Education Services Grant cut: Academies will lose £353m by 2020, DfE forecasts

Academies stand to lose £353 million by 2020 as a result of cuts to the Education Services Grant, official government estimates reveal.

A technical note on schools’ costs published today sets out how the decision to scrap the grant will affect academies over the next three years.

This year, academies have lost £105 million as a result of the cut, but their losses will rise by a further £172 million next year and by £75 million in 2019-20.

The reason for the variation in losses each year is linked to changes in pupil numbers and availability of transitional funding.

Academies and councils stopped receiving the grant last September after the government decided to scrap it in order to save £600 million.

Here’s what the government says about how it worked out the impact of the cut…

  • To estimate the impact of the removal of the general funding rate for academies, we forecast the ESG funding that would have been provided in future years had the rate remained at the £77 level that applied in 2016-17, together with expected pupil growth and ongoing conversions to academy status. This pressure was then set against the protection that academies have against reductions in ESG funding to obtain a net pressure.
  • We determined that the removal of the general rate means that academies may see a net cost pressure of £105 million in 2017-18 (£175 million ESG pressure minus the £70 million in ESG funding protection). We estimate further year on year pressures of £172 million in 2018-19 and £75 million in 2019-20, respectively, due to the growth in pupil and academy numbers and falls in protection payments.

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