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London loses as counties gain from schools funding changes

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School budgets will be determined by a single, national formula that removes local authorities’ ability to set local school funding formulae by 2020, the Department for Education has announced.

The move aims to make school funding fairer and replace the dedicated schools grant system introduced a decade ago. But council leaders in some parts of the country warn the proposals will cut school budgets significantly.

More than 10,000 schools are set to gain funding under the plans, including more than 3,000 receiving 5% more in 2018-2019 when the transition phase begins. This will increase by further 2.5% in 2019 to 2020.

The DfE says no school will experience a reduction of more than 1.5% per pupil a year, or 3% per pupil overall.

It also promises not to reduce current funding levels for pupils with high-level special educational needs.

Councillors backed the government’s decision to change the funding system, but questioned how some schools would cope with reduced funding.

Chair of the Local Government Association’s Children and Young People Board Cllr Richard Watts (Lab) pointed to a National Audit Office report published on the same day as the government’s proposals, which warned mainstream schools will need to find savings amounting to £3 billion by 2019-2020.  

“This burden in itself will make things extremely difficult and comes at a time when the government is proposing to spend money converting already good schools into academies despite there being no evidence that this improves standards,” he said.

“It is absolutely essential that the new formula is phased in over time to protect those schools that will face these reductions.”

London Councils warned that 70% of schools in the capital faced budget cuts under the new formula. Southwark LBC leader and London Councils executive member with responsibility for education Cllr Peter John (Lab) said the organisation would campaign against the proposals.

“The new funding formula must recognise that demand for school places is increasing in London, costs are higher, teacher recruitment and retention is a big challenge and there are skills shortages in key industries such as construction and IT,” he said.

But Cornwall Council’s lead member for children and young people Cllr Andrew Wallis (independent) said the announcement could potentially see local schools receive an additional £10 million.

“We would urge the Secretary of State to consider a swift transition of no more than three years,” he said.

The County Councils Network also welcomed the consultation. Chair Paul Carter (Con) said: “By the government’s own admission, the current schools distributional formula is outdated and unfair. For instance, county schools receive half the funding per pupil that inner London schools get. This is inequitable and needs redressing.”

Education Secretary Justine Greening said the reforms would “mean an end to historical unfairness and underfunding for certain schools”.

The DfE has opened two consultations on the plans – one for national funding and one for high needs funding – which close on 22 March 2017.

The dedicated schools grant was introduced in 2006 as an amount paid to each local authority based on what they had planned to spend on schools in 2005. Since then the government has topped up funding with specific grants, such as the pupil premium in 2011. 

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