'Funding formula delays risk another year of schools being ill-equipped to make sustained improvements'

There will be grave consequences of not introducing a new funding formula by April 2017, writes the executive director of the CentreForum thinktank

Natalie Perera

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For decades, school and local authority leaders in many parts of the country have been campaigning for a fairer allocation of the schools budget. Up until March 2015, there was a difference of over 75 per cent between the highest and lowest per-pupil funding rate across local authorities in England. Tower Hamlets was funded at £7,014 per pupil while the lowest funded authority, Cambridgeshire, received £3,950 per pupil.

While we would expect, under any progressive funding system, some variation in budgets across the country to reflect differing levels of need, deprivation and cost of living, the variation in per-pupil funding has over time become increasingly difficult both to explain and justify. The amount that each local authority receives is based largely on how much they historically spent on schools before the Dedicated Schools Grant was created (so very much a reflection of local decision-making) and how much extra was allocated by the Department for Education over the years in place of grant funding and targeted programmes.

The problem now is that those per-pupil allocations are not based on the current needs or demographics of pupils in different areas. This matters because we can see that, over time, the needs and challenges across the country have changed. CentreForum’s recent annual report highlighted the difference in performance across the country – particularly between London and the North, the East and isolated coastal communities. We found that over half of the top 20 performing local authorities (as measured by results at key stage 4) are in London and only two authorities (Trafford and York) are from outside London and the wider South.

While we cannot attribute the success we have seen in London schools to funding alone, it is difficult to argue that the increased investment the city has had, enabling it to attract high-quality teachers and to encourage greater collaboration and leadership, has not made a difference.

The challenges once faced by London are emerging acutely in other areas. The department’s ‘Educational Excellence Everywhere’ White Paper acknowledges the "cold spots" that exist across the country, where performance remains weak and access to strong leadership is lacking.

The lack of a responsive and transparent funding system also risks undermining the department’s accountability reforms. It will find it hard to hold schools to account if those schools can demonstrate that their budgets do not allow them to attract high-quality teachers and leaders in the same way that other similar but better funded schools are able to do.

Making progress

In 2015, the Coalition government invested an additional £390 million in the schools budget in order to reduce the variation in per-pupil funding. As a result, the variation between the highest and lowest funded authority has reduced to just under 70 per cent. (Tower Hamlets now gets £7,007 per pupil and Wokingham, now the lowest funded authority, receives £4,151). The current government has committed to maintaining the additional £390 million in the schools budget each year for the rest of this Parliament.

While this additional investment has almost certainly helped some schools in relatively lower funded authorities, it has not addressed the underlying flaw – it doesn’t enable similar pupils, in similar circumstances to attract similar levels of funding.

The government has now committed to introducing a new national funding formula in April 2017. The Department for Education published a consultation document in March this year, seeking views on which factors it should include; the role of the local authority in deciding whether and how to amend budgets locally; and transitional arrangements.

The department promised to follow this up with a second consultation on the detail of the new formula but has not committed to a timescale. It is this second consultation that will really tell us something new. It will tell us, amongst other things, how much the department will allocate to disadvantaged pupils (over and above the pupil premium), how much will be allocated to small schools in rural communities and the ratio between primary and secondary funding. Crucially, this second consultation will also set out plans for a transitional period, ie how fast gainers will gain and losers will lose. The department has then said it will issue a final statement of policy before putting these changes in place.

But is it fast enough?

In order to issue new budgets to schools in April 2017, the department needs to inform local authorities of their indicative budgets by this summer (normally before the end of term in July). This is because there is a bureaucratic, but important, process that local authorities and the Education Funding Agency must follow in order to calculate, consult on and confirm budgets for maintained schools and academies by December 2016.

The problem is that the department has not yet published the second consultation setting out the details of the new formula and will be unable to do so until after the EU referendum on 23 June. Without some sleight of hand to the already tight timetable, it is difficult to see how the department can meet its commitment to introduce the national funding formula by April 2017.

The consequence of not introducing a new funding formula in April 2017? At least another year of a funding system that is out of date, arguably inefficient, and, most of all, fails to get money to the schools that are currently ill-equipped to initiate any sustained improvements.

Natalie Perera is executive director and head of research at thinktank CentreForum. She tweets at @natalieperera1

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Natalie Perera

Natalie Perera is executive director and head of research at think tank Centre Forum

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