The National Funding Formula Tony Foot, Director – Education Funding Group 26 March 2018

Schools funding – outline The National Funding Formula The case for reform The principles for reform The schools formula we consulted on in December 2016 The changes in the final schools formula The high needs formula Impacts School efficiency The key characteristics of efficient schools Our approach to efficiency Practical tools and support

First, a quick reminder of the journey… Stage 1 consultation (March to April 2016): a vision for the future funding system as a whole and the principles that underpin it Stage 2 consultation (December 2016 to March 2017): detailed proposals for design of the formulae and illustrations of the impact on LAs and schools Additional funding for schools (July 2017): announcement of an extra £1.3bn for core schools funding – meaning overall funding per pupil maintained in real terms from 2017-18 to 2019-20 Final NFF formulae and implementation arrangements (Sept 2017)

The case for reform Funding for each LA largely based on historic allocations dating back to 2005 – but since then many things have fundamentally changed Consequently local authorities with similar characteristics receive very different levels of funding 150 different local funding formulae amplifies the variation in the funding received by otherwise similar schools Taking these factors together: Total deprivation funding per FSM pupil ranges from less than £1,000 to over £4,500 Low prior attainment ranges from £30/pupil to £3,229/pupil Primary school lump sums range from under £50,000 to £175,000

The principles for reform We are seeking to create a funding system for schools and high needs that: Supports opportunity Is fair Is efficient Gets funding straight to schools Is transparent Is simple Is predictable

The schools formula we consulted on in December 2016 (1)

The schools formula we consulted on in December 2016 (2) Weightings for each factor: maximising the % of funding for pupil-led compared to school-led factors protecting the total spent through the additional needs factors, including adjusting for hidden deprivation providing a consistent lump sum for all schools A funding floor - no school would lose more than 3% per pupil overall as a result of the formula Transition – gains of up to 3% per pupil in NFF year one, and a further 2.5% per pupil in NFF year two

The changes in the final schools formula Following £1.3bn of additional investment, the final formula builds on and improves the December proposals in three main ways: Increasing the basic per-pupil amount at all key stages Introducing minimum per-pupil funding levels: For secondary schools – £4,800 in 2019-20 with a transitional amount of £4,600 in 18-19 For primary schools – £3,500 in 2019-20 with a transitional amount of £3,300 in 18-19 Increasing the funding floor so that the formula will provide for an increase of at least 0.5% per pupil in 2018-19 and at least 1% per pupil by 2019-20 in respect of all schools, compared to their baselines Plus accelerated gains compared to December proposals

The high needs funding formula The high needs funding formula comprises the 10 factors and adjustments that were set out in our original proposals The final formula mirrors the schools funding floor and improves our approach to demographic growth

Impact Dec proposals Final formula On schools On high needs 54%/46% of schools would have gained/seen reductions Lowest-funded secondary schools would have gained 0.3% Rural schools would have gained 1.3% Schools with lowest prior attainment would have gained 1.8% All schools allocated a cash increase of at least 0.5%/1% The lowest-funded secondary schools gain 4.7% Rural schools gain 3.9% Schools with lowest prior attainment gain 3.8% On schools On high needs 0% funding floor 78 local authorities benefitting from the 0% funding floor Average overall gains of 3.3% All LAs allocated a cash increase of at least 0.5%/1% 84 LAs benefitting from the 1% funding floor in 2019-20 Average overall gains of 4.6%

Maximising the use of resources to drive up pupil outcomes. The key characteristics of efficient schools Financial planning which is based on delivering educational outcomes and is not a separate bolt-on consideration. Strategic financial planning for the longer term (3-5 years). The effective and efficient deployment of staff. Reduced spend on non-staff costs. Robust challenge from financially skilled governors and head teachers. Skilled staff responsible for managing finances. Transparent financial systems and process, which encourage constructive challenge within and between schools. Maximising the use of resources to drive up pupil outcomes.

Across the System as a Whole Our approach to efficiency Our objective is to help schools improve outcomes for pupils and promote social mobility, by getting the best value from all of their resources. Across the System as a Whole Transform the funding system Improve the infrastructure of the school estate Support partnership working between schools School-Level Support Areas of spend: Help schools to get the best value from their non-staff expenditure Support schools in managing their workforce Cross cutting: Improve data and the transparency of information Continue to develop schools’ capability for effective financial management Provide hands-on support to schools at risk

Practical tools and support An improved schools financial benchmarking service (July 2017) – building on substantial feedback and testing with schools. The Schools Buying Strategy to improve how schools buy goods and services, to support savings of over £1 billion a year on non-staff costs by 2020. It includes: giving schools access to great National Deals – current deals can already save up to 10% on energy and over 40% on MFDs. We are going further to create new deals, including on FM and Agency Supply Teachers. piloting two regional buying hubs in the North West and South West. These hubs will support local schools with services like catering and cleaning, and to buy collectively. A top ten checks for governors to support governors and trustees to make sure their school/trust is managing resources efficiently. All support available in one collection on .gov.uk (google: school efficiency and financial health)