Implementation of the National Funding Formula postponed

28 Aug

I           Secretary of State’s Announcement

On the 21 July 2016, Ms Justine Greening, the new Secretary of State for Education, submitted a written statement to Parliament explaining that the National Funding Formula (NFF) which was due to take effect in the next financial year would be postponed to 2018/19.

Readers will recall that on 7 March 2016, the Department for Education (DfE) issued the first of its two stage consultation process on the national funding formula on the basis of which it sought views on

  1. the principles that underpin the formula and
  2. the pupil characteristics and school factors it should include in the formula.

II          The Proposals

The DfE also sought views on the overall funding system, in particular on its proposals to:

  1. introduce a school-level national funding formula where the funding each pupil attracts to her/his school is determined nationally;
  2. implement the formula from 2017-18, allocating funding to local authorities to distribute for the first two years, and then to schools directly from 2019-20;
  3. create a central schools’ block for local authorities’ ongoing duties; and
  4. ensure stability for schools through the minimum funding guarantee and by providing practical help, including a restructuring fund.

Simultaneously, the DFE sought stakeholders’ views on proposals to introduce a high needs formula for children and young people with special educational needs (SEN), in particular

  1. the overall design of the formula;
  2. whether the formula factors are appropriate;
  3. how the formula should be phased in, to avoid disrupting the education of children and young people with SEN and disabilities (SEND); and
  4. the ways the government intends to help authorities address the cost pressures they face.

The consultation closed 17 April 2016.   Ms Greening told Parliament that there was an “overwhelming, positive response from headteachers, teachers, governors and parents”.  She intends to publish the government’s full response to the first stage of the consultation and will set out her proposals to the second stage once Parliament returns in October 2016.  Ms Greening will then make “final decisions early in 2017 with the view to implementing the new system in 2018/19.  Plans for funding the early years formula were to be published “shortly”.

Schools and local authorities stressed how important it was to have as much advanced notice as possible of any changes to secure stability in planning for the future and in the interests of fairness.  Accordingly, Ms Greening told Parliament that no local authority would see a reduction in funding for 2017/18 – adjusted, of course, on the basis of pupil numbers, age-weighted and taking account of high needs.  Final allocations were to be made in December 2016 on the basis of the October census.

Meanwhile, whatever the changes on the margin, no school was to face a funding reduction of more than 1.5% per pupil in 2017/18.  She also promised to publish as soon as possible the Education Funding Agency’s (EFA’s) operational guide to academies’ funding for 2017/18.

The 7 March 2016 consultation document mentioned that the school funding based on the NFF was to be allocated to local authorities (LAs) in the first two financial years – i.e. 2017/18 and 2018/19 – and it would be for the LAs to distribute the school budgets based on their local formulas. For 2019/20, the government would distribute the monies directly to schools/academies.   This has now been postponed by one year.  What has been assured for the future is the Pupil Premium and Service Children’s Grants.

The NFF will consist of four factors.

(i)         Pupil costs

(ii)        Additional needs taking account of deprivation, low prior attainment and English as an additional language (EAL)

(iii)       School Costs – which will include a lump-sum sparsity factor (i.e. to compensate schools in the shire counties with low numbers), rates, premises and growth

(iv)       Geographic Costs – i.e. to take account of the cost of housing and split sites, for instance.

III        Reactions

The main reason for the postponement of the NFF was because of the turbulence caused by the referendum. In the four-week period prior to the referendum, government work – including dealing with the NFF consultation – came to a halt.   Shortly after 23 June 2016 (the day of the Brexit vote), David Cameron resigned. Following this, five MPs put their names forward for the Conservative leadership.  Mrs Theresa May was eventually elected by default in the final stage, when Mrs Andrea Leadsom decided to throw in the sponge and call it a day after reactions to an interview to The Times in which she hinted that Mrs May was unsuitable because she did not have children.

Prime Minister Theresa May gave short shrift to several of Cameron’s previous Ministers.  One casualty was Ms Nicky Morgan who was replaced by Ms Justine Greening, previously Secretary of State for Transport.  Ms Greening comes across (so far) as someone wishes to know more first, reflect second and act third.   The evidence? She has decided to defer implementing the NFF.

However, there have been rumblings of dissent from schools and academies in the shire counties that have over several years been severely underfunded.  Readers will recall that in 2015/16, the per secondary pupil funding in Tower Hamlets was £7,007 while in Wokingham it was £4,151.  There are compelling reasons to protect, as much as possible, funding for inner-city pupils’ education. At the same time, the government needs to address the underfunding of those in many other parts of the country.   Squaring this circle will not be easy.

Writing in The Times Educational Supplement, Sir Tim Brighouse, former Schools Commissioner for London and Director of Education for Birmingham, stated that in the days of plenty, it would have been possible with £0.5 billion to eliminate the differentials.  “It certainly isn’t fair to take existing funds from challenging areas where they have used extra resources to good effect and to do it at a time of cuts,” he wrote. “That would be a bit like cutting the higher rate of tax at the expense of those on benefit.  It will reverse the success of London and Birmingham.”

It appears that the government proposes to eliminate compensating schools financially for pupil mobility.  This will exacerbate the pain that families and schools experience where there is social housing and women’s refuges. Housing benefits are being squeezed and families removed from expensive areas to the outlying parts of cities – a key reason for pupil mobility.

Sir Tim proposes that the government “add annually to the national purse and level up – not down – those areas that have suffered in the past”. But where is it to find the extra given that we are leaving our children with a national debt-liability of £1.5 trillion – a debt that will grow?

School budgets are protected in cash terms.  However, schools are losing out because of inflation, increases in staff salaries and a rise in on-costs.   Any action the government plans to take it will be criticised and come in for censure. Ms Greening is caught between a rock and a hard place and steeling herself against the slings and arrows of outrageous fortune.

The government intends to smooth out the changes by ensuring a minimum funding guarantee (MFG). Currently, this means that no school will suffer a reduction of more than 1.5%.  For the future, the figure that is being mooted is 2.5%.  The strategy will be akin to boiling the financial frog by increasing the temperature of the water very gradually.  The total funding for all schools and academies will remain static and create winners, who will not be winning that much year-on-year (a pyrrhic victory) and losers, who will be moaning and groaning year-on-year about the losses they will be sustaining.

One of the biggest losers will be local authorities that have seen their central funding for schools annually denuded.   The government has told them to stop taking responsibility for school improvement, behaviour and insurance.  LAs will be left with funding for three main areas– ensuring sufficient school places, caring for vulnerable pupils and acting as parents’ champions.

For several years, education has enjoyed “the good life” financially.  It has been well equipped and had more than seven years of plenty.  What those in education will now be experiencing may not, exactly be a famine.  However, there will be much less at a time when they will have to do considerably more – given the changes to the curriculum and assessment.

Schools in the shire counties, following the deferment of NFF by a year, will view their lot as

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