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Fairer school funding: Government statement

21st July 2014

The Rt Hon David Laws MP: I am today announcing how we will allocate £390 million of additional schools funding to the least fairly funded local areas in England. This will ensure fairer funding of English schools.

When I addressed the House in March on fairer schools funding, I confirmed the government’s commitment to ensure that, across the country, schools have a fair funding allocation that equips them to provide a world-class education. Since then, we have consulted on a proposal to allocate additional funding to schools in the least fairly funded areas.

The consultation has confirmed that there is an overwhelming consensus that the allocation of funding to local areas across England is unfair.

The proposal we consulted on was as follows. First, we would protect all local authority budgets at the same cash level in 2015 to 2016 as in 2014 to 2015. After this, we would increase the budgets of the least fairly funded local areas by setting minimum funding levels that all areas should attract for their pupils and schools. Where a local area already attracted these minimum funding levels, we would not make any change to the amount of funding per pupil that it received for 2015 to 2016. If a local area attracted less than these minimum funding levels for the pupils and schools in its area, we would increase its budget so that it met those levels.

I have listened carefully to the views of honourable members and considered over 570 responses to the consultation. I am confirming today that we will allocate extra money to the least fairly funded local areas using the approach we set out in our recent consultation. I have concluded that this is the fairest way of distributing the additional funding we have available. I am pleased to say that we are allocating £390 million additional funding – £40 million more than I announced in March.

Sixty-nine local areas will attract additional funding. My announcement today means that, for example, Cambridgeshire – the lowest funded area in 2014 to 2015 – will now receive an additional £311 for every pupil. Northumberland will now receive an additional £307 for each of its pupils and Croydon an additional £278.

Through the additional funding we are making available, every local area’s allocation of funding will reflect a minimum basic per pupil amount and minimum amounts reflecting other pupil and school characteristics. In every local area, this will mean for example that the most deprived pupils in primary schools will attract at least £4,454; in key stage 3 at least £5,820; and key stage 4 at least £6,372, and this will continue to be supplemented by further direct funding through the pupil premium.

In the consultation we published in March this year, we gave an initial indication of how, under our proposal, additional funding might be allocated to local areas. We were clear that these indicative figures were calculated using the most recent data available at that time, and that we would use updated data for the final allocations. We were clear that this meant that the distribution of additional funding to local authorities would be different from the indicative allocations set out in the consultation.

The additional funding that we will allocate to local authorities addresses the unfair distribution of mainstream schools funding. During the consultation I have heard the concern that we will not have a completely fair education funding system until we also reform the distribution of funding for pupils with high-cost special educational needs and for early years pupils. This will be our priority for reform during the next parliament, alongside introducing a full national funding formula for schools.

In the 69 local areas that will attract additional funding, schools forums will now be able to agree a local funding formula for 2015 to 2016. Our intention is that schools in these areas should receive the full benefit of the additional funding we are making available: the local authority should not hold back the extra funding to pay for centrally provided services.

However, I want to be clear that it is for local authorities, in consultation with their schools forum, to decide how they distribute this additional funding between the schools in their area. If it is the collective judgement of a schools forum that there is a better way of distributing funding locally, then schools will not receive a budget that reflects each of the minimum funding levels directly.

Today’s announcement of an additional £390 million increase in funding will make a real difference on the ground in the least fairly funded local areas, without creating instability and uncertainty in other local areas. We remain committed to taking the next vital steps towards fully fair funding once long- term spending plans are in place after the next spending review.