areas such as humanities.

Schools receive funding that is front loaded, depending largely on the number of students enrolled at the start of the course. College funding is determined by the number of students who continue on the course, and on their levels of achievement.

To date, the policy of both the previous and the present Government has been to support convergence in principle. The former Government made that clear in their competitiveness White Paper, and our Government have referred to it recently in the consultation paper on fair funding. Earlier this year, the report of the Select Committee on Education and Employment drew attention to the subject. There has also been considerable research, although there is a dispute over the methodology. It is likely that the latest piece of research from the Department for Education and Employment will be published in the next few weeks showing that the difference in funding levels has increased.

A common funding formula would help to restore some of the savage cuts imposed on colleges in recent years. It would concentrate the minds of local authorities and individual schools with small sixth forms which have not yet grasped the nettle of the damaging implications of post-16 competition. It would release resources which could also be used to increase spending in schools at key stage 3. Most importantly, by encouraging greater collaboration to secure economies of scale, it could widen curriculum choice for young people to enable them to pursue the course that best suits their interests, abilities and career aspirations.

I do not claim that the proposals in the Bill for a common funding formula for schools and colleges will achieve all those objectives overnight—nor do I believe that a common funding formula alone can address the crisis of funding or the chaotic legacy of the internal market that continues to damage post-16 education. For the nettle to be truly grasped, we need to establish new planning powers at regional level. However, the Bill would be an important means of getting the ball rolling in the right direction, and I commend it to the House.