EPI report: National Funding Formula shifts cash away from poorest schools, and 5 other findings

The Education Policy Institute (EPI) has today published the first comprehensive review of the consequences of the government’s national funding formula.

The report reveals difficult truths for ministers, including concerns that cash will not reach the poorest pupils, as pressure grows from disgruntled Conservative MPs to scrap the funding overhaul.

Schools Week has the key findings:

1.    Cash will shift from poorest pupils to those “just about managing”.

The report found the formula shifts money from the poorest pupils and schools to the “just about managing” group – that is, pupils whose families are just above the threshold for free school meals.

This is because the formula uses wider area-based measures of deprivation and increases funding for pupils with lower prior attainment, regardless of their social background.

In her first speech as prime minister, Theresa May pledged to put families who are “just about managing” at the top of her priority list.


2.    Most deprived secondaries set to lose…

Schools with more than 30 per cent of pupils on free school meals pupils are set for an overall funwding increase of £5.6 million – but this is not equally split across primary and secondary schools.

Primaries will gain in cash terms (an increase of 0.4 per cent) but secondaries with the most deprived intakes will lose (a decrease of about 0.3 per cent).

The most disadvantaged schools in London are set to lose £16.1 million by 2019-20, while more affluent schools in London are set to lose £11.2 million.

This is because London has traditionally benefited from more funding per pupil than the rest of the country, which under the new proposals will be “carved up more equally”.

In part this is due to more funding going to schools with pupils that have low prior attainment, but poor pupils in London often have slightly higher prior attainment than elsewhere, meaning their funding will be lessened.


3.    …despite secondaries getting more cash for poor pupils

The proposed formula will distribute more cash for free school meal pupils at secondaries (£1,225 per pupil) compared with primaries (£980).

This works in the opposite direction to pupil premium funding, which gives more money to primary pupils on the grounds that earlier intervention is cheaper and easier.

EPI says the reversal in the national funding formula means the “overall approach to funding for disadvantaged pupils seems to be inconsistent” and urges more evidence to be collected in this area.


4.    Lower performing schools get more money, but it could push teachers to “depress results”

Schools with the worst results in the country will get £78.5 million more than those with the highest achievement.

Secondary schools in the bottom quarter of results for Progress 8, and primary schools in the bottom quarter for the expected standards in reading, writing and mathematics, are the big winners.

Primary schools in London that currently sit in the top quarter for reading, writing and maths are set for the biggest loss, about £16.6 million.

The formula will allocate £2.4 billion to schools based on low-prior attainment factors in 2019-20, up from the current £1.4 billion.

However EPI is concerned the extra cash will “heighten the current incentive for teachers to depress pupils’ results” in reception class to get more funding.

Not only was there a funding incentive as school budgets tighten, but downplaying results in reception could make a school appear to have more made progress with pupils by the end of primary, added Natalie Perera, a co-author of the report.

“It’s a risk that the department ought to look at mitigating.”


5.    Schools with growing in-year admissions will miss out

The government is proposing to set aside £170 million for schools with large in-year growth of pupil numbers.

But the money will be baked into the formula and apportioned based on historic growth in an area.

The report argues that this means that if a new, unexpected pressure for places emerges in an area there is no responsive funding available.

However, the government said in its consultation that this is a short-term measure and it is actively seeking better alternatives.


6.    Cuts and inflation means everyone will still lose funding

Every school is facing real-term losses by 2019-20 because of the removal of the education services grant, inflation and the funding formula in combination, the report found.

Primary schools will lose about £74,000 on average each – the equivalent of two teachers.

And secondary schools will lose about £291,000 – the equivalent of six teachers.

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  1. Alistair Thomas

    1.    Cash will shift from poorest pupils to those “just about managing”.

    There is a lack of rigour in this report which leads to sensationalist conclusions. Poor /deprived pupils are supported by the Pupil Premium (PP). It is not moving; it is not increasing or decreasing. Pupil Premium monies are monitored by Ofsted; schools have to report om their use on their websites.

    The monies in the formula are not monitored. There is no guarantee that the money that is nominally allocated to these factors is used to combat deprivation. Nationally if you tot up all the monies in the various deprivation factors (FSM & IDACI) they come to about £2.5B in the current local formulae; as it happens, the PP has grown progressively to reach about £2.5B as of 2-3 years ago. In this primitive sense, you can see that funds for the deprived are exactly duplicated – an admission you won’t hear from many well-funded local authorities (LAs)or local politicians.

    Nobody doubts that deprivation is a serious issue that can lead to learning challenges. It is likely that deprived children will also trigger prior attainment concerns (LPA). LPA is another area that can attract quite reasonable amounts of additional funding, also unmonitored. Some say that this is another source of duplicate funding. Since deprivation is generally accepted as being higher in urban areas, urban areas enjoy two lots of potentially duplicate, unmonitored funding.

    Perversely, because the PP is monitored, it allows all schools to show that they are caring for their disadvantaged pupils, without even touching their unmonitored funds. Some schools will also use these funds to serve disadvantaged need, but there is nothing other than good practice and moral code that stops school leaders using the money for general education. Some would argue that using any money for the best outcomes of all pupils is the moral code of leadership. It’s just unfair that urban educators have access to so much more money than rural educators.

    The unfair funding system (151 local formulae based on historic allocations) that the new formula is supposed to address is so unfair that that the best funded London LAs get nearly twice as much money per pupil than the worst rural and some suburban/London fringe LAs. Urban costs, particularly staffing, are more expensive and something called Area Cost Adjustment (ACA) accounts for this and at its most extreme provides a 26% premium for inner London. That leaves the remaining 74% to justify. If we accept for a moment that London’s higher deprivation (remember all areas have some deprivation, so we’re talking about the variance from “normal” or base deprivation) deserves a 24% premium (ridiculously generous just to blow away any need for argument) then that still leaves a 50% premium unexplained. This is the unfairness premium which needs to be redistributed.

    Whatever the DfE claims to have done with the “National Fair Funding Formula” they haven’t even tried to deliver fairness. A fair system would see the 50% urban premium at the extreme redistributed. That would be political suicide of course but if you want to discuss fairness within the limited resources the country is willing to spend, then these are the terms. The proposals proudly claim that no school will lose less than 5% (equivalent to 10% of the unfairness premium). So, the DfE is only offering to do one fifth of the job thy promised to do. No wonder they have dropped any pretense at fairness, dropping that part of the project from the name. NFF is on offer now, not NFFF.

    The idea that the DfE is taking money away from the poor is also a matter of perspective. The only prescribed factors from the DfE are the Minimum Funding Levels (MFLs) and even these are advisory. For the NFF, the DfE is reducing basic funding (Lump sum and Age-Weighted Pupil Units {AWPUS}) below the minimum to fund increases for deprivation and LPA.

    FSM is broadly speaking the funding required to provide the “Free Meal” of the title. Because you can only give a meal or not, deprivation is reduced to a binary entity – deprived enough to qualify for a meal or not. This is the same binary logic at the heart of the PP. As an aside, how can a binary mechanism be a fair attempt to meet the degrees of need that deprivation poses? In PP, there is an Ever6 provision so that any pupil that has qualified for a free meal in the last 6 years still qualifies for general deprivation support. In MFL calculations, Ever6 FSM was not considered a key factor, and so did not contribute to guaranteed pupil funding. In NFF, despite the fact that Ever6 pupils have, by definition, moved beyond the need for a free meal, the DfE has turned the Ever6 FSM factor on. In addition to the squeeze on basic funding, in a shameless attack on small rural schools, the DfE has reduced the sparsity factor by nearly 50% below the minimum; all to fund the increases for disadvantaged pupils. There’s no scientific basis for such moves. So, far from an attack on the poor of urban centres, the NFF has compromised fairness to all pupils and rural pupils in particular to justify leaving disproportionate amounts of funds in urban centres in the name of boosting deprivation support.

    Urban centres have so much money relatively speaking that it’s unlikely that any of them came anywhere near the MFLs for any of their factors. So despite the generous boost to deprivation and LPA factors from the MFLs, urban LAs will see a reduction in the nominal amounts they have for deprivation.

    Making the case for any redistribution was always going to be difficult, more so at a time of austerity. Despite the fact that urban areas must know that they enjoy a disproportionate part of the limited funds at the expense of their rural counterparts, they were always going to grumble. The DfE could have shown us what fair should like but then insist that transition take longer and be limited until more funds come along. By compromising the very principles of fairness, they’ve managed to upset even those set to gain by their trivial meddlings. They managed to reduce the fairer funding movement to a point where even those that gain the most will not get enough to cover the 8% real terms cuts from inflationary pressures.

    You ask us to shed a tear for the urban poor that might lose something in a modest redistribution. That would be fine if the metropolitan elite had shown even the slightest concern for all children in rural and suburban areas who lack the funds for even basic education let alone proper provision for the disadvantaged over the last decade.

    The real truth is that we need more money for education. Stop blowing money on vanity projects and make sure that basic education is adequately funded. If we can’t achieve fairness now, at least acknowledge what it looks like and move towards it as a priority. Headlines like the one at the top of this article are unhelpful. Is it too much to ask for some perspective on academic research and the reporting of it?

  2. Stephen Fowler

    “Primary schools will lose about £74,000 on average each – the equivalent of two teachers.”
    Does it really cost £37,000 for a primary school to employ a teacher? It would be interesting to get a breakdown of costs.