'The Department for Education is stuck in a paradox over what to do with the new funding formula'

18th July 2016 at 18:32
National Funding Formula
Time is fast running out for a decision on the long overdue reform

With the economic uncertainty generated by the EU Referendum outcome still reverberating across the country and indeed the continent, a new prime minister moving into No 10, and a new education secretary, it is unsurprising that the Department for Education has delayed its second consultation on a new national funding formula for schools.

But, despite these global uncertainties, schools must continue to provide a high-quality, broad and balanced education for their pupils. In order to do that, they need stability and reassurances about their budgets. The government has committed to introducing a new funding formula from April next year and, without further clarity over what that formula will look like and how quickly it will be implemented, schools are left not knowing what will happen to their budgets in just nine months’ time.

When the DfE consulted on a new funding formula earlier this year, it sought views on how quickly the formula should be implemented; that is, how fast gainers should gain and how fast losers should lose. The level at which the year on year protection is set will determine how well schools are able to cope with new funding arrangements and, ultimately, the success of these reforms.

Planning is essential to protect learning

Being able to know and plan as early on as possible is particularly important for schools; unlike many businesses, schools will struggle to make redundancies mid-way through the academic year without it affecting pupils learning. For example, the median primary school has between 200 and 300 pupils. Across that range, the average budget of these schools is just over £950,000. If the DfE decides to introduce a 5 per cent floor (meaning that no school can lose more than 5 per cent of its overall budget), then primary schools of this size who are set to lose money under the new formula could face cuts of up to £47,500 next year alone. That is equivalent to an average classroom teacher salary, including costs. Even if the DfE were to apply a more conservative floor of 1.5 per cent (which is the level of the current Minimum Funding Guarantee for schools), this still means that schools of this size could be set to lose almost £15,000.

The median secondary school meanwhile has between 900 and 1000 pupils and the average budget of schools of this size is just under £5 million. A 5 per cent cut to one of these typically sized secondary schools next year equates to £250,000. That is the equivalent of more than five secondary teachers or perhaps an entire department – in a single year. Again, if we apply the current funding protection of 1.5 per cent, then a school of this size could still be set to lose up to £75,000 next year, the equivalent of almost two secondary classroom teachers.

In summary, a typically sized primary school that is set to lose under the national funding formula, could lose between £15,000 and £47,500 next year alone and a typically sized secondary school could lose between £75,000 and £250,000.

Positive change will take time

Of course, this means that there will also be schools who will see increases to their budgets of this scale (potentially more). But, realistically, how quickly can they spend it? Their most valuable purchase will be new teaching staff but that requires a lead-in time for recruitment and, in the areas outside London likely to benefit from a new funding formula, there is a stagnant market. Over time, that may change as money is redistributed across the country and headteachers have greater spending power, but this continued uncertainty will delay any stimulation of that market. At the very least, the DfE should consider the flexibilities it allows schools in building up surpluses and deficits during this period of transition.

None of this means that the DfE should not implement the national funding formula. As I wrote in my TES article last month, the absence of an up-to-date method of distributing school funding is leaving some schools, particularly in parts of the North, the East and along the coast, struggling to recruit the high-quality teachers and leaders they desperately need.

But the DfE does now face a difficult decision. With a very limited window to provide certainty, ministers must decide whether to maintain the status quo and renege on their commitment to introduce new funding arrangements next year (to the disappointment of vast numbers of schools across the country that have been waiting for decades for this reform) or introduce it so quickly that it creates significant difficulties for those who are set to lose, albeit over time, with limited gains for those who are set to "win".

Natalie Perera is executive director and head of research at the Educational Policy Institute. She tweets at @natalieperera1

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