Standing at the House of Commons despatch box in 2013, then chancellor George Osborne said school funding was “distributed with no logical reason… some schools get much more than others in the same circumstances. That is unfair and we are going to put it right.”
It took until March 2016 for then education secretary Nicky Morgan to launch a consultation on a national funding formula (NFF).
Nearly ten years on – and at least three more consultations – it’s still not been fully rolled out.
So how did a well-supported idea, resolving a well-established problem, get stuck in the policy-making weeds? And do reforms elsewhere mean it’s all been a waste of time?
Schools Week looks into the national funding formula reforms …
Technocrats meet politics
Fairer funding has been talked about for decades. Funding had been distributed on historic regional calculations – despite drastic demographic changes. The opaque system also bred a sense of unfairness.
An early consultation in 2011 found “overwhelming support” for reform. At the time, funding in similar secondaries could vary by as much as £1,800 per pupil – a £1.8 million difference (or 40 extra teachers back then) in a large secondary.
Reza Schwitzer, who worked in the Department for Education on the formula, says: “The civil servants’ view was: ‘the current system is wrong – we need to correct that. That means some people get less, and some people gain.
“But when that hits politicians, you get: ‘you want me to take 15 per cent of funding off schools in an area with an angry Tory backbencher?’ You had technocratic policy-making meeting politics.”
Policy expert Loic Menzies said that then prime minister David Cameron “soon realised where the axe would fall and came to see a national funding formula as Nick Clegg’s plan to lose him the [2015] election.”
However the policy was revived with Cameron voted back into Number Ten, albeit briefly, and it fell to Justine Greening, education secretary in 2017, to publish details of how a NFF would work.
But changes were a zero-sum game in an era of austerity: 9,000 schools would lose money, so 10,700 could get more.
The NFF was a fundamentally good policy; it just got derailed by the wider funding issue
Funding gets (School) Cuts through
Jon Andrews, head of analysis at the Education Policy Institute who worked on the formula while at the DfE, says: “You could redistribute as much as you liked – but that overall pot of cash wasn’t sufficient. The NFF was a fundamentally good policy; it just got derailed by the wider funding issue.”
That issue gained more traction as the National Education Union launched its School Cuts website in the run-up to Theresa May’s catastrophic 2017 general election.
At the time, schools were facing real-terms cuts of 8 per cent by 2019-20. The website let parents input their postcode to see how much funding their local school would lose.
“It was political dynamite,” says Luke Sibieta, research fellow at the Institute for Fiscal Studies.
Education was the third biggest issue for voters in 2017. School Cuts helped change about 750,000 votes as May’s gamble led to a hung parliament.
It was a pivotal moment for the formula. The Tories upped school funding by £1 billion a year – which included £350 million to ensure there were no losers.
Full formula progress hard-ly moving
A national formula was (partially) rolled out in 2018. Cash continued to flow through local authorities who could apply their own formula – set in agreement with school forums made up of headteachers.
But councils would have to inch closer to using the criteria set out under the national formula each year. It was called a “soft” NFF.
Greening said it was the “biggest improvement in the school funding system in decades”, and a decision “previous governments had failed to take for far too long”.
The aim was to move to a “hard” NFF – where funding would effectively go straight to schools with no local authority interference – by 2020.
But there was a problem. The underfunded schools were typically those in more leafy areas, while urban areas had comparatively more cash.
The move to even things out came as the disadvantage gap started to grow, says Education Policy Institute chief executive Natalie Perera. “That created a bit of a policy puzzle.”
This was compounded by Boris Johnson’s extra £4 billion, announced in 2019, to “level up” school funding.
It started “distorting what the NFF was trying to do”, says Andrews.
Every school now had a minimum funding level, which benefitted those leafy schools the most.
“The extra cash essentially went towards giving schools with fewer poorer kids a funding boost,” Andrews says. It “weakened” the “link between funding and pupil need”.
This was a big problem for schools.
How can you hold different schools to account for a shared value of excellence if one is doing that in a well-resourced context, and one isn’t
Becks Boomer-Clark, chief executive of the Academies Enterprise Trust, said: “One of our highest-performing schools receives £1 million extra through the minimum funding guarantee – how can you hold different schools to account for a shared value of excellence if you know one is doing that in a well-resourced context, and one isn’t?”
But the “hard” formula has been delayed until potentially 2027 while remaining thorny issues are worked out, particularly how to ensure there is still some flexibility for issues like PFI and split sites, which need knowledge of local factors.
“You just wouldn’t know all that from Sanctuary Buildings,” adds Perera.
Fix the roof while the sun shines
Perera said the desire to “keep everyone happy has ended up in position where nobody is fully happy. There has to be a recognition you can never please everybody.”
Matthew Shanks, the chief executive of Education South West, says funding is “not fair” while regions such as Devon continue to be funded less. “How can it be fair that a child in one part of the country is worth less than one in another?”
The comment gets to the crux of a key issue for David Laws, chair of the Education Policy Institute and a former schools minister.
“The notion of ‘fairness’ means something different to different people… It could mean providing the same funding level for every pupil. Or it could mean providing higher funding for children with the highest needs or lowest attainment.”
A recent consultation states a school in Bexley, south-east London, taking a primary bulge class of 30 pupils would receive an extra £31,000, but one in Tower Hamlets, east London, would get £180,000.
Andrews adds: “It’s still not perfect, but it’s a lot better than it was. We still have a progressive funding system – just that we’re equalising funding, not opportunity.”
Sibieta says the steady transition to a NFF has worked. “There’s a clear long-term goal, and allowing it to naturally happen over time was a good thing for policy. We’ll get there – it’s just about when.”
The notion of ‘fairness’ means something different to different people
However, school leaders say none of this has resolved the wider issue of squeezed funding. Schools are still worse-off in real terms than in 2010.
That’s been compounded by the more children with special needs requiring extra resource, school support services collapsing and rising poverty and mental ill health.
Meanwhile, capital funding to fix buildings is about 26 per cent lower in real terms than the late 2000s.
“Fixing the roof while the sun shines really applies with funding reform,” Perera adds.
Back to the start?
But a big shift in academy funding is threatening to derail the policy’s original aims, says Schwitzer.
Most trusts pass on the allocated funding to their schools, and fund their central operations by top-slicing.
But more are increasingly choosing to instead pool the funding of all their schools (known as GAG pooling), before dishing it out based on their own formula.
It sounds a lot like the local authority model the NFF is trying to move away from. The original problem of opaque school funding is also leaking back in a new guise.
Laura McInerney, a former editor of Schools Week and co-founder of Teacher Tapp, adds while decisions by councils applying their own formula were “made by school forums, with their own rules – decisions are now made within the trust and not always transparently”.
But Boomer-Clark says the “only motivation to do it is to level out the playing field. No trust would need to pool its GAG if the NFF was truly delivered.”
However in a world where there more schools are in MATs, we “could be back to the NFF starting point”, Perera adds.
