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Funding formula like ‘Robin Hood in reverse’ as NAO finds cash shifted from poorer areas



The government’s flagship national school funding formula has shifted cash from deprived schools to their more affluent counterparts, sparking warnings ministers are “taking from the poor and giving to the rich”.

The National Audit Office today found the national funding formula, introduced in 2018, has contributed to a “shift in the balance of funding” from more deprived to less deprived local areas.

The NAO also found that schools had to cut £2.2 billion from their budgets over four years due to cost pressures.

funding formula
Jon Richards

Jon Richards, Unison national secretary, education, said “the government has acted like Robin Hood in reverse, taking from the poor and giving to the rich”, threatening to make inequalities “even worse”.

“This funding formula must be reviewed and overhauled immediately. Money should be allocated based on educational need.”

 

Hard to conclude DfE is meeting ‘need’ objectives

The government has promised to “level up education funding” under the new national funding formula.

The NAO said while allocations are more “predictable and transparent”, the “multifaceted” nature of “need” makes it difficult to “conclude definitively” whether the DfE has met its objective of allocating “funding fairly”.

There has been a 1.2 per cent average reduction in per-pupil schools’ block funding between 2017-18 and 2020-21 for the most deprived fifth of schools, compared with a 2.9 per cent increase for the least deprived fifth.

The report stated: “Although more deprived local authorities and schools continue on average to receive more per pupil than those that are less deprived, the difference in funding has narrowed.”

Auditors said this was due to changes in “relative need” and the introduction of minimum per-pupil funding levels.

 

Schools had to cut £2.2bn to ‘live within their means’

The DfE’s own figures show that between 2015-16 and 2019-20, cost pressures exceeded funding for schools to the tune of £2.2 billion. The NAO said this meant that “to live within their means, schools needed to make economies or efficiency savings”.

The DfE estimates funding would grow faster than cost pressures in 2020-21, so schools would have some “financial headroom”. But this did not take into account the potential impact of Covid-19 costs and funding in this assessment.

However, the average revenue surplus of academy trusts rose by 16 per cent to nearly £1.3 million last year.

The number of trusts with a revenue deficit fell from 169 in 2018-19 to 112 in 2019-20. The figures cover the year to the end of August 2020, however, capturing only the first phase of the pandemic.

The DfE said the data provides assurance that during the early stages of the pandemic “schools did not incur unmanageable additional costs that they could not cover through savings elsewhere”.

It will not have the equivalent data for maintained schools until later in 2021.

 

Be clearer on funding

The NAO has now called on the DfE to make clear in both parliament and public that local flexibilities mean it cannot guarantee the amount of block funding each school receives.

“In particular, the department should be explicit that it does not have assurance that academy schools are receiving the minimum per-pupil funding levels that it has set,” the report states.

Local freedoms mean the DfE cannot ensure that each school receives the NFF calculation. Local authorities are not yet obliged to apply this calculation – only 64 did in 2020-21. The government has refused to say when it will move to a fully “hard” funding formula, meaning local authorities have to award funding based solely on the NFF.

But multi-academy trusts can re-distribute funding to their schools based on their assessment of need, meaning that even a hard formula would not guarantee academies get the same funding as everyone else.

The DfE said every primary school will receive at least £4,000 per pupil, and secondaries at least £5,150 per pupil this year, “delivering on the government’s pledge to level up the lowest-funded schools”.

A spokesperson said the NFF “ensures that the areas with high proportions of students from disadvantaged backgrounds are receiving the highest levels of funding, providing £6.4bn in funding for pupils with additional needs in 2021-22.”



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