Thoughts on the DfE's consultation: Schools National Funding Formula

05-04-2017

by Kerry Ace, Finance and Policy Manager, Governance and Academies, Colleges and Universities, CIPFA 

The DfE issued the consultation document Schools National Funding Formula – Stage 2 in December 2016. The consultation sought views on detailed proposals for the design of the new national funding formula for schools, and for the central school services block for local authorities. It builds on the earlier consultation, launched in March 2016, regarding the principles and structure for the new funding system. Summarised below are some of the key points included in CIPFA’s response.

CIPFA supports the overall aims of the proposed national funding formula. We believe that schools’ funding should be transparent, fair and that the outcomes of the formula should support opportunities for all pupils. In our view, key to a successful implementation is the need to ensure that there is sufficient funding overall to provide for a high quality education system and that there is appropriate transitional protection to allow schools to adjust to changing funding levels. Introducing a new formula could see significant losers in terms of funding and has the potential to generate turbulence across the education sector.

The consultation considers the transition to a reformed funding system and arrangements for a ‘soft’ formula. The stage one consultation noted plans to phase in changes over time. We believe that the proposed changes need to be phased in gradually to protect those facing a reduction in budgets. We are therefore concerned about the proposal to have only one year of the ‘soft’ formula in 2018-19 and not two as proposed in the stage one consultation. 

Where schools lose 3% of their funding, there will be significant one-off costs associated with redundancy payments and pension contributions which will be difficult for academies, particularly stand-alone academies, to address. Currently there is no financial help available for this. In our view, it would be helpful for the DfE to look at how academies in these situations might be supported.

We remain concerned about the savings of around £600m to be made from the withdrawal of the Education Services Grant (ESG) and its impact. 

Schools will be expected to fund core services such as education support and school improvement from their own budgets, despite a smaller element of funding for ESG duties being paid through the schools block of Dedicated Schools Grant. This is against a backdrop of concerns regarding the financial health of the sector expressed by the National Audit Office in its report on schools’ financial health (Financial sustainability of schools, December 2016). This noted that the DfE’s overall schools budget, although protected in real terms, does not provide for funding per pupil to increase in line with inflation. 

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