Schools National Funding Formula Consultation – Part 2 The SDBE - Developing Church of England Education

The SDBE - Developing Church of England Education DfE Policy Objectives Fairness / social mobility Move away from more historic basis of funding – similar schools and areas should receive more similar levels of funding Formula factors that maximize funding directly related to pupil characteristics Per-pupil element of formula reduced from 76% to 72% and lump sum reduced to below current national average– principle is that more funding follows pupil characteristics. The formula will be applied consistently even as rising numbers of pupils enter the education system. Overall spending is projected to increase from £40 to £42 billion in the current spending review period. The SDBE - Developing Church of England Education

The SDBE - Developing Church of England Education Key Components ‘Soft’ implementation for 2018/19 via LAs ‘Hard’ implementation for 2019/20 direct to schools Minimum funding guarantee retained at -1.5% per annum 3% funding floor capping total change resulting from the NFF Gains capped at 3% per-pupil in 2018-19 and 2.5% in 2019-20 2018-19 will see the DfE allocate funding for individual schools in accordance with the formula and then pass it en bloc to the LA, who will then distribute it in accordance with their local formula (abiding by the MFG). 2018-19 schools block will be ring fenced, however with the agreement of the LA/ schools forum/majority of local schools. MFG is based on the schools block funding received by a school as if it were full, and takes account of the difference between the old and new lump sum and sparsity factors. Generally calculated based on pupil and school led funding, not premises, mobility and growth. The implementation of a funding floor limits the rate at which the DfE can afford other schools to realise their full gains. 73% of schools will realise their full gain under the fully implemented formula. LAs will have some flexibility over small aspects of the formula (historic commitments, split sites, pupil growth), and the DfE will consider the role of the schools forum in the NFF. The 3% funding floor will cost £280 million to implement. 46% of the schools losing money will benefit from the funding floor. Only 1.8% of the formula is based on historic factors, although the funding floor will in time create its own history. Proportion of funds allocated between the schools block and high needs block is based on the national LA average (6:1 ratio – Central services is 1/25th of High Needs). Government have pledged no LA will lose money from its High Needs Block. The SDBE - Developing Church of England Education

The SDBE - Developing Church of England Education National Variation Most LAs will experience a change within the -3% to +3% range. Inner London will lose the most. Only region in which per-pupil funding overall will reduce. Of the 20 LAs seeing the biggest reductions under the NFF 11 of these are in London. Under the proposed formula schools in Inner and Outer London would still be funded, on average, 17.4% higher than schools elsewhere, reflecting higher teaching and general labour market costs and higher numbers of pupils with additional needs. The SDBE - Developing Church of England Education

The SDBE - Developing Church of England Education Diocesan Variation Funding for LAs under the national funding formula, including the schools block, high needs block and central services block. This table represents the percentage change in the combined schools block, high needs block and central services block allocation for LAs under the NFF when 2016-17 pupil data is used as the baseline. This does not include pupil-premium (protected in cash terms)/sports premium funding and LA funded historic commitments. The first column is for the ‘soft’ year and the second the ‘hard’ year. Transitional protections include both the MFG/caps on gains, protection in cash terms of the high needs block and the -2.5% floor on the central services block. Inner London boroughs fare less well than others. The SDBE - Developing Church of England Education

Diocesan Variation Schools block funding for individual schools broken down by LA. The first two columns present an average percentage change in the schools block allocations of diocesan schools within a LA. The losses for Inner London are higher than the LA figures, demonstrating that many of these schools will be receiving protection from the MFG. The final column illustrates the range of the percentage change in schools block allocations of diocesan schools within a LA in the transitional year only. Ranges in Inner London are smaller because the majority of schools are in the bottom band. There is however a considerable range in other LAs. In particular I have not included here the final formula ranges but some secondary schools have such substantial increases that the range is much distorted for other schools in the Borough. There is a substantial range amongst primary schools in Outer London. The SDBE - Developing Church of England Education

SDBE Consultation Response As DfE budget is protected only in cash terms the primary effect of the national formula is one of redistribution – acknowledge there will be both winners and losers Support in principle a greater equality of funding between schools Support from the DfE needs to go beyond guidance and training to significantly improving central services that can help schools save money, e.g. procurement Standards in London have risen substantially in recent times such that it is now one of the top performing areas nationally The pace of the proposals limits the ability of schools to achieve savings in the most efficient way, in particular as regards staffing The minimum funding guarantee and funding floor provide a degree of stability for schools’ budgets. Whilst recognising the protection afforded to the budget for the Department of Education compared from other departments the overall allocation will not protect most schools’ budget in real terms up to 2019/20. Without any real terms increase the effect of a national formula is therefore primarily redistributive, resulting in winners and losers. Inner London schools in particular are set to lose the most, with the majority of such schools’ losses capped by the minimum funding guarantee and funding floor. It should be recognised that standards in London have risen very substantially over recent times to become one of the top performing areas nationally. Funding reductions will be especially hard to absorb for these schools because relevant costs on schools in London continue to rise sharply. We support in principle a greater equality of funding between schools brought about by a national formula, however schools will need more support than is currently available to meet the financial demands placed upon them. This must extend beyond guidance and training to significantly improving the procurement and other central services provided by the DfE that could reduce schools’ costs. The government’s own figures acknowledge that cost pressures on the overall schools budget will rise by 3.1% in the 2016/17 school year, and by a further 1.5% in both 2017/18 and 2018/19, amounting to an 8% real terms reduction over the spending review period. The pace of the proposal will force schools to make savings through sub-optimal means, particularly around staffing, as any restructuring processes precipitated by this formula will front-load costs onto schools. The SDBE - Developing Church of England Education

SDBE Consultation Response Support the 3% funding floor/minimum funding guarantee Formula does not reverse the significant cuts to ESG from 2017/18 New methodology for area cost adjustment will reduce London funding compared from previously this formula? Under the proposed arrangements the funding floor does not seem to offer any protection for schools during the current spending review period over and above the minimum funding guarantee. If the floor was raised from -3% then it would benefit those schools facing the largest reductions under the proposed formula. The area cost adjustment multiplier could be increased in order to reflect rising local costs in areas like London. Many schools are struggling to recruit and retain staff, and young teachers in particular will be drawn away from London if their employment does not offer sufficient compensation for their rising costs of living. Indications are that the new area cost adjustment methodology will result in proportionately reduced funding for Inner London schools. As part of the spending review the ESG grant was reduced dramatically for 2017/18. Following publication of the White Paper in March primary legislation was intended to follow that reduced the statutory duties on LAs and further reduced their role in school improvement and other shared services. However, no such legislation has been forthcoming and consequently it is becoming increasingly difficult for some LAs to sustain their current level of services to schools given funding constraints. The drawing together of different funding streams into the new ‘Central Services’ block does not return funding for these duties and services to former levels, which will put LA revenue budgets under pressure. The SDBE - Developing Church of England Education

The SDBE - Developing Church of England Education DfE Guidance www.gov.uk/government/collections/schools-financial-health-and-efficiency Aim for buying strategy to save schools £1 billion a year by 2018/19 on their non-staff spend. The SDBE - Developing Church of England Education