Schools facing real-terms cuts under new funding formula

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New analysis reveals that all schools in England face real-term cuts in funding per pupil, even after the introduction of a new National Funding Formula (NFF).


Even after the proposed funding formula is introduced schools will see reductions to their budgets

The Government is currently consulting on the introduction of a new national funding formula for schools. The consultation closes next Wednesday (22 March).

To inform the consultation, the Education Policy institute (EPI) has published a new analysis considering the impact of the NFF, who the ‘winners and losers’ will be and what it will mean in context of wider financial pressures on the school system.

It follows widespread opposition to the NFF from Conservative backbenchers. Earlier this week the former education secretary Nicky Morgan urged the Government not to abandon the draft formula, which she implied still needs tweaking.

The EPI says that the Government is right to proceed with its plan to introduce a new funding formula as there are clear disparities within the existing school funding system in England. However, it claims that under the NFF lower funded local authorities are unlikely to see the increases they hope for.

The aim of the NFF is to allocate a greater share of funding to disadvantaged pupils, but the EPI analysis finds that the overall impact of redistributing the schools’ budget will see funding shift from the most disadvantaged pupils to those in families who are ‘just about managing (JAM)’.

 It finds that:

  • The most deprived primary and secondary schools, those with more than 30 per cent of pupils on free school meals (FSM), will see a net gain of £5.6m overall;
  • Primary and secondary schools with less than 30 per cent of FSM pupils will gain an additional £275m. Many of these schools have low-levels of disadvantage;
  • Pupils who live in the least deprived areas will experience the highest relative gains;
  • The proposed £2.4 billion in additional support of pupils with low prior attainment under the NFF will mean that the lowest performing schools in the country are set to gain £78.5m more overall than the top performing schools. The EPI says this is particularly acute in London, where the highest performing primary schools have a net loss of £16.6m.

The analysis goes on to consider the impact of inflationary pressures and the removal of the Education Services Grant, to assess overall changes to school finances between 2016-17 and 2019-20.

It estimates that by 2019-20, there are unlikely to be any schools in England which will avoid a real-term cut in per pupil funding, even in areas benefiting from the new formula.

Up to half of primary schools and half of secondary schools will be faced with cuts in funding per pupil of between six and 11 per cent, which amounts to an average real term loss of £74,000 per primary school and £291,000 per secondary school. The EPI says this is equivalent to on average, the loss of almost two teachers across all primary schools and six teachers across all secondary schools.

It warns that without additional funding beyond 2020, there is a risk of further budget losses for around 5,000 schools. The Government has said it will protect the national core schools budget in real terms to 2020.

Natalie Perera, executive director of the Education Policy Institute and report co-author, said, ‘For too long school funding has been inconsistent across the country, with similar schools receiving different funding levels to teach similar pupils. The Government is right to propose a new and more rational funding arrangement for schools despite a challenging economic climate.

‘While the NFF is broadly welcome, our research highlights that the wider financial pressures on schools mean that all schools in England are set to experience real terms per pupil cuts in spending over the next 3 years, even after the new formula is introduced.

‘Our findings suggest this could mean an average primary school loses funding equivalent to two teachers, while the average secondary school loses the equivalent of six teachers.

‘The Government also needs to be clearer about its funding plans beyond 2019-2020, to give schools time to plan for further changes in funding. If the DfE fails to secure additional funding beyond 2019-20, then it can only continue to deliver the new funding formula for “under-funded” schools by making further, large, cuts to the budgets of over 5,000 schools.’

Minister for School Standards Nick Gibb said, 'School funding is at its highest level on record at more than £40bn in 2016-17 and is set to rise to £42bn in 2019-20 with increasing pupil numbers. Our proposed new funding formula schools will help end historical unfairness so schools are funded according to their pupils’ needs, rather than by their postcode, with more than half set to receive a cash boost.

'Of course we recognise that schools are facing cost pressures, which is why we will continue to help them use their funding in cost effective ways without affecting educational outcomes, including by improving the way they buy goods and services.

'We are consulting schools, governors, local authorities and parents to make sure we get this formula right, so that every pound of the investment we make in education has the greatest impact.'

Dr Mary Bousted, general secretary of the Association of Teachers and Lecturers (ATL), said, 'Despite the Government’s claims to the contrary, the EPI’s report has provided independent evidence to support what ATL has been saying for months – that schools are facing significant real-terms cuts in per-pupil funding and will need to find £3 billion in savings annually by 2020.
'It is indisputable that education ministers need to go back to the Chancellor and secure more funding for our schools. The National Funding Formula is a constructive attempt at distributing funds to reverse historic anomalies and targets support to the most disadvantaged pupils in our society; but there is simply not enough to go around.
'What is clear from this research is that schools need to be better funded. All schools need sufficient money to provide the education their pupils are entitled to and the Government is not providing adequate funding. In particular, disadvantaged pupils and schools in deprived areas will suffer without this additional funding.'

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