School Funding

Monday 7th March 2016 Written Statements

[The Secretary of State for Education (Nicky Morgan)]

The Government are today launching the first stage of their consultation on national funding formulae for schools and high needs.

As part of our commitment to governing as one nation and to educational excellence everywhere, we must fund pupils with the same characteristics and the same costs at the same rate, no matter where they live. Funding should be fair for all parts of the country: rural and urban, shire and metropolitan, north and south. The current funding system fails to do this, and is arbitrary and unfair: a school in one part of the country can receive over 50% more than an identical school with exactly the same children, simply because of an accident of geography. We will tackle this unfairness and end the education funding postcode lottery by introducing new national funding formulae from 2017-18, based transparently on the needs of children, pupils and schools.

Across all of our proposals we have three priorities: 1) allocating funding fairly and straight to the frontline, 2) matching funding to need so that the higher the need, the greater the funding and 3) ensuring the transition to a reformed system is manageable.

We should allocate funding fairly and straight to the frontline.

Following a transition period, we are proposing a single national formula for schools, removing the role of local authorities in determining school funding so that pupils with similar needs will attract the same level of funding to their school no matter where they live. In a system where increasing numbers of schools operate as academies, independent of their local authority, and more and more are in multi-academy trusts which cross local boundaries, there is limited reason for local authorities to determine the funding of schools. For pupils with high needs, the local authority remains the right level at which to distribute funding, as there are still important local decisions to be made both about the pattern of provision, and about the special provision required for individual children and young people.

Funding should be matched to need.

The distribution of need across the country has changed in the last 10 years, but the funding system has not kept up. Eligibility for free school meals has declined markedly in some areas, and risen elsewhere. But the distribution of core schools funding has remained constant, unable to adapt. With the introduction of the national funding formula, funding will genuinely match need, ensuring that pupils from disadvantaged backgrounds receive significant additional funding to help them overcome entrenched barriers to their success. We are consulting on the objective, evidence-based factors that actively drive cost—we would use these in the schools and high needs systems to match funding to need each and every year. For schools, they cover: basic funding for every pupil, funding for additional needs, funding for school costs and funding for area costs. We want to enable head teachers and local leaders to ensure that all children and pupils are given the opportunity to achieve to the best of their ability at every stage of their education.

The transition should be manageable.

Proposals to remove the role of the local authority from school funding represent a significant change to the system. We are therefore proposing to phase in this change so that there is a smooth transition period, before bringing it in fully in 2019-20.

Authorities will continue to determine the funding for schools in their area in 2017-18 and 2018-19. We will use this transitional phase to look closely at how local formulae have responded to the introduction of the national funding formula. We will also make sure that the pace of change in funding is manageable. For schools, this means continuing the minimum funding guarantee. For high needs, we also propose that a significant element of the formula should, at this time, be based on the current pattern of expenditure, to protect provision for children and young people already settled in schools and colleges. Finally, from 2016-17 we will make available additional funding for schools to invest in ways to save money in future, helping them to manage the transition to a national funding formula. We are also providing information, tools, training and guidance to help schools improve their financial management and efficiency.

What we are proposing will be the biggest step forward in making funding fair in over a decade. These are important and significant reforms to get right and so we will consult in two stages. In our first consultation we are outlining our clear vision for the funding system; the principles by which we will set our formulae; and the factors we propose to use. It will be an opportunity to thoroughly debate the principles and the building blocks of the formulae. Once we have done so, we will then be able to set out proposals for the detailed design of the formulae and show how the new formulae will impact on the funding of schools and local authorities, in a second consultation. A consultation on our plans for early years funding will also follow later in the year.

This Government have already protected the schools budget in real terms and protected the pupil premium to target funding at the most disadvantaged pupils—at levels higher than any Government before. Now we are making the system for distributing this funding fair, so that no pupil or school is disadvantaged by where they are.

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