Where next with the national funding formula (NFF)? Distribution aside, the government must ensure that sufficient funding is available for schools and colleges in the first place, says ASCL Funding Specialist Julia Harnden.

Funding: Where Next?

I’ve worked in the education sector for more than two decades and in all that time, ASCL has been pursuing a national distribution formula for school funding that promotes equity of access to a great education, transparency and predictability. Our faith in that endeavour has never wavered and we are sure the message is the right one. Every child and young person should have access to what they need to succeed. 

So, when the government finally introduced the NFF in 2018 it was a welcome step forward. Since then, the methodology has been applied at national level. We know that most local authorities have moved towards the NFF, and some are now mirroring the NFF in their local formula, but flexibilities mean that in 2022, the cash a school receives into its bank account is still determined by a local formula. 

The government has been clear that completing the legislative reforms required to move to a direct national formula are ongoing, and we are awaiting the outcome of a consultation published last summer. This consultation asked a fundamental question about the aim of a national distribution methodology: Should it include all pupil-led and school-led factors, and should it be allocated directly from the centre without further local adjustment through local formulae? 

If only it could be answered with a simple yes or no. There’s still lots to think about. ASCL’s position is that we agree with the stated aim: a national distribution methodology that will underpin transparency and fairness. However, we cannot agree to a national distribution methodology ‘at any cost’. So, the answer to the question is, “Yes, but…” Here are a few of the ‘buts’ that need to be thought through before we dash to complete the reforms to meet a legislative deadline. 

SUBSIDIARITY: We think the principle of subsidiarity should apply to the distribution of education funding, and that, for the most part, this means school or trust level. However, we also think that in some cases local authorities (LAs), with their capacity for local decision making, may be the most appropriate level for allocation of funds. We think that funding for growth and falling rolls are likely examples of this. 

FAIRNESS: We support the government’s ‘levelling up’ ambitions, and the role that a NFF can play in that ambition. Unfortunately, since its introduction, the NFF has tended to provide larger increases for the least deprived schools (8% to 9%) than those in the most deprived areas (5%).ⁱ

MORE HASTE, LESS SPEED: The formula needs to be functioning well before the progression to a direct NFF can take place. In 2020/21, 15.6% of all schools required top-up funding to meet the government’s own minimum per pupil funding levels. We do not think that this is a formula that is functioning well yet. 

The pace of change must be managed with perspective. Progressing reforms to the schools NFF in isolation may present some risk. For example, we acknowledge that additional funding has been added to the high-needs block, but the delay in the publication of the SEND Review is unfortunate. We think that modelling the financial implications of the outcome of the SEND Review is a necessary part of the progression to a direct NFF. 

We also know that simply reforming the distribution methodology will never address the insufficiency in school and high-needs funding. To do that, the funding pot must be big enough for a well-functioning distribution formula to get to work in. 

Sufficiency and the Spending Review 2021 (SR21) 

Nevertheless, it’s only right that we acknowledge the steps the government has taken in the last few years to address insufficiency. An additional £7.1 billion has gone into the core schools budget for 2022/21 and 2022/23. 

And in October, the Chancellor announced an additional £4.7 billion for the core schools budget, by 2024/25. Think of the core schools budget as funding for mainstream pupils aged 5–16 and specialist provision, alternative provision and support for children and young people with SEND. We anticipate that this will be split relatively evenly across the next three years, but, at the time of writing, we don’t know exactly how – we only know that about £300 million in 2022/23 will cover the employer costs associated to the National Insurance levy beginning this April. 

The government is telling us that altogether, increases since 2019/20 equate to a cash increase of approximately £1,500 per pupil by 2024/25. 

This is good news of course. But it is only right that we contextualise the outcome of SR21. 

Analysis by the Institute for Fiscal Studies (IFS)ⁱⁱ indicates that by the end of the SR period (March 2025), spending levels will have reversed real-terms cuts made since 2010. Another way of looking at it is that schools will have survived 15 years with no overall growth in spending. This is a rather unpalatable thought. In fact, the IFS says that this level of squeeze on school resources is unprecedented in post-war history. 

The message for 16–19 provision is even harder to hear. By 2024/25, college spending per student will be about 10% below 2010 levels and for school sixth forms, spend per pupil will still be 23% less than in 2010. 

What about resources to fund the recovery of lost learning? 

The Chancellor confirmed an additional £1.8 billion to extend the recovery premium for primary and secondary schools, provide an additional hour of learning per week for students in post-16 settings and fund a substantial training package for middle and late career teachers. This is mostly new money, and brings the total pledged to schools and colleges for recovery to £5 billion. 

The enduring frustration with funding to support recovery is that it feels like a short-term response to a long-term set of challenges. All funding is welcome, of course, but the sector should have confidence that the long-term investment required to mitigate the impact of the pandemic on our future workforce and therefore, the national economy, is assured. I don’t think we have that confidence yet.

Whether it’s money for mitigating the risks of lost learning over the past two years, or the core schools’ budget for the next three years, our plea is the same. Get the distribution methodology right and make sure that the financial resource available is sufficient and reliable.

ANALYSIS BY THE INSTITUTE FOR FISCAL STUDIES (IFS) INDICATES THAT BY THE END OF THE SR PERIOD (MARCH 2025), SPENDING LEVELS WILL HAVE REVERSED REAL-TERMS CUTS MADE SINCE 2010. ANOTHER WAY OF LOOKING AT IT IS THAT SCHOOLS WILL HAVE SURVIVED 15 YEARS WITH NO OVERALL GROWTH IN SPENDING.

Sources

• https://ifs.org.uk/publications/15588
• https://ifs.org.uk/publications/15858

Julia Harnden
ASCL Funding Specialist
@julia_harnden

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