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School Funding

Volume 664: debated on Monday 9 September 2019

Today I am confirming detailed aspects of schools and high needs funding arrangements for 2020-21. This follows a statement by the Secretary of State for Education on 3 September, which confirmed to Parliament that the funding for schools and high needs will, compared to 2019-20, rise by £2.6 billion for 2020-21, £4.8 billion for 2021-22, and £7.1 billion for 2022-23.

In 2020-21, this funding will be distributed using the schools and high needs national funding formulae (NFF). We will be publishing provisional NFF allocations at local authority and school level in October, including local authorities’ final primary and secondary units of funding for the schools block. Alongside this, in the usual way, we will publish technical documents setting out the detail underpinning the formulae. We will then publish final schools and high needs allocations for local authorities in the dedicated schools grant (DSG) in December.

The schools NFF for 2020-21 will continue to have the same factors as at present, and we will continue to implement the formula to address historic underfunding and move to a system where funding is based on need. The key aspects of the formula for 2020-21 are:

The minimum per pupil funding levels will be set at £3,750 for primary schools and £5,000 for secondary schools. The following year, in 2021-22, the primary minimum level will rise to £4,000.

The funding floor will be set at 1.84% per pupil, in line with the forecast GDP deflator, to protect per pupil allocations for all schools in real terms. This minimum increase in 2020-21 allocations will be based on the individual school’s NFF allocation in 2019-20.

Schools that are attracting their core NFF allocations will benefit from an increase of 4% to the formula’s core factors.

There will be no gains cap in the NFF, unlike the previous two years, so that all schools attract their full core allocations under the formula.

As previously set out, we will make a technical change to the mobility factor so that it allocates this funding using a formulaic approach, rather than on the basis of historic spend.

Growth funding will be based on the same methodology as this year, with the same transitional protection ensuring that no authority whose growth funding is unwinding will lose more than 0.5% of its 2019-20 schools block allocation.

The Secretary of State confirmed on 3 September the Government’s intention to move to a “hard” NFF for schools—where budgets will be set on the basis of a single, national formula. We recognise that this will represent a significant change and we will work closely with local authorities, schools and others to make this transition as smoothly as possible.

In 2020-21 local authorities will continue to have discretion over their schools funding formulae and, in consultation with schools, will ultimately determine allocations in their area. However, as a first step towards hardening the formula, from 2020-21 the Government will make the use of the national minimum per pupil funding levels, at the values in the school NFF, compulsory for local authorities to use in their own funding formulae.

In addition, two important restrictions will continue:

Local authorities will continue to set a minimum funding guarantee in local formulae, which in 2020-21 must be between +0.5% and +1.84%. This allows them to mirror the real terms protection in the NFF, which is the Government’s expectation.

Local authorities can only transfer up to 0.5% of their school block to other blocks of the DSG, with schools forum approval. To transfer more than this, or any amount without schools forum approval, they will have to make a request to the Department for Education, even if the same amount was agreed in the past two years.

The high needs NFF for 2020-21 will also have the same factors as at present. With over £700 million of additional funding, the formula will:

Ensure that every local authority will receive an increase of at least 8% per head of 2 to 18 population through the funding floor. This minimum increase in 2020-21 allocations will be based on local authorities’ high needs allocations in 2019-20, including the additional £125 million announced in December 2018.

Above this minimum increase, the formula will allow local authorities to see increases of up to 17%, again calculated on the basis of per head of population.

The teachers’ pay grant and teachers’ pension employer contributions grant will both continue to be paid separately from the NFF in 2020-21. We will publish the rates that determine the 2020-21 allocations in due course.