The Government are consulting on a new funding formula for schools. It will determine school budgets on a consistent basis nationally.
The largest proportion of funding (72.5%) will be based on the number of pupils in a school. However, the new formula also recognises deprivation, low prior attainment of the pupils, pupils with English as an additional language, mobility, sparsity of population as well as some fixed running costs and adjustments for regional variation in costs.
There is no new money attached to the proposals. The new formula distributes the same level of money in a different way creating winners and losers at local authority level. The general trend of shifting money from Metropolitans to Shires is stark.
Changes to funding allocation for local authorities in England
In particular, nearly all Inner-London boroughs and a number of Outer-London boroughs will lose under the new arrangements.
Changes to funding allocation for local authorities in London
This shift in London is caused by a number of factors.
1 Historic decisions ‘inflated’ London’s existing funding
In the past a number of grants were given to London for example Excellence in Cities. These have been rolled forward over the years without revisiting the underlying need. Arguably this has inflated the existing funding to London. The new formula takes no account of these historic grants so whilst London schools will be funded at the highest level of all schools under the new formula (reflecting the high levels of deprivation and pupils with English as an additional language), this is lower than historic funding.
2 The deprivation gap is reducing
London has high levels of deprivation but the gap between London and other areas is reducing. London is becoming more affluent overall. The same applies to Manchester, Liverpool and Birmingham.
3 The cost differential for London has been reduced
The Area Cost Adjustment (ACA) is a multiplier that is applied to certain factors to reflect regional variations in cost. For example, the cost of living in London is perceived to be higher and therefore many employers pay a London Allowance to attract and retain staff. Historically, the ACA assumed that the cost of recruiting teachers was the same as the general labour market. However, it was found that the London differential for teachers was less than that for all workers and therefore the ACA multiplier for London has been reduced.
In recent years, London schools have outperformed the national average at all Key Stages. We found this when we did the Annual London Education report in 2015 and the same trend has been found in the latest report published last month (for 2017). The latest report states ‘what is clear is that continuing the journey of improvement in London is vital if the UK as a whole is to continue to compete on a global scale’. It would be a shame if this journey of improvement was halted by the introduction of a new funding formula for schools.
The consultation closes on 22nd March 2017.