From education to employment

Funding the Pupil Premium: Fairness for Young People and Parents

Mark Corney, Author

Significant cuts to 16-19 participation funding and 16-19 financial support are in the pipeline from 2011/12 because of decisions taken by the Coalition Government in the emergency budget.

Now, in the final days before the spending review, the 16-19 sector could face further cuts in order to fund a pupil premium for 4-15 year olds from disadvantaged backgrounds.

As a result of the emergency budget, the Department for Education could suffer cuts of up to 20%. Rightly, the 16-19 sector is preparing for similar cuts in participation funding for school sixth forms, FE colleges and training providers.

In addition, parents with 16-19 year olds in full-time further education and unwaged training will be hit by the planned ‘freeze’ in non-means tested child benefit and the scaling back of means-tested child tax credit to households on no more than £26,000 per year.

If this were not enough, the Coalition Government is trying to draw together funding for a pre-16 pupil premium from outside mainstream school budgets. Critical, of course, will be the scale of funding and the source of the funding.

According to the DfE, £3.9bn is notionally allocated through mainstream school budgets for pupils from disadvantaged backgrounds. The Coalition Government plans to announce the amount of funding for the pupil premium shortly after the spending review.

As a guide, however, £1.3bn would increase it by a third, less than £2.5bn promised by the Liberal Democrats in opposition but significant given the fiscal crisis.

Clearly, the Treasury would like DfE to find savings in its budgets to fund the pre-16 pupil premium. Yet, with mainstream schools budget protected finding anywhere near £1.3bn will be difficult.

Savage cuts to Sure Start, nursery education, children care, youth services, and children and family services would be politically dangerous since they help the poorest most in society.

The Chancellor, meanwhile, has made clear that if £4bn of extra savings can be made on welfare benefits, this funding can be used to support the key priorities of the Coalition Government. High on the list of priorities is the pupil premium although there is stiff competition from defence and welfare to work.

Unsurprisingly, universal benefits including non-means tested child benefit have come under the spotlight. Currently, child benefit is paid to all parents with children from birth to the end of compulsory education (£10.3bn) and 16-19 year olds in full-time further education (£1.5bn).

Speculation is mounting that the Coalition Government will abolish or severely restrict post-compulsory 16-19 child benefit, thereby freeing-up funding for the pre-16 pupil premium.

In opposition, the Conservatives and the Liberal Democrats toyed with the idea of abolishing means-tested Education Maintenance Allowances to fund the pre-16 pupil premium. Now in government, the irony is that they wish to retain means-tested EMA but abolish non-means tested 16-19 child benefit.

Indeed, there is an unanswerable case for cutting back the cost of 16-19 child benefit. 16-19 year olds from wealthy families stay-on anyway, tend to achieve good A levels and then enter university.

Parents with 16-19 year olds in private sixth forms also receive child benefit and they are more likely to enter our elite universities than children in state sixth forms. The result is high levels of deadweight and entrenched social immobility.

Unquestionably, the Coalition Government should scale back 16-19 child benefit.

One option would be to means-test it. Restricting 16-19 child benefit to parents on household income of £45,000 could save £300m in England. Another option would be to abolish 16-19 child benefit altogether and provide compensating payments to poorer families through means-tested child tax credits.

More radically, the remnants of 16-19 child benefit alongside child tax credit could be transferred to EMAs to create a 16-19 Youth Allowance. Under this option, all 16-19 financial support would be in the hands of students.

Indeed, with significant funding in their hands, albeit conditional upon attending school or college, more young people from poorer backgrounds could stay-on post-16.

Yet, the critical question is whether savings in 16-19 child benefit should be used to fund a pre-16 pupil premium.

Surely, the savings are needed to reduce the number of young people ‘not in education, employment and training’ (NEET). 16-19 funding should be for 16-19 year olds. It is clearly unfair to prioritise today’s 4-15 year olds in favour of today’s 16-19 year olds given the challenging economic circumstances they face.

The pre-16 pupil premium should be funded from 0-16 funding. More specifically, the pre-16 pupil premium should be funded through means-testing 0-16 child benefit.

Restricting 0-16 child benefit to household income of £45,000 could save around £2.3bn per year, with £1bn compensating the Treasury for not freezing child benefit and £1.3bn for the pupil premium.

Nothing would symbolise fairness more than taking child benefit away from wealthier families to pay for extra support for pupils from disadvantaged backgrounds.

Mark Corney is author of “Funding the Pupil Premium: Fairness for Young People and Parents” published by CfBT Education Trust

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