Posted in Funding, Uncategorized

A fairer funding formula?

Funding for schools is an issue at the forefront of education sector reforms – having first been announced in March 2016 in the White Paper ‘Educational Excellence Everywhere’, on 13 December 2016 the government announced stage two of its consultation plans to design and implement a new way of funding for schools.

If you have ever attempted to unpick and understand the formula used by LAs to fund schools, you will have no doubt been left just as confused and confounded as you were when you started. Many have argued that the allocation of funding to schools is based on a formula that is too historic and outdated to meet the needs of any pupils in our schools today.

The new formula will determine how core revenue funding is distributed, and is intended to address the unfairness that exists in the current system, whereby similar schools in different parts of the country receive very different levels of funding.

Its aspiration is to achieve an equitable distribution – which means that any pupil with the same characteristics will attract a level of funding that is transparent and predictable, regardless of where they live.

It is important to remember, however, that these reforms are about distribution and not the sufficiency of funding.

In order to eliminate the current ‘archaic’ system in which schools are funded, the government is proposing for schools to be funded through a single, national approach, removing the additional layer of variation and complexity created by the current existence of a different formula in each LA. In theory, a national funding formula would allow for more certainty around a school’s funding.

Yet, the problem remains that the overall level of investment in the education system does not correlate with rising cost pressures.

The problem with the funding formula appears to be caused by the fact that the overall education budget is effectively being frozen at a time when schools are experiencing an increase in operational costs.


School leaders and governors attended a national funding formula conference in Westminster, London earlier this month to vent their anger at the £3 billion of savings that schools have been told to make by 2020.

The tension was palpable as attendees questioned the DfE over the “crippling” cuts and bleak times that lie ahead for everyone in the education sector.

MP James Heappey told the conference that, although he is happy with the basics of the national funding formula, he is “dubious” about the government’s focus on free schools and grammars, and the fact that the government is making money available for this makes it “worse” as there is clearly cash for “political and peripheral” projects.

The Education Funding Group Director at the DfE, Tony Foot, gave a presentation on the planned formula, and received a barrage of questions from the audience.

Richard Slade, headteacher of Plumcroft Primary School in Greenwich, said: “If I am going to deliver those kinds of cuts, standards are going to fail, the needs of the most vulnerable aren’t going to be met and there’s a point where my school isn’t going to be safe because I physically won’t have enough adults in a large school.

“I believe that’s unacceptable. If I’m required to do that, there’s a point where I’m going to stand by my principles on a moral imperative – and I love what I do, and I’m good at what I do, but there’s a point where resignation is the only option, because I am not going to implement that level of cut.”

Earlier this year, a National Audit Office report into the financial sustainability of schools warned that school budgets are being squeezed by pay rises, the national living wage, higher employer contributions to national insurance and pensions, and the apprenticeship levy.

The analysis in the report found that current funding is not in-keeping with increasing pupil numbers, and although the budget is protected against inflation, the rising numbers will mean schools will face real-terms cuts of £3 billion over the next four years.

Russell Ewens, a member of the Funding Policy Unit at the DfE, told attendees at the Westminster Education Forum about how the DfE expects schools to save £3 billion by 2020.

Mr Ewens said: “The department calculates that schools could save £1.3 billion by 2019-20 through better procurement and the balance of £1.7 billion by using staff more efficiently.”

Many retaliated to this comment, arguing that a large number of schools around the country have already done what the DfE is proposing.

In order to minimise the damage caused to some schools under the proposed formula, the government introduced a minimum funding guarantee to limit the impact on the ‘winners’ and ‘losers’.

There will be a 3 percent per-pupil cap on schools who are set to have increased funding from 2018-19, and a 3 percent cap on schools losing money.

The Education Policy Institute report, published last week, said: “If the Department does not remove the -3 percent floor and move gaining schools up to their formula amount, it must accept that different schools with similar pupils will continue to be funded at a different level.”

If this is the case, then the national funding formula will not achieve what it is intended to – to create a consistent and transparent system.

As uncertain times lie ahead, school leaders asked Luke Sibieta, Programme Director for Education, Employment and Evaluation at the Institute for Fiscal Studies, what will happen post-2020 regarding the national funding formula.

The response?… “We don’t know”.

Unfortunately, it seems that the new national funding formula will do very little to alleviate fears over deficit levels in schools.

Given the fundamental importance of a school’s funding, we would suggest that schools and other interested parties actively involve themselves in the government’s consultation before it is too late.


Our Financial Efficiency Resource Pack is designed for school leaders and governors to help achieve financial efficiency in the face of funding cuts. Use this resource pack to review your financial planning procedures and governor processes for monitoring financial efficiency, plan for financial recovery, scrutinise your school workforce planning, and for expert advice on managing a deficit budget.



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