School funding shifting towards more affluent areas, NAO finds
Neil Puffett
Monday, July 5, 2021
Schools in the most deprived areas of England saw a real terms reduction in funding over the last three years compared with a real terms funding increase for the most affluent schools, new analysis shows.
The National Audit Office (NAO) has now called on government to review its school funding methods.
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The report by the NAO on school funding in England found that in recent years there has been a "relative re-distribution of funding from the most deprived schools to the least deprived schools" due to how the Department for Education has allocated schools block funding to local authorities and how local authorities have distributed funding to maintained schools and academy trusts.
Between 2017/18 and 2020/21, average per-pupil funding for the most deprived fifth of schools fell in real terms by 1.2 per cent to £5,177; over the same period, average per-pupil funding for the least deprived fifth increased by 2.9 per cent to £4,471.
The relative shift in funding away from more deprived schools towards less deprived schools has occurred in every region except outer London, with the trend particularly marked in inner London.
The NAO said the shift was a result of the introduction of the national funding formula in 2018/19, which aims to allocate school funding "more transparently and consistently", according to DfE.
Prior to 2018/19, the DfE allocated schools block funding to local authorities mainly on a historical basis, meaning that local authorities received a per-pupil funding rate largely determined by the rate they had received in the previous year, which resulted in local authorities with similar characteristics sometimes receiving quite different levels of funding.
Under the national funding formula, the DfE allocates nearly three-quarters of schools block funding based on pupil numbers, with the remainder based on factors relating to the characteristics of pupils and schools.
"The multi-faceted nature of need makes it difficult to conclude definitively on whether the [DfE] has met its objective of allocating funding fairly with resources matched to need," the report states.
"Taking deprivation alone, the largest element of need in the national formula, there has been a shift in the balance of funding from more deprived to less deprived local areas. This shift has resulted mainly from changes in relative need and the introduction of minimum per-pupil funding levels. Although more deprived local authorities and schools continue on average to receive more per pupil than those that are less deprived, the difference in funding has narrowed."
The NAO has said that in light of the narrowing gap in funding allocations between the most deprived and least deprived schools, the DFE should evaluate the impact of the national funding formula and minimum funding levels over time and "use that information to inform whether further action is needed to meet its objectives".
"In particular, the [DfE] should review whether the shift in the balance of funding from more deprived areas to less deprived areas, and from more deprived schools to less deprived schools, means it is adequately meeting its objective of matching resources to need."
The NAO has also called on the DfE to complete its review of support for pupils with special educational needs and disabilities, which was launched two years ago, and set out how it will improve this aspect of the funding arrangements for mainstream schools.
In September 2020 the Institute for Fiscal Studies warned that larger schools in disadvantaged areas are set to face years of challenges related to Covid-19 due to lack of funding.