Gove’s school league tables will fail the poorest pupils

The introduction of the English Bac will push money away from those children who need it most.

When the new school league tables are published later this morning, there will be lots of parents and teachers who are shocked by the latest ranking of their school. More worryingly, the league table is going to pull head teachers in two directions and discourage them from using the pupil premium to help the poorest pupils.

The new table will measure how many pupils get good GCSEs in just five subjects – English, maths, science, a language and a humanities subject – rather than results across the board. The new measure, labelled an English Bac, is being introduced to combat what Michael Gove sees as a rise in "soft subjects". So many schools that rose up the league table last year because their pupils improved in other subjects are likely to see a sharp fall in their league table position today. Indeed, the government estimates that only 15 per cent of pupils will achieve the Bac.

The fact that the new league table has been introduced retrospectively has caused anger among teachers. They are concerned that they will be ranked using exams that were taken before the new measure was even in place. Up until this year, they were being actively encouraged to offer a broad curriculum, including information technology, diplomas and citizenship – none of which will be included in the new Bac. It is unfair, they claim, to penalise them for following the previous system.

Though these criticisms are justified, they are unlikely to cause much concern to Michael Gove. The very point of pushing the reforms so quickly is to shine a spotlight on the problem he has identified. The lower the number of schools passing the English Bac, the more evidence there is to back his claim that pupils are failing conventional GCSEs.

But what should give him a bigger headache is the impact the new league tables will have on the poorest pupils. Since becoming Education Secretary, Gove has made narrowing the attainment gap between rich and poor pupils his cause célèbre. Yet today's reforms to the league tables are likely to encourage schools to focus their resources on more affluent pupils.

IPPR analysis shows that, in 2009, only 26.6 per cent of pupils eligible for free school meals achieved five or more A*-C grade GCSEs or equivalent including English and maths, compared to 54.2 per cent of pupils not eligible for free school meals – an attainment gap of 27.6 percentage points. And only 10,000 children on free school meals got grades A*-C in a modern language – just one in 50 of that year's cohort of pupils.

The harsh reality is that the pupils most likely to achieve the Bac are those from more affluent backgrounds.

By placing the English Bac at the heart of the new accountability framework, the government is providing an incentive for schools to focus resources on those middle-class children likely to do well in a narrow range of academic subjects. Even the pupil premium, which is money intended for poorer children, is likely to be diverted to help boost a school's position in the league tables.

While Gove's rhetoric on narrowing the attainment gap between rich and poor pupils is laudable, he is sending a contradictory message with the new rankings. Until this contradiction is resolved, it will be the league tables that dictate where schools focus their effort.

Resolving this contradiction will require two things. First, additional support should be targeted towards the pupils for whom it is intended. The pupil premium, for example, could be an entitlement for every child on free school meals to activities such as extra catch-up tuition, small-group tuition or one-to-one teaching to stretch the most able. This would prevent the funds being diverted towards pupils more likely to boost a school's position in the league tables.

Second, the accountability system should be adjusted to give weight to a wider range of measures than attainment in "hard" GCSEs. New York City, for example, has introduced a school report card that includes measures such as the progress of children from low-income households. This would be a better way to hold schools to account for their performance against a wide range of criteria.

Jonathan Clifton is a research fellow at IPPR.

Jonathan Clifton is a senior research fellow at IPPR.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation