Education funding plans 'still unfair'

The current system to make Local Authority Central Spend Equivalent Grant (LACSEG) transfers has been the subject of heated debate and indeed legal challenge for some time. Many will be aware that the key bone of contention has been the lack of a relationship between transfer amounts and the actual savings to authorities from academy conversions. Compounded by a lack of recognition that continuing to deliver services for maintained schools, and indeed delivering services for academies, comes with an inevitable element of fixed cost.

It’s good to see that the DfE have recognised the need to refund local authorities who have suffered disproportionately from the current top-slicing approach. London’s local authorities will be getting some £12.8m back of the more than £24m that was taken from them – a clear indication that the system was seriously flawed and a welcome return of much needed revenue.

In my view, there is the opportunity for DfE to use their third attempt at getting this right to achieve greater fairness leading to the funding of maintained schools and academies on the same basis.

With the number of academies growing over time but not uniformly across local authorities, it is vitally important the government establishes proposals that are fair to all local authorities in the amount that is top-sliced from formula grant – which of course will get locked into the business rates retention system at the same time.

The key to achieving fairness is a proper understanding of the level of actual savings to local government from academy conversions and how these are realised. I expected to see DfE recognising that transfers from local authorities need to be based on clearly demonstrable savings from academy conversions and that these savings are realised over time as resources are reallocated and difficulties in finding savings are overcome.

The fact that government’s new proposals are still basing the transfer from formula grant on local authority budget statements means they haven’t listened to our previous responses. We’ve argued that these include costs that often relate to authority functions that are not directly involved with academies. A transfer reflecting these is therefore unfair to local authorities.

And of course any sensible scheme should be sufficiently flexible to reflect local variation. A one-size fits all national rate, although appealing in its simplicity, risks not achieving fairness for any authority. The government has asked for views on the suitability of applying an Area Cost Adjustment to grant payments. Given that they accept that many of the functions the grant will fund relate to staff and premises, it must surely be right that regional cost variation is reflected

Without improved fairness for future funding arrangements, there’s likely to be further pressure placed on council taxpayers, at a time of other considerable reforms in local government finance such as funding transfers for new public health responsibilities and council tax benefit localisation.

Hugh Grover, director fair funding, performance and procurement, London Councils

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