This Commons Library research briefing provides information about the planned introduction of a national funding formula for schools in England, due to be implemented from 2018-19. Department for Education consultations on funding reform close on 22 March 2017.Jump to full report >>
The Government is planning to introduce a national funding formula (NFF) to calculate the amount of core revenue funding that mainstream schools in England will attract in respect of primary and secondary (but not sixth form) pupils.
There isn't currently a national formula like this. Local authority areas get different amounts of money per pupil in the Schools Block element of the Dedicated Schools Grant, or DSG. They then draw up their own local funding formulas to share the money out between schools, although they have to do this following DfE guidance.
This is the formula that will be used to calculate and distribute core revenue funding for mainstream schools in England.
There will be separate formulas to calculate early years funding and high need funding (largely this is for high-cost provision for children with SEND), as well as for some services still centrally provided by local authorities.
As well as money from the NFF, schools will also get income from other sources, including: the Pupil Premium which will remain outside of the NFF; 16-19 funding if they have a sixth form; early years funding if they have nursery classes; voluntary contributions and fundraising, to varying degrees; and capital funding for maintenance, renovations and new places, where appropriate.
The NFF is due to be introduced in as a 'soft' format in 2018-19 and a 'hard' format from 2019-20. In 2018-19, the formula will be used to work out how much funding a school should attract. This will then be aggregated up to local authority level and distributed according to a local authority-determined funding formula, as now. From 2019-20 the formula would be used to calculate schools' core revenue funding directly, and the role of the local authority in deciding how funding is shared out would be significantly reduced.
The Government is currently consulting on the weightings in the NFF, and its phased introduction. The consultation closes on 22 March 2017; a parallel consultation on high need funding is due to close then, too.
Alongside the second stage NFF consultation, the DfE has published illustrative figures showing how schools and local authorities might fare in two hypothetical scenarios under the proposals:
These illustrative figures don’t show what any school will get in any particular year, but are intended to inform the consultation and give an idea of how the formula might work.
The DfE hasn't provided illustrations for future years beyond 2018-19, but has said that no school would see annual cuts in per-pupil funding of more than 1.5% in any one year and more than 3% overall (i.e. across more than one year) as a result of the NFF. Increases at individual schools will be capped at 3.0% per pupil in 2018-19 and 2.5% in 2019-20.
Allocations relating to the NFF in any particular year will depend on a range of variables including:
The DfE's December 2016 consultation document explained that as a result of Government proposals:
Groups of schools the DfE says are more likely to gain are:
The DfE says that the main group of schools likely to see reductions are:
Those in Inner London and some other urban areas that have particularly benefitted from historic funding decisions and where underlying levels of deprivation have fallen over recent years […] The main reason that this formula would reduce funding to schools in these areas is that we are using the most recent data about relative levels of socio-economic deprivation.
On 14 December 2016, the National Audit Office (NAO) published a report on the financial sustainability of schools in England.
This said that mainstream schools, overall, would need to find £3 billion of efficiency savings by 2019-20. This equated to a net real-terms reduction in per-pupil funding of around 8% for mainstream schools between 2014-15 and 2019-20. The NAO reported that:
Speaking in response to a debate of 25 January 2017, Schools’ Minister Nick Gibb said that core schools funding was being protected for the duration of the Parliament. The Government accepted schools were facing cost pressures.
He went on to say that the funding reforms were not about the overall level of school funding or the cost pressures that schools were facing, but about ending the "postcode lottery" and making funding fairer. Some of the cost pressures had “already materialised” and the DfE was providing high-quality advice to schools on better procurement, and budget management.
This note relates to England only.
Commons Briefing papers SN06702
Authors: Nerys Roberts; Paul Bolton