Full transcript | Nick Clegg | Speech on education | Wandsworth, London | 5 September 2011

"I want to see all of the second wave free schools in poorer neighbourhoods."

Today is the first Monday back for teachers and pupils up and down the country. A day always marked by renewed optimism. Pupils plan to work harder. Teachers come back refreshed. And all parents - I know this myself - have the best intentions for the months ahead: Whether that means making sure you're there for sports day and the class play. Or finding that bit of time at the end of the day to help with homework. Just doing whatever you can to give your children some extra support.

This year, there's a feeling of optimism in Government too. The Coalition has made some big changes to our education system. To improve the quality, choice and opportunities available to families. And we're looking forward to seeing those take root.

The problem with new-term-enthusiasm, however, is: it doesn't always last. It isn't shared by everyone. And, as a society, we tend to let it fade too quickly.

Replacing our high hopes with an equally familiar fatalism. We allow ourselves to believe some basic assumptions as if they are facts of life. There are good schools, and there are bad schools. Some children are bound to do well - the brightest, the wealthiest. The troublemakers, the children from the tougher neighbourhoods, will inevitably lag behind. Most parents will at least try to take an active interest. But the daily grind will often get in the way. And a difficult, uninterested minority will never be brought on board. That's the way things are. The way they've always been. And, notwithstanding some improvements here and there. The way they always will be.

I don't accept that. There is some truth to these assumptions - because they are based on consistent patterns. But they aren't inevitable. And we do the next generation a disservice by cursing them with our low expectations.

Sometimes you hear commentators slamming school standards as if teachers are lazy and feckless just because some schools are failing. Condemning children and young people in the country just because some of them have gone off the rails. Yes, our country has problems but they will not be solved by denigrating our teachers and our schools. We won't get more young people to take responsibility for themselves, or find work, if all we do is perpetuate the myth that no-one under the age of 25 can be trusted. There were young people on the streets rioting last month. They should face the full force of the law. But there were young people on the streets cleaning up the next day, too. And we cannot let our anxieties about some parts of our society undermine the hopes and dreams of a generation.

Today I want to talk about the Coalition Government's twin ambitions for our education system: A decent start for every child and a good local school for every family. That may sound basic, but it's absolutely fundamental to creating a fair, liberal and socially mobile society. Helping individuals fulfil their potential. Helping make Britain a place where anyone who works hard can get ahead.

To get there, Government needs to be innovative. Schools need to step up to the challenge. And, crucially, parents need to do their bit, supporting teachers, too.

Before I come to that, let's pause on the problems. Labour spent vast sums on schools. And, to be fair to them, some things did get better. Education is clearly an area where money makes a difference.

My party has always understood that. It was the Liberal Democrats who advocated a penny on income tax for education in 1997, and again in 2001.

And now, despite unprecedented pressure on the public purse, the Coalition is protecting the current schools budget, in real terms.

But, what Labour's record also shows is that big budgets, directed from Whitehall, aren't enough. And if your aim is simply to get a bit better, that isn't enough either. We live in a globalised age; if we are to thrive in the economy of the future, we need our children to excel. And we cannot afford to leave some behind.

Ours is now one of the most unequal school systems in the world. In the UK your background has more of an impact on how well you do at school than in nearly any other developed country. Despite the number of pupils achieving five good GCSEs having hit record highs. The gap between poorer and wealthier children getting these grades has stayed the same. Teenagers from disadvantaged homes are still only half as likely to do as well. And there are schools where not a single pupil on Free School Meals is even entered for the most academic subjects. Or sits the exams where they can achieve the top grades.

Bluntly, the best schools are still in the nicest areas, populated by the children whose parents are better off. Poorer children tend to go to worse schools. And wherever they go, they usually get lower grades. That is the stark reality we face.

For liberals, education is meant to free individuals from the circumstances of their birth. But in our society school doesn't always provide that kind of opportunity to fulfil your potential. Too often our education system ties children to their beginnings; it denies their parents choice; and it deepens social divides.

That's a problem for everyone.

It costs our economy. According to one estimate, if we could get all under-achieving pupils up to the national average, by 2050 we could add 4% to our GDP.

It holds back the whole class. When a handful of students switch off, they play up, monopolising their teachers' attentions and everyone suffers.

And, when the best schools are concentrated in some communities but not others, poorer families get the raw deal. And all parents are faced with the well-known stresses and strains of trying to get into the right catchment area.

So we need fundamental reform to break the traditional patterns of winners and losers in our schools.

First, that means a decent start for every child. Closing the gap between disadvantaged children and their better off classmates.

Given how early that gap appears, you cannot wait to intervene. That's why, for example, the Government has extended the free nursery care three and four year olds currently receive from 12.5 hours to 15. And is going even further, making this vital early education available free to every disadvantaged two year old as well.

Once these children reach school they'll benefit from our £2.5bn Pupil Premium. Additional money that follows them throughout their primary and secondary education.

The Coalition isn't going to prescribe to schools how they spend the money...

But today I do want to urge them to look carefully at the research that already exists: We know that there are a host of tried-and-tested methods for raising attainment. Investing in teachers' training and professional development.
Smaller class sizes. More pastoral support, outside the classroom. Or more intensive, individual tuition.

The Sutton Trust recently looked into this. And found that, especially for younger children who need to catch up. An extra half an hour of more intensive time with the teacher. Three times a week, for up to twelve weeks.

Can do as much good as five months in the classroom.

The same report found that when children are older, they benefit from sitting down with teachers to plan and monitor their own progress. They do better if they are given specific, personalised feedback.

Not just on how well they did at a task, but also how they approached it. And the report concludes that behaviour improves when older pupils have clubs to go to after school.

All that takes time. It needs staff. It costs money. But it works. And it is precisely the kind of help the Pupil Premium is for.

And though schools will be free to spend the money as they think best - Experimenting with new ways to support those who need help. Schools will have to publish information about what the pupil premium money was spent on. And they will have to publish information to show if it's making a difference and helping these children achieve more. That transparency is vital for parents - and communities - to be able to hold schools to account. And for all of us to learn about what really works in breaking the link between background and life chances.

Discipline matters, too. Everyone knows you can't teach in a disrupted classroom. And teachers need the authority to be able to deal with bad behaviour. Which is why this government is strengthening their hand, and being stricter about school rules and teachers' power to enforce them.

We need order in the classroom. But can't simply write off children who do wrong. Children who are violent, who struggle to keep calm and control their behaviour - so often because of chaotic lives at home - do need to be taken out of the classroom. But they mustn't be thrown on the scrap heap. It doesn't do them, or society any good.

That's why we're piloting a dramatic change in the way we deal with pupils who are excluded from mainstream education. Strengthening the power of schools to remove disruptive pupils. But ensuring they cannot then forget them. Or leave someone else to pick up the pieces. Over time, schools themselves will become responsible for the budgets for excluded pupils. They will be expected to commission the alternative education they receive. And their exam results and later progress will be included in the original school's data. There will be no washing your hands of a pupil once you have asked them to leave the room. And it will be in your interests to see those pupils brought back on track.

Those are measures aimed at closing the gaps between pupils. How do we close the gaps between schools?

We currently have one of the most segregated school systems in the world. With a huge gulf between the best and worst. And the latter concentrated disproportionately in the poorest places.

The only way to bridge that divide is to learn from the evidence. From the experiences of other countries. Understanding what drives school improvement, and where we have been going wrong.

And the evidence is overwhelming: good schools need high-quality teaching; sufficient freedom; diversity and choice. So we are taking action on each.

On teaching standards, we need to continually raise the quality of new entrants to the profession. That's why, for example, from next year, funding for PGCE training will only be available to graduates with at least a 2:2 degree, or equivalent. We're reforming teacher training so that trainees spend more time in the classroom. And we've increased the grant for Teach First.
Which has proved hugely successful in getting some of our most talented graduates into our most challenging schools. We're also making it easier for people who already have a career to make the step into teaching.

On greater autonomy we have reduced the reams of bureaucracy that eat up endless work hours and stifle innovation. And we're offering all schools the chance to take on Academy status, either individually or as part of a chain. Where they have full control over their curriculums, staffing and budgets.

Of course, that freedom must be matched with accountability. So, for example, from now on all schools will need to publish 'destination data'. Showing in black and white what pupils go on to do once they leave. We're overhauling OFSTED's framework to focus more squarely on school's core responsibilities: learning, leadership, attainment and behaviour. And we want inspectors to engage more directly with teachers, students and parents. Rather than simply relying on data and spreadsheets. And, where schools persistently struggle, and cannot show signs of improvement. They will have their management replaced by schools with a proven track record.

Clearly, as the number of Academies expands, we will need to make sure that we get the right balance between school freedom and local accountability.

I think some confusion has been allowed to grow around our long term vision for schools: There's an increasing belief that we are trying to sideline local authorities altogether because Academies so far have only had a direct relationship with the Secretary of State and the department in Whitehall.

So let me straighten this out once and for all. This government wants all schools, over time, to have the opportunity to be autonomous with Academy freedoms. Both Liberal Democrats and Conservatives promised that in our manifestos. But we do not want that to lead to mass centralisation of the schools system.

Far from it: as Academies become more commonplace, and eventually the norm, we will make sure people do not lose their voice over what local schools provide. So we will need to develop a new role and relationship between schools, central and local government.

Councils have an essential job. We will ensure they have a stronger role in making sure there are school places in the area for every child, not just those who know how to play the system.

We have strengthened their role in admissions. They will oversee our new, fairer, admissions code. A code which makes it easier for the poorest to get the best places and easier for any citizen to complain if the rules are broken.

We will strengthen their role supporting children with special needs. Sarah Teather is bringing forward a radical set of reforms which will ensure local councils can help knock heads together to get a better deal for disabled and disadvantaged children.

And we will give them a critical role ensuring there is fairer funding Local authorities will help ensure the schools forums which currently divide up the cake locally are more transparent and they will help guarantee that academies, and other schools, are funded on exactly the same basis.

But we can - and we will - go further. Where there are no schools the local authority "owns" any more - there should be no barrier to the local authority working in a new relationship with academies, in partnership with central government.

The local authority could have a key role in deciding who new providers are and holding existing providers more sharply to account.

Local authorities, closer by their very nature to their community than the Secretary of State, could be more determined than distant Whitehall to drive up attainment in their own patch - for example by setting higher standards for all schools in their area.

That is why I am inviting those local authorities which wish to move to the new phase to grasp this opportunity and be involved in piloting this new role, starting from next year.

Working with the Department for Education we will use this pilot to develop a model which allows local communities to show they can develop new partnerships - built on greater freedom for professionals - but buttressed by real local accountability.

Finally, we're introducing more choice into the system - encouraging under-performing schools to raise their game. We know diversity pushes up standards. I've seen it myself: Years ago I travelled around Europe comparing school systems for a pamphlet on educational performance across the EU.

What I learned then planted the seed for the idea of the pupil premium. But it also convinced me that diversity of schools is also important. It's something Liberals championed more than 100 years ago when we challenged the Conservatives' plans to outlaw non-conformist schools.

Parents, children and communities benefit from innovation, diversity, and choice. One size fits no-one.

And it's part of the rationale behind free schools.

The first wave of free schools will open this week. The idea is that parent groups, charities and other organisations can open schools where they are not happy with the existing choice. It is controversial with many, and there are risks - but I am confident we have mitigated those risks to make sure this is now a policy which will promote higher standards, better integration, and fairer chances especially for children from the most deprived backgrounds.

Let me be clear what I want to see from free schools. I want them to be available to the whole community - open to all children and not just the privileged few. I want them to be part of a school system that releases opportunity, rather than entrenching it. They must not be the preserve of the privileged few - creaming off the best pupils while leaving the rest to fend for themselves. Causing problems for and draining resources from other nearby schools. So let me give you my assurance: I would never tolerate that.

The Coalition has made it clear that our overriding social policy objective is improving social mobility. Reducing social segregation; making sure what counts in our society are ability and drive, not privilege and good connections.
Free Schools will only be acceptable so long as they promote those goals.

That's why I am pleased that half of the first wave will be in deprived areas. And the vast majority in areas where they desperately need school places.

Michael Gove will be making decisions on the second wave over the coming weeks. I want to see all of them in poorer neighbourhoods. Or in areas crying out for more school places.

We are also taking unprecedented steps to make sure disadvantaged pupils actually get into these schools. Along with academies, free schools will, for the first time, be able to give them special priority in their admissions.

How can we be confident they will? Because, crudely, these pupils receive the pupil premium. The more of them the school takes, the more money it gets.

That's a simple, but crucial, financial incentive. No one has reformed the admissions code like this for years. In future, free schools must use this power to do all they can to make sure that they have the same proportion of Free School Meals pupils as the local average - at least.

Schools prepared to open up their facilities to the whole community will also be further up the queue for government funds. These steps, taken together, should alleviate people's concerns. Free schools, yes, but only if they are fair schools too.

And, to anyone who is worried that, by expanding the mix of providers in our education system. We are inching towards inserting the profit motive into our school system. Again, let me reassure you: yes to greater diversity; yes to more choice for parents; But no to running schools for profit, not in our state-funded education sector.

So, opportunities for every child, in every neighbourhood - an ambitious agenda.

But, for this to work, parents need to do their bit too. The fact is: if you don't take an interest in your child's education, teachers cannot make up the shortfall. We currently have the most talented generation of teachers this country has ever seen. But they cannot do everything.

We already expect our teachers to be social workers; child psychologists; nutritionists; child protection officers. We expect them to police the classroom, take care of our children's health; counsel our sons and daughters. Guide them, worry about them. And, on top of that, educate them too. When you consider that list, it is phenomenal that so many rise to the challenge. But it is too much to ask. Teachers are not surrogate mothers and fathers; they cannot do it all.

And, when you talk to teachers, it's clear they are desperate for parents' help.

They know, like we all know, the importance of parental involvement in a child's development. In his review of life chances, Frank Field found it to be the single most important factor in a child's progress. Just last week we heard from Demos that children are much less likely to binge drink and get into trouble during adolescence. If they experience warmth in the home when they are young, and clear discipline as they grow up.

The fact is: parents hold their children's fortunes in their hands. I know it's not always easy. But, when you speak to teachers, they're not making unrealistic requests. They aren't demanding parents break the bank on private tutors, or top of the range computers. They aren't insisting parents cut down on their working hours to spend more time at home. They just want mothers and fathers to get into simple, commonsense, inexpensive routines. Small changes that make the world of difference to their classrooms.

Because a teacher can't make sure that children take time at home to get a proper breakfast that sees them through until lunch. They can listen to a child read at school - but they can't do an extra fifteen minutes at home in the evening. A teacher can't turn the TV off when it's time for homework. Or make sure children get to bed on time so they don't come to school tired. Teachers tell me what a huge difference these little things can make. They also know that they can't do them. But they know that parents can.

I know that it is not easy. Do I get it right every day? No I don't. But do I, like so many parents, want to do more? Yes I do. And I know parents up and down the country feel the same. Now is the time to do it. We expect teachers to do so much. And they invariably do. But we all have a part to play in transforming the nation's schools.

So, to sum up. On a day where everyone is determined to make the best of the new school year. Let's set our sights even higher. Lets work together: government, schools and families to deliver the best for our children. No more shrugging our shoulders. No more accepting the status quo. A society where we celebrate the work our teachers do for our children. But where we all play our part in teaching them, too. With the right opportunities, every child can do well. With better teachers and more freedom, every school can do better.

Through choice and diversity - spread fairly - every community can have access to the schools they need.

Thank you.

Nick Clegg is leader of the Liberal Democrats and MP for Sheffield Hallam. Clegg initially trained as a journalist before working as a development and trade expert in the EU. He was elected as MEP for the East Midlands in 1999, stood down in 2004, lectured at Sheffield and Cambridge universities, and was elected to the UK parliament in 2005.
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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?