Education Funding Reform

Wednesday 19th December 2012 Written Statements

[The Minister for Schools (Mr David Laws)]

The school funding system should be transparent, pupil-led and easy to understand. That is why, from 2013-14, we have made changes so that the core funding for all schools and academies will be allocated based on the needs of pupils using clear and consistent local funding formulae.

We are now reforming the way that local authorities and academies are funded for education services.

The current funding arrangements, designed when there were far fewer academies, can no longer support an increasingly autonomous school system following the growth in the number of academies.

We need to ensure that academies and local authorities receive money for the pupils who are their responsibility. As key responsibilities transfer to academies, an appropriate amount of funding should also transfer.

Academies are responsible for a range of education services, such as school improvement, audit and asset management, that local authorities perform on behalf of maintained schools. This gives academies greater freedom to secure the right services for their pupils.

Local authorities and academies receive funding for these responsibilities separately via two different grants from Government. The method of calculating how much money each academy should receive for education services is bureaucratic and convoluted.

That is why we are establishing the education services grant from 2013-14. The new grant will be allocated on a simple per-pupil basis to local authorities and academies according to the number of pupils for whom they are responsible.

The funding for education services will be fairer, simpler and more transparent as a result.

We consulted on these changes over the summer. The Government have listened to the local authorities that told us the transfer for the education services grant from local government funding was too high. They told us they were now spending less on these services and so we have reduced the amount of money that is being transferred from local government funding for the education services grant by £180 million, from £1.22 billion to £1.04 billion, in 2013-14. A total of £1.03 billion will be transferred in 2014-15. This means that less money will be transferred from local authorities for education services than we originally proposed.

We took this decision in order to protect local authorities, who are now spending more of their funding on other priorities, but it would not be right for academies to lose out as a result. That is why we are using money from the Department for Education’s budget to supplement the education services grant rate for academies over the next two years. This will not affect the amount transferred from local authorities or the funding available for maintained schools. We intend to remove this transitional protection for academies over a limited period of time so that the rates for local authorities and academies are brought together.

The changes that we are announcing today will end year-on-year turbulence for academies, address the wide national variation in the current funding rates, and give local authorities and academies confidence in the way their funding has been calculated.

Copies of the Government response to the consultation will be placed in the Libraries of both Houses.