Heads fear ‘drastic’ effect of plan to cut budget protection

11th March 2016 at 00:00
School leaders dismayed by prospect of losing national minimum guarantee under new funding formula

Schools in the areas hardest hit by a new funding formula are likely to lose the safety net offered by a national budget protection scheme, it has emerged.

A consultation published this week reveals that the Department for Education is considering letting local authorities in areas where schools will lose money under the new formula introduce a “local minimum funding guarantee”.

This would “allow greater losses [for schools]” than permitted by the government’s nationally set minimum level, it says. Heads have reacted with dismay to the news.

Simon Elliott, headteacher of Forest Gate Community School, a secondary in Newham, east London – which is expected to be one of the hardest hit areas – said: “It would be very difficult to manage the losses if the minimum funding guarantee did [fall].”

Mr Elliott said cuts of more than 2 per cent would have a “drastic” effect on his school.

The measure is one of a series of changes outlined by the DfE this week as it opened a consultation on the principles of a new funding formula, due to be introduced in 2017.

It also reveals that the role of local authorities in education will be further pared back and that they will have to stop running school improvement services by the end of the 2016-17 financial year.

“We will review the statutory responsibilities that currently apply to local authorities so that funding and accountability are aligned,” the consultation adds.

The current national minimum funding guarantee means that schools will not see annual cuts of more than 1.5 per cent per pupil. It is not yet clear what the figure will be once the formula is introduced. But for some areas, that could now be irrelevant.

The DfE document says that lower local funding guarantees could be necessary in 2017-18 as some local authorities would have “very little room for manoeuvre” if they had to meet a nationally set level.

The changes would have to be agreed by local schools forums, and the department would limit the amount by which councils could cut the minimum funding guarantee, the report says.

‘Invest to save’ fund

The consultation acknowledges that some schools will “lose funding”. And it reveals that some extra cash will be made available to help pay for the costs associated with “restructuring a school’s workforce”, such as redundancies.

The DfE suggests that the “invest to save” fund – aimed at helping schools “manage the transition to the national formula” – could also be used for financial, legal and HR advice, plus the cost of retraining teachers to cover new areas of expertise.

The consultation reveals that some academies could lose as much as 3 per cent of their budgets per year because of the government’s decision to abolish the £600 million Education Services Grant, a move that was announced by the chancellor, George Osborne, in November’s autumn statement.

No fixed timescale for the implementation of the new formula is offered by the consultation. “The length of time it takes to get to a position where all schools are funded according to the formula should not be fixed arbitrarily but should instead be determined by what is manageable for schools,” it says.

And the full picture of how much schools could lose under the new national funding formula is still far from clear because the department has not yet published details of the financial implications.

These will be outlined in a second consultation document that is not expected to be published until after the London mayoral election on 5 May.

Russell Hobby, general secretary of the NAHT headteachers’ union, told TES that he thought that the changes brought about by the new formula would be “smaller than people both hope and fear”.

He said he was “disappointed” that the consultation gave no details of the financial implications of the reforms. “I can’t tell whether they [the government] are doing the right thing or not until I see the amounts associated with it,” he said.

“We’ve got a history with this government of good ideas that are poorly implemented, so I don’t think the principles are enough for me to feel confident [about the reforms] yet.”


For more on funding, see TES Leadership on page 15, and this week’s feature on page 24

Winners and losers in the funding formula lottery

The Department for Education this week used Rotherham and Plymouth as examples to demonstrate the discrepancies in school funding under the current system.

The two areas “have comparable proportions of pupils eligible for free school meals yet Rotherham receives nearly £500 more per pupil than Plymouth”, it said in a statement.

So what do headteachers in those areas think?

Pepe Di’Iasio (pictured, left), headteacher of Wales High School, a secondary academy in Rotherham, told TES that although the department’s comments portrayed his school as well funded, visitors would not get this impression. “We have between 20 and 25 portable classrooms that were designed to be here for a maximum of four years but have been here for over a dozen years, and will have to service us for the foreseeable future,” he said.

On top of this, cost pressures, such as rising pensions and National Insurance contributions, have caused the school to plan for a deficit budget next year. Mr Di’Iasio said he expects the new formula to lead to cuts to his budget, which will make the situation harder.

Steve Baker, principal of Lipson Co-operative Academy in Plymouth, told TES that although he anticipated that his school would gain under the new formula, the benefits of this would be limited because he expected cost pressures to trigger an 8.5 per cent real-terms cut by 2019.

“No amount of rearranging the deckchairs on the Titanic will make up for that,” he said, adding that he thought the new formula would lead to only a “modest” redistribution of funds between schools.

Ministers “haven’t given themselves an awful lot of time” to bring in a new formula, he said.

The proposals

What the Department for Education consultation on the principles of its new schools national funding formula proposes:

Local authorities will have to stop running school improvement services by the end of the 2016-17 financial year and their statutory responsibilities to schools will be reviewed.

In areas where schools are hardest hit by the new formula, local authorities could introduce their own “local minimum funding guarantee”. This would “allow greater losses” than permitted by the government’s nationally set level.

Some academies could lose up to 3 per cent of their budgets because of the £600 million axed from the Education Services Grant.

Schools that will “lose” under the new formula will be able to use an “invest to save” fund to pay for financial, legal and HR advice or “in extreme cases, the cost of restructuring a school’s workforce”.

The new formula will be introduced in a “soft” form in 2017-18 and 2018-19, with councils still involved in distributing the funds.

From 2019-20 it will be used in a “hard” form, cutting out local authorities’ role in allocating the main schools budget – although they will still have a role in allocating funds for pupils with additional needs.

For the first two years, the budget for “school cost factors”, such as business rates, Private Finance Initiative costs and schools with split sites, will be distributed on the basis of councils’ historic spending, a move that will limit the impact of the changes until 2019.

The pupil premium will remain as a separate funding stream.

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