Using sugar tax to plug gap in school funding is perverse, say councils

Fears have been raised that the sugar tax, earmarked to invest in children’s sports and healthy eating programmes from April 2018, could be diverted to plug holes in education funding.

Local council leaders have said the government must find new funds to pay for its boost to schools funding, amid concerns that money due to be raised from the levy on sugar-packed soft drinks will be used to make up the shortfall.

The Local Government Association, which represents more than 370 councils in England and Wales, said it was crucial the levy was protected, given significant cuts to councils’ public health budgets, slashed by £531m over five years.

Izzi Seccombe, chair of the LGA’s community wellbeing board, said she had “grave concerns the government is hijacking this money to plug funding shortages elsewhere.”

In February 2017, the Department for Education announced that £415m of funding from the soft drinks industry levy would be allocated to schools in 2018-19 to fund after-school activities, sports and promote healthy eating.

The levy had been expected to bring in £1bn over the next parliament, which has been guaranteed by the Treasury even though tax receipts are now likely to be lower than predicted because many soft drinks companies have reformulated drinks to avoid paying the tax.

However, last week the DfE announced that £315m from the sugar tax will now be diverted in 2018-19 to addressing school funding shortages, leaving just £100m to fund the original objectives.

MPs had raised significant concerns about the new schools funding formula, which left thousands of schools facing real-terms budget cuts. Conservative MPs cited the schools funding as one of the key issues of the election, with schools warning they would have to lay off teaching staff.

Seccombe said the soft drinks levy had been a significant step in the fight against obesity. “The government needs to find genuinely new money to meets its new school funding commitments,” she said.

“It is perverse and counterproductive to simply shift this money around, particularly at the expense of children’s health. It calls into question the original purpose of the levy.”

Seccombe said the loss of the funds could also derail the government’s childhood obesity plan, where cash from the levy was a major theme. “The government needs to be clear about what this now means for the levy, and for reducing the worrying levels of child obesity in this country,” she said.

“Schemes that encourage physical activity, healthy eating and improve children’s mental and physical health, which the levy would have been used to pay for, cannot be seen as nice to do but fundamentally non-essential.”

A DfE spokesman said £100m from the sugar tax levy in 2018-19 would still be spent on improving child health, with extra revenue allowing the government to double the PE and sports premium by 2020. However, the department said the remainder would “rightly be used to increase the resources going directly to schools” to shore up current funding.

“The introduction of a National Funding Formula alongside the additional £1.3bn investment in the core school budget represents the biggest improvement to the school funding system in over a decade,” a spokesman said.

“It will allow for a cash rise in every school and prioritise funding for headteachers who can use their expertise to ensure money is spent where it will have the greatest possible impact.”

The government also confirmed on Wednesday it was abandoning the Conservative manifesto commitment to provide free school breakfasts for all primary school pupils, as a replacement for scrapped free school lunches.

The decision to cut free school lunches, introduced by the coalition government, was widely criticised after it was revealed the government planned to spend just £60m on the scheme – around 7p per pupil.

In a written statement, education minister Robert Goodwill confirmed the government would be retaining the existing provision for universal infant free school meals, but said £10m from the soft drinks levy would be used to expand breakfast club provision in up to 1,600 schools.

Labour’s shadow education secretary, Angela Rayner, called the admission “yet another humiliating U-turn” from the Conservatives.

“Just weeks later they have abandoned that pledge as they beat a full scale retreat from their own manifesto,” she said. “Only Labour has a fully funded plan to provide free school meals to all primary pupils while protecting schools’ budgets in real terms.”