A REPORT BY THE National Audit Office (NAO) has found that while government funding per pupil has remained virtually unchanged since 2014, a new national funding formula has contributed to a shift in the balance of funding from more deprived schools to less deprived schools.

The Department for Education’s total funding for mainstream schools increased from £36.2 billion in 2014-15 to £43.4 billion 2020-21. However, the increase in pupil numbers meant real-terms funding per pupil rose by only 0.4 per cent.

Between 2015-16 and 2019-20, cost pressures on mainstream schools were estimated by the Department to have exceeded funding increases by £2.2 billion, mainly because of rising staff costs. The cost of supporting an increased proportion of pupils with education, health and care plans also grew by around £650 million between 2015-16 and 2020-21. Overall, funding increases were projected to exceed cost pressures in 2020-21.

However, the Department did not take account of the potential impact of Covid-19 as part of its assessment of cost pressures. While the Department provided schools with funding during the early stages of the pandemic for exceptional costs, and later in 2020 to help schools cover costs arising from staff absences, several stakeholders told the NAO that this funding would be insufficient.

The Department implemented a new national funding formula in 2018-19. As part of the national funding formula, the Department introduced a new minimum per-pupil funding arrangement. In 2020-21, the levels were set at £3,750 per primary pupil and £5,000 per secondary pupil. Under the minimum funding arrangement, 37 per cent of the least deprived fifth of schools were allocated more funding in 2020-21. However, none of the most deprived fifth of schools were allocated an increase in funding as a result of this arrangement. This is because these schools were already receiving per-pupil funding above the new minimum requirement.

Under the national funding formula, more deprived local areas receive more per-pupil funding than less deprived areas as funding is linked to need, but the difference has decreased. The main reasons for the relative re-distribution of funding between local authorities were the introduction of minimum per-pupil funding levels and changes in relative need, such as the proportion of pupils eligible for free school meals.

Between 2017-18 and 2020-21, average per-pupil funding in the most deprived fifth of schools fell in real terms by 1.2 per cent, while per-pupil funding in the least deprived fifth increased by 2.9 per cent. In total, 58.3 per cent of the most deprived fifth of schools saw a real-terms decrease in per-pupil funding.

The Department cannot ensure that that each school receives the funding calculated by the national funding formula or the intended minimum funding levels, since this is decided by local authorities and academy trusts. Local authorities can apply local funding formulae but must pass on minimum per-pupil funding to their maintained schools, while academy trusts do not have to do the same for academy schools. The government has said that it intends to move to a ‘hard’ national funding formula where schools’ budgets would be set directly by the Department based on the formula.

The NAO recommends that the Department evaluates the impact of the national funding formula and minimum funding levels over time. The Department should use this information to review whether it is meeting its objective of allocating funding fairly with resources matched to need, paying particular attention to the shift in the balance of funding away from more deprived schools to less deprived schools.

Gareth Davies, the head of the NAO, said: “The Department for Education has met its objective of making the way it allocates school funding more transparent and consistent. However, it is less clear whether it has met its objective of allocating funding fairly.

“There has been a shift in the balance of funding from more deprived to less deprived local areas. Although more deprived areas and schools continue to receive more per-pupil funding than those that are less deprived, the difference in funding has narrowed. The Department must evaluate whether this funding model is matching resources to need.”

Commenting on the report, Kevin Courtney, joint General Secretary of the National Education Union, said: “This important report exposes the financial difficulties schools continue to face, even after the start of the Government’s much-heralded funding increase for schools.

“The report also concludes that the Department for Education have ‘not systematically assessed the cost pressures arising from Covid-19’ and that their assurances that schools didn’t have unmanageable costs arising from Covid ran counter to the experience of the stakeholders the NAO spoke to.

“The report questions why local authorities must provide detailed funding information on their maintained schools and yet multi-academy trusts need not publish any information on how they allocate funds or why.

“So yet again the Department for Education have been found out on school funding. Yet again their assurances that schools are in a strong financial position turn out not to be accurate. Yet again the Department’s claims to be prioritising the most disadvantaged turn out to be the opposite of their actions.

“Schools cannot thrive without proper financial support and without a proper assessment of costs.  Gavin Williamson pays scant attention to his brief. We hope, however, that both he and the Treasury will heed this report and provide the funding schools and colleges need to allow the nation’s school children to make up for the last year.”

* Download School funding in England and associated documents  here.

* Sources: National Audit Office and National Education Union