Core School Budget Allocations

Baroness Barran Excerpts

Tuesday 17th October 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)]

My Lords, with the leave of the House, I shall repeat in the form of a Statement the Answer given by my right honourable friend the Minister for Schools to an Urgent Question in the other place earlier today. The Statement is as follows:

“As the Government confirmed in a Written Ministerial Statement yesterday, the Department for Education has corrected an error in the notional allocations of the schools national funding formula for 2024-25. Those allocations were originally published and notified to the House on 17 July 2023. However, the department has subsequently uncovered an error made by officials during the initial calculations of the national funding formula. Specifically, there was an error processing forecast pupil numbers, which meant that the overall cost of the core schools budget for 2024-25 would be 0.62% greater than allocated. The department therefore issued new NFF allocations on 6 October this year to rectify that error as quickly as possible.

The Permanent Secretary has apologised for the error in writing to both the chair of the Education Committee and the Secretary of State. The Secretary of State has instructed the Permanent Secretary to conduct a formal review of the quality assurance process surrounding the calculation and quality assurance of the NFF, with external and independent scrutiny. Peter Wyman CBE, the chair of the Institute of Chartered Accountants in England and Wales, will lead the review. Improvements have already been identified to ensure that similar mistakes are not repeated.

I reassure the House that the error does not affect the overall level of school funding, which remains at £59.6 billion for 2024-25. The Government are continuing to deliver in full the core schools budget, which includes funding for mainstream schools and for high needs. As I said, it will remain at £59.6 billion in 2024-25, the highest ever in history in real terms and in cash terms. That is a percentage increase of 3.2% compared with 2023-24. Through the schools national funding formula, average funding is £5,300 per primary school pupil and £6,830 per secondary school pupil in 2024-25, up from £5,200 and £6,720 respectively in 2023-24.

Schools have not yet received their 2024-25 funding, so the correction of this error does not mean adjusting any funding that schools have already received. Likewise, the error will not impact on the publication of the dedicated schools grant in December, or on when schools will receive their final allocations for 2024-25. The 2024-25 high-needs national funding formula allocations, which fund provision for children with complex special educational needs and disabilities, are also unaffected by this error, as are other funding streams outside the NFF, including the teachers’ pay additional grant announced in the summer.

I would also clarify that the recalculation of the NFF for 2024-25 does not affect the affordability of the 2023 teachers’ pay award. There has been no change to the funding that was promised as part of the pay settlement in July and which the unions agreed meant that the pay award was properly funded. The Government recognise that the correction of the NFF error will be difficult for local authorities and frustrating for some school leaders, which is why the department has rectified the error as quickly as possible. The department is working closely with school stakeholders, including unions, to communicate this change and support schools and local authorities.”

[Baroness Twycross (Lab)]

My Lords, this is yet another example of the Government failing on education. As with RAAC, there was a delay in notifying school leaders; the error was identified in September, but heads were not notified until October. Can the Minister tell the House about how the error was identified, the timeline and decisions on the communication of this to schools and families? It is also clear that the Government know that the correction of the national funding formula will be tough for local authorities and frustrating for some school leaders. How will the department assist head teachers to deal with the additional stress and pressure this may cause, as the error will affect staffing decisions, judgments about school purchases and additional support available to pupils?

[Baroness Barran (Con)]

I do not accept that the Government delayed action either in relation to RAAC or in this case. In relation to RAAC, when we had new information that came to us as a department, we took the only responsible decision that any Minister could take, which was to take urgent action to ensure that no one was at risk. That was exactly what we did, and we are working closely with schools to resolve the challenges they face as a result. The reason for the error was a mistake in the coding of pupil numbers. Normally, it takes about six weeks to go through that process. We obviously needed to do a thorough quality assurance to make sure that the revised numbers were correct. We did that in four weeks and then there was no delay in announcing it.

[Lord Storey (LD)]

My Lords, the Minister will know through her visits to schools that school budgets are stretched to breaking point. Head teachers are telling me, and no doubt telling the Minister, that day in and day out they are struggling to make ends meet. The average primary school will receive £12,000 less than the average secondary school and £57,000 less than was expected. Schools will have planned their budgets for 2024-25; that is the critical point. Does the Minister think that commitments made back in July to the House should be honoured and the original national funding formula rates should stand?

--- Later in debate ---

[Baroness Barran (Con)]

We understand that this has a clear impact on schools and on local authorities in particular. That is why we are working through this closely with local authorities. But to be clear, they make their final allocations once they have the definitive pupil numbers, which were published on 5 October. The earlier publication of this data allows them to do initial planning, but no definitive allocations would have been made ahead of the publication of the projected pupil numbers. We are honouring the initial commitment, which was £59.6 billion. Over three years, that is a 20% increase in funding for school budgets, with a tilting of that increase towards some of the most disadvantaged areas in the country. It would obviously be irresponsible to increase funding based on an error by officials. There is a very rigorous process, as the noble Lord knows, for approving funding and we cannot sidestep it in a situation like this.

[Baroness Blower (Lab)]

My Lords, I listened carefully to the Statement and the Minister’s response, so I wonder if she can answer two specific questions. First, the department has committed to undertake an investigation, so when will that investigation be commenced? Secondly, might the department decide at the end of that investigation, as it has done in previous, recent years, to keep the per-pupil funding as announced in July? In response to my noble friend on the Front Bench, the Minister talked about the overall spending but the issue with the recalculation of pupils is that the per-pupil funding is now lower. The department has in previous years honoured the allocation at per-pupil level rather than the global total so, after the investigation, might the department have the opportunity to reconsider and honour the per-pupil level of funding?

[Baroness Barran (Con)]

The noble Baroness needs to forgive me, but I am not familiar with the instances to which she refers. I am not aware of anywhere that there has been an error made by officials and the per- pupil figure was honoured, which would require finding, as I understand it, an additional £370 million. I do not think that is likely. I do not have an exact timeline for the investigation but, clearly, we want to get clarity on this as quickly as possible. We are absolutely committed to publishing the lessons learned from that.

[Lord Addington (LD)]

My Lords, can the Minister give us some idea of where the lack of spending, shall we say, is affecting the structure of a school? I remind the House once again of my interests in special educational needs. Is it in the capacity to identify those with hidden disabilities? Some 80% of the population who are dyslexic are not identified at school, or throughout their lives. Are we going to find out that there is less capacity there? Will there be less capacity in things such as sport, or art and drama, because we are not undertaking the training? Where will there be some reduction in capacity in schools, because there clearly is going to be some?

[Baroness Barran (Con)]

I think the noble Lord will accept that schools have significant autonomy over their budgets, and therefore it would not be appropriate for me to speculate on where they will make the savings to meet the shortfall.

[Lord Berkeley of Knighton (CB)]

My Lords, I was heartened to hear the Minister say that areas where there is deprivation will be especially considered. Could she say a little more about how those are areas are identified? Are there already criteria that have established which they are and what they need?

[Baroness Barran (Con)]

There are areas of the country which, for historic reasons, have had lower than average per-pupil funding: the north-east, the north-west and Yorkshire and Humber, to give some examples. Conversely, inner London has historically had the highest per-pupil funding. That increase for inner London has been protected, but it means that those regions that I mentioned, and others, will attract above-average increases in per-pupil funding, which has been part of our strategy to ensure that the allocation of funding is fair.

[Baroness Blower (Lab)]

My Lords, given that we have time remaining, may I ask the Minister if she has a view on how the lower per-pupil funding allocation—at least £43 per pupil—is likely to impact on the mental health work in schools, particularly those wrestling with incredible child poverty?

[Baroness Barran (Con)]

I can only repeat what I said to the noble Lord, Lord Addington. Each school, as the noble Baroness well knows, has a deep understanding of the needs of their school community and is best placed to make the decision on where to prioritise spending, including the adjustments that, sadly, have to be made.

[Lord Addington (LD)]

Given that we still have time, following that answer, could the Minister give me an idea of what will not be cut? When will the planning be honoured? If we know that, we will have an idea of what is vulnerable.

[Baroness Barran (Con)]

First, I do not accept that we are not honouring our commitment; it was £59.6 billion, and we are honouring that. It is important to have that on the record. The noble Lord will be relieved to know that, as I mentioned in the initial Answer, the high-needs budget for children with special educational needs and disabilities is not affected by this.