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Government to review school funding plans

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The Department for Education has agreed to keep a close watch on controversial funding reforms after councils warned they could force the closure of small schools.

A senior department official told LGC this week that it would “advise ministers on making any necessary adjustments” after concerns were raised about plans to simplify the school funding regime.

The review will open next year as councils implement the reforms, under which locally set school funding formulas will be replaced by one set centrally.

The DfE will monitor the effects of the reforms in 2013/14 and recommend changes for the following year should the reforms have damaging consequences, the department official added. A “fundamental switch’ back to a local funding formula was not on the cards, he added.

News of the review comes after Conservative leaders of several large councils spoke out against the reforms, warning that they would strip authorities of crucial decision-making powers and threaten the future of schools in rural areas

Under the reforms, councils will have to allocate the same amount of lump-sum funding to all schools. Local school funding formulas - which are based on up to 37 factors - will be abolished and replaced with new formulas based on 12 factors, set by the department.

Many councils use a local factor to compensate small schools for the low levels of per-pupil funding they receive, and would no longer be able to do this.

A letter from the department announcing the review, seen by LGC, says: “Some authorities have reported to us their concern about the change in budgets produced by the introduction of a simpler formula.”

It adds: “We will be carrying out a careful review in early 2013 of the impact of simpler local formulae.

“We will work with local authorities to explore the effect of different factors…This will enable us to advise ministers on making any necessary adjustments to prevent unacceptable consequences for schools.”

The letter also said the department would extend its minimum funding guarantee, under which no school will lose more than 1.5% per pupil in funding, beyond 2014/15. Councils had raised concerns that they would be hit hard when the guarantee ended. However, the letter did not say how much the guarantee would be worth.

Ian Parry (Con), cabinet member for finance, education and skills at Staffordshire CC, one of the councils that raised concerns about the plans, described the review as a step in the right direction.

“We’ve managed to get this concession from the government as a direct result of pushing them to reconsider their reforms and the impact they would have on our schools”, he said. “We’re pleased that they’ve pledged to review the impact of the reforms in 2013-14.

“However, I still urge the key decision makers to look at the bigger picture on this. These reforms do not take into account the diverse school landscape we have here in Staffordshire, and do not stop the fact that some schools will enjoy big increases to their budgets at the expense of others. Extending the funding guarantee is putting a sticking plaster solution on the problem.”

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