The National Funding Formula Tom Goldman Department for Education October 2017

National Fair Funding Conference Thursday 19th October, 2017

Introduction Why reform at all? Why adopt this formula? What comes next?

A (very) potted history - 1 1988 Local Management of Schools Delegated budgets, local formula, LA sets budget 1997+ Passporting, Standards Fund, School Standards Grant Increased pressure on LA to pass funding increases through to schools’ budget Increased funding paid as specific grant 2003 Reform on Education SSA “Funding crisis” 2006 Dedicated Schools Grant Funding ring-fenced to education, distribution by Spend plus 2011 Specific grants into DSG, Pupil Premium 2013 Limits on local formulae factors, 3 blocks in DSG 2015 Minimum Funding Levels

A (very) potted history - 2 Trends: Increased focus on the individual school School-by-school comparisons, increasing uniformity Much better (more?) data available Tension between stability and change Tension between simplicity and accuracy

Why reform at all? - 1 Reform is disruptive and resource-intensive So what has driven the need for reform? Fairness Identical schools would get different funding Identical LAs would get different funding We cannot explain why school X gets £X and school Y gets £Y We can explain why school X gets £X; and why school Y gets £Y; but not both together So: we cannot justify the current system or distribution Inexplicable differences are cannot be justified – even if they are justifiable

Why reform at all? - 2 So what has driven the need for reform? Allocative efficiency However efficient individual schools may be, the system will be inefficient if funding isn’t directed to need An even greater priority when budgets are tight Unresponsive to change Beyond total pupils numbers, at best ad hoc, one-off adjustments Promoting equality of opportunity / social mobility? Balanced by the importance of stability Protections and transition, rather than stasis (How) will it improve pupil outcomes?

Why adopt this formula? - 1 A school-level calculation School-to-school comparability Looking to a hard formula A ring-fenced Schools Block Greater certainty, greater transparency DfE taking responsibility for the schools: high needs balance; but some local flexibility A funding floor for stability Clearly a political priority…

Why adopt this formula? - 2 A funding floor for stability Clearly a political priority… “While we will make funding fairer over the course of the parliament, we will make sure that no school has its budget cut as a result of the new formula” Conservative “We will introduce a fairer National Funding System with a protection for all schools, so that no school loses money per pupil in cash terms” Liberal Democrat “We will introduce a fairer funding formula that leaves no school worse off” Labour Impacts on standards in schools which lose? Funding based on pupil and school characteristics, and school funding history 2.5ppt differential, per year, between NFF gains cap and NFF funding floor (and more for the lowest funded)

Why adopt this formula? - 3 Starting from 150 local authorities’ collected experience Our factor values’ starting point was local formulae And 26,000+ consultation responses We can continue to explore why authorities are setting different formula, to inform NFF development Protection of additional needs Protecting the quantum, including “hidden” deprivation spending But reconsidering the balance and making wide coverage uniform Recognising limitations of proxy measures

What comes next? - 1 Areas for immediate on-going work Premises; PFI Growth Mobility Preparations for a hard formula Timing? The next Spending Review The formula has to distribute 100% of the available funding

What comes next? - 2 Not “introducing the NFF”; now “continuous improvement” Not one-off, grand public consultation, and Not set in aspic, storing up new problems for the future Now issue-by-issue consideration of incremental change But NFF v2.0? High Needs Schools?

Conclusion NFF documentation Executive Summary, Policy Document https://www.gov.uk/government/publications/ national-funding-formula-for-schools-and-high-needs Illustrative Tables, Technical Notes https://www.gov.uk/government/publications/ national-funding-formula-tables-for-schools-and-high-needs Detailed school-by-school calculations via COLLECT NFF consultation is over, but still keen to continue to learn from local experience For immediate on-going work; in preparation for future reform DfE sessions today: National Funding Formula for Schools 2018-19 operational issues High Needs Not NFF: Efficiency, Pupil Premium