Education secretary admits £2.5bn for poorest children will come from existing budget despite David Cameron claim

The education secretary, Michael Gove, has admitted that he has had to make cuts to his own budget in order to fund the coalition’s flagship £2.5bn policy of a “pupil premium” despite claims from the prime minister and others that the money would come from outside the education budget.

Gove also acknowledged for the first time that funding will be redistributed so that some schools face a cut in order to make the extra payment to schools taking additional pupils from the poorest homes.

The chancellor, George Osborne, promised last week that the education budget would rise each year for the next four years and announced the new £2.5bn pupil premium, a financial reward to schools for each child they take from the poorest homes. The idea is the key Liberal Democrat policy in the government’s coalition agreement and the spending review.

Gove told the BBC’s Politics Show: “At the moment we’re consulting on how the people premium, which is the additional money, the additional £2.5bn that we’ve made available for the poorest students, will be allocated, and it depends precisely on whether or not we allow the people premium to go to slightly more children, or we target it very narrowly on the very poorest. Depending on that, you can then make a calculation about which schools will find that they’re actually losing funding, and which schools will find that they’re gaining funding.”

He later insisted that though “quite a bit” of the £2.5bn will come from the welfare reforms announced last week: “Some of it comes from within the Department for Education budget, yes.” He insisted that the schools budget safeguarded and that the savings would come from elsewhere in the DfE’s £67.3bn, which also funds children’s services and support for families and older teenagers.

Gove was also challenged on the school building plans after it emerged that schools that were given the green light in the summer when 700 others were scrapped, have now been told they must make further cuts of up to 40%. He insisted that authorities falling within this category were aware that their budgets could still be revised.

Andy Burnham, the shadow education secretary, said: “If you look back since the coalition began every minister has said it’s additional funding for the pupil premium. Now Gove admits it’s not. This is a very serious charge which they now have to answer.”

Separately today the deputy prime minister, Nick Clegg, confirmed that the coalition will publish its plans for tuition fees within two weeks and that fees would definitely be capped.

Vince Cable, the business secretary, confirmed that there are likely to be penalties for graduates wanting to pay their loans back early in the plans. He told Sky: “There is an issue about people who go on to very high earning jobs and who therefore pay off relatively quickly and we do have to think about how we can find a way by which they make some sort of contribution towards low earning graduates. It’s a tricky technical problem but we’re working on it.”

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