PRESS RELEASE : Fair funding for all schools [April 2012]

The press release issued by the Department for Education on 13 April 2012.

Headteachers today welcomed a government consultation on how school funding can be made fairer.

It seeks the views of parents, teachers, schools, unions and local authorities about the current system, and asks whether a new system would result in a fairer outcome for schools.

The consultation launched today is the first part of a two-stage process. Taking into account these views, further proposals will be published for consultation later this year.

As it stands, the school funding system creates large variations in how much money similar schools in different parts of the country receive. Funding is based on historic calculations – some dating back to at least 2005 – that bear little resemblance to the needs of schools and their pupils today.

For example:

• Similar primary schools’ funding can vary by as much as £1,300 per pupil. Similar secondary schools’ funding can vary by as much as £1,800 per pupil. In a secondary school of 1,000 pupils, that is a difference of around £1.8 million. This could pay for around 40 extra teachers.
• In one local authority, a school with 43% of its pupils eligible for free school meals received £3,367 per pupil. In another local authority, a school with only 10% of its pupils eligible for free school meals received £4,032 per pupil. This is a difference of £655 per pupil.
• The system cannot respond to changes in the types of children living in certain areas. In Peterborough, for example, the number of children who speak English as an additional language has risen by 60% since 2005. This significant change will not have been reflected properly in the funding system.

Ministers believe this is unfair, which is why the government is consulting on whether we should try to make school funding fairer.

Ideally a new funding system for all schools would:

• distribute money in a fair and logical way, with schools in similar circumstances and with similar intakes of pupils receiving similar levels of funding
• provide transparent, additional funding to support deprived pupils, with the pupil premium being the first step to creating a fairer funding system
• be clear and easy for parents, schools and the public to understand
• support a diverse range of school provision, including academies and free schools.

More than £35 billion of revenue is spent on schools each year. It is crucial that the funding system provides good value for money and that resources are distributed fairly.

The consultation asks questions including:

• Do you agree with the case for reforming the system?
• Do you agree with the aim of ensuring that all deprived pupils get the same level of funding no matter where they live?
• What is the right balance between simplicity and complexity?

Schools Minister Lord Hill said:

Headteachers tell us that the current funding system is unfair and illogical. In some cases it means a child living in one part of the country can be funded up to £1,800 more than a child with similar needs living elsewhere. Having a fairer system is not just right in principle. It would enable parents to see more clearly how schools are doing with the funding they receive.

Addressing the disparities and inequalities within our school system is a top priority for the coalition government. For standards to improve, all pupils must get the support they are entitled to. This consultation is the first step to ensuring fairer funding for all.

Brian Lightman, General Secretary of the Association of School and College Leaders (ASCL), said:

ASCL has long argued for a reform of the funding system and the development of a new funding system. We are therefore very pleased to see that the government is launching this consultation.

What we have known for some time, and was obvious following the department’s release of financial data on schools in January, is that the current funding method is inequitable and indefensible. Funding between similar secondary schools can vary by up to £1,000 per pupil; this situation surely cannot be allowed to continue. A continuation of the current ‘spend plus’ methodology would actually increase the level of unfairness in school funding, making this review absolutely essential.

Implementation of a change of this magnitude will need to be very carefully planned and we welcome the opportunity to contribute to this consultation.

Russell Hobby, General Secretary of the NAHT, said:

The time is right for a debate on a new funding system. The significant differences in funding between schools of the same size and intake cannot be justified and the current system is far too complicated. Funding must be consistent across schools if accountability is to be fair. We are under no illusions about the challenge and risk, especially in times of financial constraint, but it is a conversation worth having.

The early framework for consultation asks many of the right questions and suggests some workable principles. As an association, we endorse the need to recognise the differing characteristics of pupils and for simplicity and transparency. School leaders must be able to plan over the long term.

We need to think carefully about how we protect small schools that are so clearly valued by their communities, how we avoid turbulence and how we manage any transition.

These are the early days of a very long run process and we welcome the commitment to a genuine dialogue from first principles.

The government is also consulting on potential options for funding academies next year, as an immediate step towards making the funding system simpler. This consultation will run for 6 weeks.

At present, academy funding replicates the funding that other schools in the local authority receive. But this system was designed for a much smaller number of academies. As more schools choose to convert, the current system is becoming increasingly clumsy and needs to change. 629 academies are now open, compared to 203 in May 2010.

The current academy funding system has a number of flaws:

• Like maintained schools, academies receive opaque funding allocations
• The system is complex and lacks transparency
• Replication of funding is labour-intensive and bureaucratic. The Young People’s Learning Agency (YPLA), the body that administers academy funding, estimates that an average replication model takes 3 to 5 days to build but may take up to 3 weeks to verify
• The system for calculating the Local Authority Central Services Equivalent Grant is extremely complicated and does not deliver funding that is transparent

The Government is consulting on three different options for funding Academies in the school year 2012 to 2013.

David Wootton, Chair of the Independent Academies Association, said:

We in the academy movement are committed to a funding formula that is fair for all schools and all children. The present system is innately unfair and has for a long time disadvantaged many youngsters. The funding system has not kept up with the pace of change or indeed changes in localities.

A new funding system has the potential to create a fairer and simpler way of funding schools. This consultation offers everyone the chance to explore and consider in some detail the opportunities and challenges in moving from the current highly complex arrangements to a simpler, transparent system.

The intention to consult on the benefits of a new funding system was set out in the Schools white paper.