National funding formula: We might benefit from the change but the government needs to be bolder

Southend High School for Boys is one of many schools that gets a “raw deal” under the current funding methodology. We welcome the long-awaited consultation.

The Department for Education (DfE) proposals are broadly in line with what we expected, and in some cases feared! Of course, it is hard to assess the practical impact of the proposals as there are no numerical details in this part of the consultation.

The biggest issue we see is the rate of change/transition timeline. A number of sector bodies have been arguing for a faster rate of change on the basis that using the minimum funding guarantee (MFG) of 1.5 per cent means it will take 10 to 15 years for funding levels to equalise.

We are encouraged to think and act like a business and while we recognise we have a 18 month planning timeline, it seems extraordinary that schools are not being credited with the intelligence to plan for the funding change in a reasonable timeframe. If it is unacceptable that schools are currently funded at such varying rates, then it is unacceptable if the transition to a fairer formula is intentionally slow.

The proposed new model includes funding elements for deprivation and prior attainment (which links closely to deprivation, although they are/should be different indicators). It is intended to retain pupil premium. The effect is that deprivation is, again, being more than double-counted.

Of course, the pressing issue here will be the weighting that is applied to these measures (which used to be locally determined and will become a national figure).

The weightings have not yet been published and will appear in phase two of the consultation. There is a real risk that unjustified levels of between-school variation will be perpetuated and the lowest-funded schools will continue to carry a disproportionate burden of the austerity programme.

Pupil premium does have a political slant in that it will remain “for the duration of this parliament”. This could be because it is being seen as a softener for some areas of the country but it does mean that when asked if we want a deprivation factor to be included, the answer has to be yes on the basis of the hint that pupil premium may not exist after the next general election.

This means we are building a funding regime that is double counting and instinctively feels twisted. If pupil premium is to remain in the long-term, the deprivation element of the formula needs pruning.

The proposed new model also includes an “area cost adjustment”. The suggested approaches are either based on current teacher employment costs (which masks the actual pressure in different localities, where low school income suppresses the wage profile) or utilising a “labour cost adjustment” derived from the local employment market.

Southend doesn’t fare well in this approach. Local wages are low. However average incomes are relatively high (due to commuting to London) and living costs are the 11th least affordable in the country. Therefore we will need to make the case for other indicators, more reflective of the cost of living, to be used for the area cost adjustment.

The DfE has embarked on the Schools Financial Health and Efficiency Drive recognising there will be as many losers as winners with the funding changes.

We have pointed out the inefficiency of Business Rates and the fact it makes a great deal of sense for the Education Funding Agency to pay the rates directly to the local authorities. It is disappointing the DfE want to continue to work in an inefficient way and not practise what they are preaching.

Another point that needs considering is the cost increases. If you are currently financially tight, have done everything you could reasonably be expected to do to be lean and efficient, and are set to gain no more than 1.5 per cent more per year, allowing for the capping, then the chances are that this will not actually cover the cost increases up to and including 2019/20.

Of course, leaving School Forum in place for another two years could further dampen the transition.

Put simply, if ministers are truly committed to ending the current funding travesty, then we would reasonably expect them to make much bolder steps.


Read more reaction to the national funding formula consultation here.


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  1. Alistair Thomas

    Great contribution, thank you.

    Agree about deprivation – One source, one factor. Accountability has been the difference with Pupil Premium – More than likely, this has enabled well funded schools to use the equal amounts of money in the DSG factor for something else entirely. All special funds that take us away from equal funding for a worthy reason should be monitored (i.e. the LCHI SEN funds masquerading as Low Prior Attainment). The latter should be about all pupils with needs including the talented who are often disruptive through boredom or insular.

    Agree about the rates – what services do education use. Education should pay its way, a standard rate per pupil in every county, every setting, including EY and Post 16, and the DSG should cover it. All education providers should be 0-rated for VAT too. We should have a well-developed and universal idea of what an education business is and how it should be treated.

    Sympathetic about ACA – thought the hybrid ACA used for the recent SB top-ups covered this. Probably need custom ACAs for each phase as the primary staffing costs are different in EY, Schools and Post-16. Sparsity is another cost adjustment and should be treated as such. In rural areas, if you can’t put 30 pupils in front of the teacher that means higher costs per pupil just like is readily accepted in KS3 and KS4. To provide specialist services to remote areas costs far more per pupil than doing the same for densely-packed urban areas. Education services (at least while they still exist) should be cost adjusted.

    Not sure what you mean about Schools Forums. Currently they have next to no power. The LA can and does in many instances just ignore them. We will rue the day that we destroy local governance of education. It needs to be removed from local government without doubt and brought under control of local education leaders, and it needs to have some regional collaboration so that education support and education quality is more consistent nationally. A remodelled empowered Schools Forum is one possible answer to the former, a complete rethink on RSCs to represent all education not just an academy elite is the answer to the latter.