Press release

Fairer school funding plan revealed

Plans for a national funding formula to ensure every school will have funding matched to need, to give every child an excellent education.

Historic reforms that will bring an end to the unfairness in the school funding system have been outlined today (7 March 2016) by Education Secretary Nicky Morgan.

Providing educational excellence everywhere is a key part of the government’s mission to extend opportunity to every child. This includes delivering on the manifesto commitment to protect the core schools budget. This will be over £40 billion next year, including the pupil premium - funding worth £2.5 billion a year targeted at the most disadvantaged pupils. This is the highest ever level of funding for schools of any government.

But the current system for distributing that funding is outdated, inefficient and unfair. Under the current system, a school in one part of the country could receive over 50% more than an identical school with exactly the same children, simply because of an accident of history.

Under proposals published for consultation today, the government has started the process of introducing a national funding formula from 2017 to 2018. This represents an important move towards a system where school funding is allocated on a consistent national formula. As part of this, local authorities will receive funding to help with their responsibilities towards young people with high-level special educational needs on a fair and formulaic basis, so that no pupil is disadvantaged simply by where they live.

The plans outlined today will ensure:

  • every school and local area, no matter where they are in the country, is funded fairly - according to need rather than the oddities of history; meaning areas with the highest need will attract the most funding and ensuring that all children get access to the education they deserve
  • funding gets straight to the frontline - the current school funding system relies on local authorities determining how much funding schools are allocated. A single national funding formula for schools will remove the role of the local authority, ensuring pupils with similar needs attract the same level of funding to their school, and will also give headteachers far more certainty over future budgets

Education Secretary Nicky Morgan said:

We want every school in England to get the funding it deserves, so that all children - whatever their background and wherever they live in the country - get a great education.

The introduction of a national funding formula from 2017 to 2018 will see the biggest step towards fairer funding in over a decade - ensuring that pupils get funding that genuinely matches their need. It will also ensure that pupils from disadvantaged backgrounds continue to receive significant additional funding to overcome entrenched barriers to their success.

This is a key part of our core mission to extend opportunity to all children and provide educational excellence in all parts of the country: rural and urban, shire and metropolitan, north and south.

Local authorities will continue to play a vital role in the distribution of high-needs funding as they are best placed to make important local decisions about children with special educational needs and disabilities.

Today’s announcement marks the first stage of the government’s education funding reform consultation process. The consultation proposes that the following factors are considered as part of allocating core schools funding:

  • basic per pupil funding - ensuring a core allocation for the costs of teaching all pupils
  • funding for additional needs - including deprivation, low prior attainment and English as an additional language
  • school costs - including fixed costs and those related to schools serving rural communities
  • area costs - ensuring more funding goes to areas that face the highest costs

There will also be a parallel consultation on a national funding formula for early years funding later this year. Once these key principles have been agreed, a further consultation seeking views on the weighting of these factors will follow.

This second stage consultation will set out full illustrations of the impacts of the funding formulae across schools and local authorities.

The government will phase the changes in over time so that there is a smooth transition period, manageable for schools and local authorities, including retaining the local authority role in school funding until 2019 to 2020 - although the national funding formula will begin in 2017 to 2018.

Notes to editors

  1. Find out more about the ‘Schools national funding formula’ consultation and ‘High-needs funding reform’ consultation.
  2. Examples of the variation in school funding in the current system, based on data about local authorities’ school funding formula published annually by the Education Funding Agency, show:
    • Rotherham and Plymouth have comparable proportions of pupils eligible for free school meals, yet Rotherham receives nearly £500 more per pupil than Plymouth
    • the current funding system - where local areas’ allocations are determined on the basis of out-of-date information - cannot keep pace with changes in demographics. For example, in the last 10 years, the proportion of pupils eligible for free school meals (FSM) in Lincolnshire has more than doubled. In Southwark, the FSM rate has nearly halved
    • local authorities are using different formulae to distribute funding locally, and can make very different decisions. For example, a secondary pupil with low prior attainment would attract £2,248 of additional funding in Birmingham, compared with £36 in Darlington. In other local authorities, these pupils would not attract any additional funding
  3. From 2016 to 2017 an ‘invest to save’ fund will be made available to schools to help them to manage the transition to a national funding formula.
  4. To support schools to make the most of their budgets, the government has published a new package of information, tools and support on GOV.UK, which brings together lots of useful financial health and efficiency information
  5. The previous government made good progress in reforming the system for funding schools by allocating an additional £390 million to boost 69 of the least fairly funded areas in the country in 2015 to 2016. This additional funding has been protected in local authorities’ 2016 to 2017 funding.
  6. Following the outcome of the spending review in November 2015, the government announced that the core schools budget will be protected in real terms over the course of this Parliament - protecting the cash per pupil funding within the dedicated schools grant and pupil premium rates for the most disadvantaged children.

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