Letting schools work: choice for parents, incentives for heads – by Edward Leigh MP

Introduction

The failures of our current education system are too numerous and familiar to bear repetition. Suffice it to say we all know that something is rotten in the state of British education. After 11 years of a Labour government, too many children leave school functionally illiterate and innumerate, and too many, fed through the sausage-machine of our current system, drop out of university. If money were the solution, the problem would surely have been fixed by now. In the current year the Government will spend 5.6% of GDP on education (from primary to university), as against 4.7% in 1996-1997 – an increase approaching 20%[1].

In spite of this largesse with our taxes, a recent poll shows that nearly three in five (57%) of parents would send their children to an independent school if they could afford to. That is the biggest figure since Labour came to power, and more than 20% up (nine percentage points) on the previous poll four years ago.[2]

With this in mind, I have a few ideas for improving the situation.

One plank of my proposal, regarding independent schools, is similar to the (Labour-dismantled) assisted places scheme – but with minimal state intervention. Another is that all state schools should be grant-maintained, as an essential basis for any worthwhile liberation of the state sector.

Building on current Conservative party policy

Head teachers have always said that they need to have the absolute right of decisions over expulsion resting with them, so I am delighted to see that Michael Gove has announced that this will be restored by a Conservative government. Too many children’s education suffers from disruption by reinstated troublemakers.

Michael will also reduce bureaucracy in planning and building; increase the organisations that can set up Academies; give parents control of £5,000 + per pupil to take child out of a school they are unhappy with and apply to a new Academy; provide extra capital funding for new Academies in the poorest areas, and give them ‘greater autonomy’ over the curriculum.

This all takes us further in the direction of the relative freedoms established by the Government through the Academy schools. Michael’s plans are an excellent foundation for a future Conservative government. Here are a few ideas for building on his superb work.

For instance, he says that all Academies will be non-selective. But why shouldn’t all schools – not just Academies – have freedom from local authority control, freedom over the curriculum, freedom to set their teachers’ salaries and freedom to select their pupils? Some may prefer to become more academically selective, others not; I would not force any school to select. Currently almost all comprehensives can select 10% of their intake on what one might call quasi-academic grounds[3], so even the Government has grudgingly conceded a little ground.

Who benefits from preventing selection?

But while the Government’s opposition to full academic selection may please doctrinaire egalitarians, it does nothing but damage to the prospects of children – especially those the egalitarians most want to help. The ‘surplus places policy’ does not officially exist; nonetheless, it is a grimly established fact. It means that if a single place is vacant at the direst of state schools in a particular area, the local authority will permit neither a popular school to expand nor a new school to be opened.

No wonder nearly a fifth of children don’t get their school of first choice; in parts of London, as many as half are disappointed. No wonder atheists have their children baptised to get them into good church schools.

We accept selection in most other parts of life, as in choosing candidates for jobs – though even here egalitarians are keen on quotas based on criteria other than qualifications and suitability. The Government’s latest plans to legalise ‘positive discrimination’ for employers on grounds of sex and race as a ‘tie-breaker’ where two candidates are of equal merit is a case in point.

When it comes to education, for most children, a highly academic school would not serve them best, but for those who would benefit from such, it should be made available. I have never been in favour of recreating the educational apartheid of the 1950s between grammar schools and secondary moderns, but I do think heads should be able to run their schools as they please.  Very few schools in such a case would ever become super-selective. Why should they? Why can’t schools in the state sector be given the same freedom as those in the private sector where there is an infinite variety of type of schools? Most independent sector schools are effectively all-ability.What a pity that people on ordinary incomes find it so difficult to access them.

In many other walks of life we give people a leg-up; why not in education?

Meanwhile Michael Gove’s emphasis on streaming is a very welcome first step in helping children move forward at their own pace. I fully agree with him that we should not be obsessed with creating a few more grammar schools. Equally, it would be wrong to rule out the creation of a few more if heads think they are needed

All schools should be able to find their own level. This can only happen when head teachers are allowed to manage their budget, control their curriculum, hire and fire their staff and have in their schools the pupils they want.

The restrictions which currently prevent these common-sense freedoms from being exercised should be lifted forthwith. Only then will state education be able to flourish so that most children’s’ time at school becomes not an ordeal issuing in failure, but an experience in which their self-confidence is built up by acquiring a solid grounding in the knowledge essential to success.

Our motto should be: ‘Get Whitehall and politicians out of education.’

The Education Tax Credit: how it works

This new take on school choice is an idea from the USA and Canada – the ‘education tax credit’.[4] Noticing the widespread availability of tax allowances for schooling in Europe, I have adapted it to the British situation. This is not a voucher in disguise; it is an altogether different mechanism, a variation on the assisted places scheme. Although the Treasury is involved in an administrative role, in essence the credit is a private contract between parents and schools. No “Government money” – really taxpayers’ money – is involved. Hopefully, this could overcome some of the understandable resistance to previously proposed schemes from the independent schools, who are ‘once bitten twice shy’ from the abolition of the assisted places scheme.

The basic principle of the credit is that it gives parents a pound-for-pound reduction in their income tax liability up to a sum equivalent either to a proportion or, perhaps, the full amount, of that spent in the state sector for each child they have in private education.

I am not being prescriptive as to the best approach, but rather tentatively putting forward two alternative ideas for debate. Below are some essential points:

  • The credit could be EITHER not means-tested and worth £6,000 per child (equivalent to about the full cost of state school expenditure).
  • OR means-tested, against a figure for maximum family income yet to be decided, given the number of variables.
  • It should put no limit on family size.

Advantages of the education tax credit

  • Encourages more parents to choose independent education.
  • Increasing competition lowers cost of independent schooling.
  • Stimulates increase in number of suppliers.
  • Increases innovation.

How to introduce it: various options, not an exhaustive list

  • 1) It could either be introduced piecemeal – i.e. starting with a credit of £500 or £1,000 and increasing the amount incrementally – over the first 5 years of a Conservative government, but, importantly, with its ultimate goal declared from the outset.
  • 2) Or piecemeal from the second term of what one hopes will be at least a 3-term Conservative government.
  • 3) Or it could be introduced in the first term of a Conservative government, but starting with a credit of £1,000 and escalating gradually by £1,000 again up to £3,000 by the third year.

What will it cost the Treasury?

This depends on how many taxpayers use the credit. Yes, every pound spent on the credit is lost to the Treasury – but by encouraging parents to transfer children to private schools, this saves the cost of funding those children in state schools, so even a £500 tax credit would have a dramatic impact in savings to the Treasury. It would bring about 55,000 new pupils into private school (c. 10% of the current number) – so enabling the creation of about 100 new schools. Net Treasury savings: £115m+

With a credit of £1,000, you double those figures (though one cannot simply extrapolate upwards on a simple pro rata basis thereafter). That means you could increase the number of children in private education by c. 20%, with net savings to the Treasury of up to £177 million.[5]

I propose an eventual credit either without means-testing and equivalent to the full cost of state education per child, currently around £6,000; or, if means-tested, available up to the full £6,000 to low earners and at a maximum of £3,000 to high earners (definition of high and low earners to be determined in due course, given the number of variables in the foreseeable future).

Preventing abuses

To prevent possible abuse of the credit, it would be restricted to named individuals who were not currently at an independent school.

Answering objections

  • In answer to the old ‘deadweight cost’ objection – the cost that would be incurred if the credit applied to pupils currently at private schools – only new pupils not currently at a private school would be eligible. Although this seems restrictive, it has the advantage of rolling out the credit very gradually, so that it becomes fully effective over 2 or 3 parliaments. Alternatively, one could argue that those with children already at private school would feel understandably resentful if they couldn’t use the credit; as with almost all policies, there is no way to please everybody.
  • Some fear middle-class ‘white flight’ from state schools will necessarily result from giving parents more choice; all the evidence is that this has not been the case in Sweden[6].
  • I acknowledge that in the current tax credit system put in place by Labour, a means-tested education credit would entail an excessive increase in the already high marginal tax rates faced by many poorer families. A typical household on tax credits with children earning an extra pound over £6,420 has to pay an extra 20p in income tax, 11p in national insurance and lose 39p of tax credits, meaning that they only get to keep 30p out of every extra pound that they earn. To means-test the education tax credit as things stand would make their effective marginal tax rate even higher and so make work pointless for many households. To prevent this consequence, it would obviously be necessary to reform the current system. This paper is not the place to go into detail about how that would be done, but a reform of current tax credits is any way long overdue.

Encouraging the rich to help the poor

  • Combined with the tax credit, I would like to suggest that donations to private school scholarship funds and bursaries, which currently benefit from the gift-aid scheme, should be completely tax-deductible up to 20 per cent or less of your gross income. This is currently the case in America, where all donations to not-for-profit schools enjoy this benefit. As almost all private schools in the UK are run as charities, the same could apply.

Conclusion

Effective promotion and implementation of the tax credit would require a sea-change in public perception – but wake up! It has already started to happen. Witness the polls I cited above. Some people are yearning to give their children a private education; others would be happier within a liberated state system.

The way to satisfy both constituencies would be to get these schemes up and running, stage by continuous stage, presenting the focus groups with a fait accompli.

Finally, let me emphasise that I am not myself committed to a particular position in this area. I simply propose these ideas for wider debate.


[1] Figures from Treasury website

http://www.hm-treasury.gov.uk/spending_review/spend_sr04/press/spend_sr04_press08.cfm

[2]Ipsos MORI poll February 2008 http://www.ipsos-mori.com/content/home-page-news/ipsos-mori-survey-shows-record-demand-for-independ.ashx

[3] Commons Hansard 28 Apr 2008 : Column 228W

Jim Knight: A school may select up to 10 per cent. of its intake by aptitude in prescribed subjects if the school considers it has a specialism, whether or not the school is a designated specialist school….a child with aptitude is one who is identified as being able to benefit from teaching in a specific subject, or who demonstrates a particular capacity to succeed in that subject. Such selection is limited to subjects where there are recognised tests for aptitude which do not inadvertently identify high academic ability….Prescribed subjects are modern foreign languages, performing or visual arts and physical education or sport. Schools may continue to select 10 per cent. by aptitude in design and technology and ICT if they already had such arrangements in place prior to the 2008 academic year.

[4] Adam B. Schaeffer, December 5, 2007, The Public Education Tax Credit, Policy Analysis, no. 605, Cato Institute,

[5] James Stanfield et al., The Right to Choose: Yes, Prime Minister!, Adam Smith 2006 http://www.adamsmith.org/images/uploads/publications/Road_Map_Education.pdf

[6] ‘Free to choose, and learn,’ The Economist, 3 May 2007

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