Gove considering voucherisation of education funding, with headteachers running school budgets

By Tim Montgomerie

A massive story on the front of the FT(£) today. Alex Barker and Chris Cook report that Education Secretary Michael Gove is considering the introduction of direct funding of schools. If the reform went ahead there would be at least three big and very positive impacts:

• Schools will no longer get money at the discretion of local authorities but in proportion to the number of pupils they attract and retain. This will allow good schools to grow more easily and under-performing schools to learn that it will be improve-or-die. This is essentially voucherisation of schools funding.
• Headteachers will receive money directly. They will decide how to use their budgets, choosing whether to invest more in buildings, teachers and a hundred other judgments.
• Money would flow directly to the new free schools that Michael Gove hopes that voluntary groups, faith communities and businesses will establish. 25 are already in the pipeline after a slow start.

The big losers would be local authorities. Although they would retain some role in providing services to schools they would lose a great deal of power if this localisation-to-the-frontline were to go ahead. Although Orange Book Liberal Democrats would probably welcome the proposal there would be resistance from the powerful local government wing of our Coalition partners (and, indeed, from Tory local councillors).

The reform would have to be phased in as many schools currently receive much more money per pupil than others. The Institute for Fiscal Studies estimates that more than 60% of secondary schools and 40% of primary schools would lose out from a per pupil direct allowance.

As the FT notes, this is a bolder reformer than anything considered by Margaret Thatcher or Tony Blair. It is potentially transformational - empowering parents, forcing schools to offer better services and retrain or sack under-performing teachers. Go for it, Mr Gove.

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The graphic below (from the FT(£)) summarises the change.

10.45am: On his blog Douglas Carswell sounds a note of warning: "It puts in place the architecture of even greater central state control.  Can you imagine ministers starting to attach various conditions in return for the funding schools get?  We might like the bit about "proper history", but what about the things lefty ministers will demand?"