Question to the Department for Education:

To ask His Majesty's Government what plans they have to allocate additional funding in the period 2025–30 to secondary and post-16 education providers to address the lag before the new National Funding Formula takes effect.

As confirmed in the Implementing the Direct National Funding Formula (NFF) government consultation response, published in April 2023, the department remains committed to introducing a ‘direct’ NFF in which individual schools’ budgets are calculated by reference to the national formula, rather than via 150 local formulae. This will require a new legislative framework and the government plans to bring the necessary legislation forward in a future parliamentary session. The government consultation response can be accessed at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1153128/_Implementing_the_direct_national_funding_formula_government_consultation_response.pdf.

Under the NFF, as it operates now, schools are funded on the basis of their pupil numbers in the previous October census. This is known as a ‘lagged’ funding system and operates in this way to give schools more certainty over funding levels to aid their planning. It is particularly important in giving schools that see year on year reductions in their pupil numbers time to reorganise their staffing and costs before seeing the funding impact. Where schools are experiencing significant growth in pupil numbers, local authorities can use the growth funding they are allocated to support schools to manage the increase in pupil numbers before the lagged funding system has caught up.

The direct NFF, once introduced, will continue to base funding for schools on the previous October census. As such, there will be no change in the operation of this aspect of the funding system.

The NFF is not used for post-16 funding. The 16-19 funding formula also uses lagged student numbers as a basis for funding allocations. Subject to affordability, additional funding is made available to institutions delivering 16-19 education (including up to 24 for those with high needs), to support them with additional costs if they have higher than expected student recruitment. Each year the department reviews the early data from institutions and award in year growth payments. For the 2023/24 academic year, the department is publishing the rules for calculating in year growth awards early, providing a guarantee that growth will be funded based on departmental rules, giving certainty to providers to aid with their financial planning.