School funding in England

The Conservative Government insisted that it had protected total core school funding in real terms over the last Parliament. However, as the National Audit Office (NAO) and the Institute for Fiscal Studies (IFS) pointed out, pupil numbers have been rising and schools are facing cost pressures; the money has to go further.

The previous Government also proposed a national funding formula for schools. A consultation held just before the 2017 General Election promised the formula would target funding more fairly and consistently, and while the formula was welcomed in principle, there have been concerns, including from backbench Conservatives, about its impact.

The size of the cake

Core per-pupil school spending was better protected over the last two Parliaments than most other areas of public spending. It increased by 0.6% in real terms during the 2010 Parliament, and was broadly held steady in cash terms during the two years of the 2015 Parliament and in plans to 2020.

The IFS, the NAO and the Government have all recognised that schools are facing cost pressures on top of increased pupil numbers. These include higher pension and National Insurance contributions, the new Apprenticeship Levy and pay increases.

The IFS concluded that during the last Parliament schools faced their first real-term per-pupil reductions since the mid-1990s. They estimated that protecting spending per pupil in real terms between 2017-18 and 2021-22 would cost an additional £2 billion. Reimbursing schools for the costs of earlier pressures, as well as protecting them going forward, would add another £1.7 billion. In total, that would require a 10% increase to the schools budget. Labour, the Conservatives, the Liberal Democrats and the Greens have all promised real-terms increases in school funding.

Core school budget in England

The way the cake’s shared out

Currently, central Government allocates an amount of money to local authorities, who then use a local funding formula to share out the money between schools. The new funding formula would award money based on a range of factors including: a basic age-weighted per-pupil amount, deprivation, and prior attainment. These are similar factors to those currently used by local authorities, but the new national formula would apply them uniformly across the country. In the absence of any further increase in planned spending at a national level, the new formula would be largely redistributive. There would be winners and losers. The May Government proposed short-term limits on the amount individual schools would gain or lose, but the Conservative Manifesto 2017 promised to “make sure that no school has its budget cut as a result of the new formula”.

To accompany the funding formula consultation, the Department for Education published illustrative allocations for schools and local authorities, based on 2016 pupil data. Under this hypothetical scenario and the formula set out in the consultation, 54% of schools would see a cash increase, while 46% would see a cut. This presumes that the formula has been implemented in full in 2016, and without any transitional protections.

The proposal is for the new formula to be phased in from 2018; sticking to this deadline would require swift action following the General Election.

Reaction to the Government’s funding formula plans

Most seem to agree that a new formula for distributing school funding is needed, and that the current system is opaque and out of date. However, School Cuts, an alliance of some of the main teaching unions, has argued that there will be almost no real-terms ‘winners’ under the proposed formula because of increasing pupil numbers and costs; the cake needs to be bigger for anyone to get a bigger slice.

MPs of all political stripes expressed concerns about potential negative impacts of the formula in their areas, with the press citing an ‘uprising’ among some Conservative backbenchers.

The f40 campaign group of ‘low funded’ local authorities was critical of the proposed formula, saying it was “alarmed that so many schools are losers”. It failed to understand “why this should be the case when those schools were already poorly funded and well below the national average”. It called for a lower weighting on additional needs factors (such as deprivation) and a higher weighting for basic per-pupil funding, because
all schools had a minimum running cost, regardless of their circumstances.

The Labour Party has promised a formula “that leaves no school worse off” and addresses “historic underfunding” of some schools.

This article is part of Key Issues 2017 – a series of briefings on the topics that will take centre stage in UK and international politics in the new Parliament. More Key Issues posts will be published on this blog throughout June, subscribe via the homepage to get instant alerts.

For more on school funding, please see the Commons Library briefing: School funding in England. Current system and proposals for ‘fairer school funding’.

Picture credit: Classroom View toward Windows by Krissy VenosdaleCreative Commons Attribution 2.0 Generic (CC by 2.0)

‘”Tory uprising’’ claim puts school funding row centre stage in campaign’:
Guardian, 3 May 2017

‘One in six schools admit asking parents for money due to budget cuts, survey reveals’:
Telegraph, 10 April 2017