Government response

Message from Michael Gove regarding funding reform

A message from Michael Gove to MPs regarding reforms to the school funding system.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Dear Colleague,

This session we have made further progress on reforming our school system so as to compete with the best in the world.

  • New measures on discipline have come into force giving heads and teachers greater authority to search pupils; the power to insist on same-day detentions and, most importantly, to exclude violent pupils without any threat of having them re-instated.
  • GCSEs have been toughened up. For pupils starting courses this September, we’re ending re-sits and bite-sized modules as well as reintroducing marks for spelling, punctuation and grammar.
  • More than 40% of secondary schools have now taken up our offer to convert to academy status and we’ve found new sponsors for over 100 of the worst primaries in the country.
  • The first 24 free schools are up and running with more than 50 due to open this September.
  • The pupil premium has been increased to £600 per pupil, providing additional support to the most deprived children. It now supports all children whose parents have taken up free school meals at any point in the past 6 years.

Today I have announced the next steps in reforming the school funding system to make it fairer and more transparent. The current system is not only ludicrously bureaucratic, it is also unfair as schools in different parts of the country are not funded on a rational basis. Moreover, the sheer complexity of the system gives schools less incentive to respond to the needs of local parents by expanding or establishing new provision.

Of course, trying to simplify a complex system is itself an extremely complex task. In our last consultation we sought views on the introduction of a national funding formula, which would distribute money to local authorities based on the current needs of pupils. We also proposed simplifying the way that local authorities distribute that money to schools so that the whole process is more transparent and supports the needs of pupils.

Support for reform was widespread but responses also suggested this model would need careful planning. Getting the components and implementation of a fair national funding formula right is critical and we need to manage transition carefully so there is the minimum disturbance for schools. In the current economic climate, stability is crucial.

We will, therefore, begin the process of reform by simplifying local funding arrangements, before moving to a new national funding formula during the next spending review period. The document we have published today sets out our first steps towards introducing a national funding formula and explains how the system will operate from 2013-14.

The key changes are:

  • A significant reduction in the factors local authorities can consider when constructing school formula - down to 10 from the 37 used around the country at the moment. This will make it much easier for schools to understand the rationale behind their budgets.
  • Much greater delegation of funding to schools - apart from a small fund to cover their statutory duties, LAs will no longer be able to top-slice school budgets. Instead schools forums will decide whether or not to pool funding to pay for LAs to provide services.
  • These simplifications will allow us to fund academies on exactly the same formula as maintained schools in the future - as opposed to with a year’s lag under the system inherited from the previous Government. Academies will continue to receive an additional grant to cover services that are provided by LAs to maintained schools from formula grant and our plans to introduce a national approach will deliver a simpler system which gives equivalent funding to academies and local authorities for these functions.
  • Regulations regarding schools forums will be strengthened so that they operate more transparently and efficiently
  • Schools will continue to receive the stability they need. No school will lose more than 1.5% of funding per pupil for 2013-14 and 2014-15.

The combined effect of these changes will be a very significant simplification of school funding that will lay the ground for further moves towards a national funding formula during the next spending review period.

We will also simplify arrangements for funding early years provision and will introduce a new approach for funding high-need pupils from 0 to 25. This will provide better support for pupils with high needs as well as giving greater choice to parents.

Copies of the document setting out these changes - ‘School funding reform: Next steps towards a fairer system’ - are available at


Michael Gove

Secretary of State for Education

Updates to this page

Published 26 March 2012