Funding - A black hole?

Read any of the coverage of the Government’s new national funding formula for schools and you’d be forgiven for being confused. Schools have more money ‘than ever before in the history of the country’, said Education Secretary Damian Hinds. ‘School budgets are at breaking point,’ retorted the National Association of Head Teachers (NAHT).

‘We are investing an additional £1.3bn in school and high-needs funding,’ trumpeted the Government.

‘Funding must […] be increased for pupils with special educational needs or disabilities which [has] suffered even bigger real-terms cuts since 2010,’ said trade union the National Education Union (NEU).

So what is happening? Is there more money or not, and why does it matter?

The changes

The Government is introducing a new funding system: 152 local funding formulas are to be replaced with a single National Funding Formula (NFF) in an attempt to make funding fairer and more transparent. The NFF, which comes in a year after the early years sector’s EYNFF, applies to both maintained schools and academies.

Under the new formula, the ‘schools block’ of the Dedicated Schools Grant (DSG) will be ring-fenced from this month. The schools block is part of the DSG, along with blocks for high needs, early years, and a new pot for ‘central school services’.

In the past, councils could move money from the schools block to plug gaps in the high-needs block or the early years block. Now, this is no longer possible to any significant extent, though the DfE will allow up to 0.5 per cent of their schools block to be transferred, with the agreement of their schools forum. If schools forums do not agree, or if a local authority wants to move more than 0.5 per cent, then permission is needed from the Education Secretary.

This is a transitional version of the NFF and incorporates certain transitional rules such as a cap so every school’s notional funding increases by at least 0.5 per cent per pupil in cash terms during 2018/19. The full ‘hard’ formula now won’t come in until 2020-1.

The high-needs block, which is for children with an Education Health and Care (EHC) plan or for support with severe and complex needs, is not going to be ring-fenced, children’s minister Nadhim Zahawi has confirmed, but it is up to local authorities to decide how this is spent. In Islington, high-needs funding is spent on providing places in children’s centres for children with severe and complex needs, top-up funding for under-threes, area SENCOs, an Under Fives Advisory Group and a team which finds additional hours for children with complex social, emotional, special educational needs or disabilities.

The early years block contains three- and four-year-old funding for both the universal 15 hours and the extra 15 hours – both of which are distributed via the EYNFF. It also contains the two-year-old free entitlement, the Early Years Pupil Premium, funds for nursery schools, and the disability access fund.

The impact – SEND

The major teaching unions agree that high-needs funding is in crisis. ‘We don’t think high needs or early years have ever been funded with enough,’ says Anne Heavey, the NEU’s education policy advisor. ‘There is a real problem in terms of meeting needs for SEND – at schools and the early years – every level.’

Yet the Government says there is overall an increase in funding for high needs with an uplift of 0.5 per cent per head in 2018-19 and at least 1 per cent per pupil by 2019-20. This is part of an ‘additional’ £1.3bn investment in school and high-needs funding under the NFF.

However, there is also a rising number of SEND children. The number of statemented children, or those with EHC plans, has risen 8 per cent from 223,945 in 2010 to 242,185 in 2017, according to consultancy Cordis Bright.

There are also claims of historic underfunding of high needs. A London Councils survey of 31 boroughs showed that back in 2016/17, borough budgets for SEND provision were underfunded by £100m.

Plus, FOI requests by theTES have indicated a £226m shortfall in 2017-8 between the amount of high-needs funding provided by central government and the amount local authorities across the country said they need. The figures also predict shortfalls of up to 30 per cent in 2018-19. Senior teachers have been taking action – just last month, head teachers in Hull wrote to Mr Hinds, demanding a £5m increase in high-needs funding in their borough.

Despite the funding uplift, ‘we’re not even touching the sides’, says Ms Heavey. She adds that the success rate for families challenging a local authority refusal to grant an EHC plan at a tribunal – a staggering 86 per cent in 2017 – ‘is indicative of a rationing system where local authorities with children with high needs are [not] getting access’.

Valentine Mulholland, head of policy at NAHT, adds that ‘ringfencing is bringing things to a head’.

According to Ms Mulholland, high-needs funding, which is attached to children with EHC plans or children with complex needs at a council’s discretion, simply hasn’t been reaching early years children because of a lack of resources in other areas of the system.

She says, ‘We know there is a massive backlog with EHC plans; many members tell me by the time the child gets a plan the child is no longer in early years.’ She says a lack of expertise at the local authority level is often to blame, such as a lack of educational psychologists with an early years specialism. ‘They can’t do the assessment, let alone provide the support – therefore very little of the high-needs funding block is supporting the early years.

‘High-needs funding is missing and health and social care is missing, and particularly for children in the early years.’

In 2016, there were 3.6 million birth to four-year-olds in the UK, including those who don’t have special needs. In the same year, 0.25 per cent of those, or 9,000 children under five, had an EHC plan.

The impact – early years block

The Government has provided the early years block with £1bn extra funding per year by 2019-20 to fund its free offers – which includes more than £300m per year to uplift funding rates.

Ms Mulholland says while local authorities moving money between the different blocks is ‘routine’, it is ‘mainly funding going into high needs’. But she adds, ‘We know that some local authorities were subsidising their early years block because of the cuts to funding associated with EYNFF.’

Local authority sources add that the ring-fencing of the schools block will mean more money coming out of the early years block. Schools money has been used to support the salary costs of early years quality services – central costs incurred by local authorities for their internal early years posts for those who deal with sufficiency, distributing early years funding and providing support and training services.

A local authority source adds that joint schools and early years pots could suffer. ‘Some early years quality services work across both schools and early years settings, therefore some funding may have been allocated from schools’ improvement pots. This could be schemes where those with QTS would work with maintained nursery and Reception teachers, for example. These are likely to be hit – as are quality improvement schemes generally – going against the Government’s stated aim of “sector-led quality improvement” as appears in the workforce strategy.’

Is there more money or not?

The bone of contention seems to be whether you talk about increases in real terms, or in cash terms.

The Government has said that school funding is at ‘record levels’. This is correct in cash terms, i.e. how big the pot of money is that they are allocating to schools. But crucially it doesn’t take into account inflation and increasing pupil numbers.

According to the Institute for Fiscal Studies, school spending will still be less than it was in 2015/16, but instead of continuing to fall between 2017/18 and 2019/20, it will stay roughly the same per pupil.

This ‘additional money’ for schools is also not new, but comes from other places in the education budget – £420m from a budget used to repair and fund school buildings, and £280m from the pot for new free schools.

So Mr Hinds’ claim that ‘real-terms funding per pupil is increasing across the system’ was incorrect – and was reported to the UK Statistics Authority by the shadow education secretary because the rise is a cash terms, and not a real terms, one.

A Department for Education spokesperson says, ‘We are investing an additional £1.3bn in schools and high-needs funding and have protected this budget in real terms during the next two years.

‘Under the new high-needs national funding formula, every local authority will see an increase in funding.

‘Where authorities are finding costs difficult to manage within their allocations of high-needs funding, there is continuing local flexibility to ensure that councils can work with the schools in their area and direct funds to where they are most needed.’