Autumn statement: New national funding formula announced

25/11/2015

The National Governors’ Association welcomes plans for a new national funding formula for schools announced today by the chancellor, George Osborne, in his autumn statement to the House of Commons.

Its implementation will be preceded by a consultation led by the Secretary of State for Education, Nicky Morgan, which will begin in the New Year. But Osborne promised that from 2017 the new formula would start to be introduced, saying: “We are going to phase out the arbitrary and unfair school funding system that has systematically underfunded schools in whole  swathes of the country…in its place we’ll introduce a new national funding formula,” adding: “the formula will start to be introduced from 2017”.

Emma Knights, NGA's Chief Executive said: “The National Governors' Association is extremely pleased that the Government is brave enough to tackle the difficult issue of introducing a fairer school funding formula. NGA has been arguing for years that the current system of funding schools is archaic and unsustainable. We also welcome the protection of the pupil premium, funding to improve the progress of poorer pupils; we need to continue with the emphasis on tackling the disadvantage poorer pupil’s face at school.  Although we are pleased to see continued investment in early years, it still remains to be seen whether the rate is sufficient enough to fund high quality early education which plays a particularly important role for those disadvantaged families. We do not yet know the detail of today's announcements and we won't know for some time what they mean for individual schools, but we remain concerned for our worst funded schools, particularly those with sixth forms which are being cut”.

At NGA’s summer conference in June, Nicky Morgan told NGA members: “It cannot be right that there are some parts of the country where there is not just a few but thousands of pounds of difference between the amounts that schools are getting between county and city or between neighbouring authorities.”

Osborne announced that the “Spending Review and Autumn Statement represents the next step towards the government’s goal of ending local authorities’ role in running schools and all schools becoming an academy”. The main points for schools from the review are:

  • Although the school budget is protected in real terms, the per pupil rate for the Dedicated Schools Grant (DSG) is to be protected in cash terms. This money makes up the bulk of a schools’ funding and is given to each local authority as a bulk grant before being distributed to schools (including academies through the EFA) on a per pupil basis.
  • The Education Services Grant (ESG) will be cut by £600 million and the government will consult on reducing local authorities' statutory duties relating to schools. ESG funding covers a wide range of local authority education services (including school improvement and education welfare services) and amounted to approximately £815 million in 2015-16. It is paid directly to academies at a rate of £87 per pupil. The DfE say they will support schools in finding efficiencies.
  • A commitment to £23 billion of investment in school buildings including the opening of 500 new free schools, creating 600,000 places and rebuilding and refurbishing over 500 schools. Although this looks like an increase in capital funding, this depends on how much of the money will be used to open new free schools and how much will be used for existing schools.
  • Free infant school meals to be maintained
  • Pupil Premium rate is protected (£1,320 for pupils in reception to year 6; £935 for pupils in year 7 to year 11; and 1,900 for each pupil who has left local-authority care because of adoption, a special guardianship order, a child arrangements order or a residence order). 
  • 30 hours of free childcare for working families with 3-4 year olds in 2017, but only for parents working more than 16 hours a week, with incomes less than £100,000.
  • Maintain free childcare for disadvantaged 2yr olds
  • A commitment to £1.3 billion of spending to attract new teachers, particularly those who can deliver the English Baccalaureate (EBacc) and in Science, Technology, Engineering and Mathematics (STEM) subjects.
  • Protect the 16-18 budget in cash terms until the end of this parliament. 
  • Allow sixth forms to convert to academy status. This will allow colleges to claim back VAT costs on non-business transactions and allow schools to form multi-academy trusts with previously independent 16-18 institutions.
  • Spending on apprenticeships will double in cash terms from 2010-11 to 2019-20. From 2017 the government will also set a levy on large businesses who employ apprentices which will be set at 0.5% of the employer's total wage bill. The aim of this will be to raise £3bn and to encourage businesses to train their apprentices. Businesses that are committed to training ‘will be able to get out more than they pay into the levy, through a top-up to their digital account’. An independent body will be set up to advice the government on the rate of the levy funding. 

Click here for the Spending Review and Autumn Statement 2015: documents.

Click here for the DfE press release.

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