Concern as pensions hike wipes out £350m per-pupil funding boost


The government has delayed wholesale changes to national school funding, pledging instead a £350 million boost for the lowest funded schools. However, heads say a hike to pension contributions will leave some worse off. Pete Henshaw reports.

The hike in the pensions contributions that schools have to make will wipe out any benefit brought by the £350 million increase to the education budget, it was claimed this week.

Schools minister David Laws unveiled plans on Thursday (March 13) to give the £350 million to schools in the lowest funded local authorities across England. He claimed that four in 10 areas will gain.

However, school leaders disagreed, arguing that the extra cash will be eaten up by a 2.3 per cent increase in pension contributions, unveiled by the Treasury last week.

The Association of School and College Leaders (ASCL) said that when combined with a likely one per cent increase in teachers’ salaries this would cost schools about £340 million.

ASCL also added that four years of “static or falling funding” coupled with rising costs had already seen schools’ purchasing power fall by more than four per cent.

The union did welcome the news that schools in low-funded authorities would be receiving the £350 million boost and as such would be “hit less hard” by the pension hike, but warned that schools in better funded areas will be facing a “real-term decrease in their budgets”.

It comes after the government last year committed to a national consultation on a fairer way of funding schools.

The majority of schools in England receive between £4,000 and £7,000, although figures in 2009 showed that schools in Leicestershire received as little as £3,728 per pupil compared to a school in the City of London which received £7,603.

However, there are concerns about how a national funding formula would work. In 2011 an analysis by the Institute of Fiscal Studies warned that any move to a national formula would create “winners and losers”. 

It said: “Even under a reform that sought to minimise the amount of disruption, roughly one in six schools would see cuts in funding of 10 per cent or more compared with existing policy, while one in 10 schools would see their funding increase by 10 per cent or more.”

Mr Laws announced the £350 million funding boost in a statement to the House of Commons, during which he defended the government’s record on fairer school funding.

He said: “Our reforms for 2013 to 2014 and 2014 to 2015 mean that the system is now fairer, simpler and more transparent – with at least 80 per cent of funding now allocated on the basis of the need of each pupil within a school.”

However, Mr Laws said the government would not yet be setting out a timetable for moving all local authorities towards a single funding formula.

He added: “But the case for action is so strong that we intend to act immediately to deliver a substantial £350 million boost to schools in the least fairly funded local authorities in the country. We will be able to achieve this without any local authority receiving a cut to its per-pupil schools budget.”

The money is to be allocated in April 2015 for the 2015/16 financial year and Mr Laws pledged that “no local authority or school will lose from this proposal, but around four in 10 areas will gain”.

He added: “While this is only the start of the transition to fairer funding and eventually a national funding formula, it is the biggest step towards fairer schools funding in a decade.”

At the same time, Mr Laws unveiled a consultation on schools funding in 2015 which sets out how the £350 million is to be allocated.

It proposes minimum funding levels (MFLs) that a local authority should attract for its pupils and schools in 2015/16 based on a range of pupil characteristics.

If a local authority already attracts funding at the level calculated under the MFL (or higher) then it will see no change to its funding per-pupil. 

However, if a local authority attracts less than the MFL calculation, then the Department for Education will meet the shortfall.

Based on current data, the consultation says that schools might expect the following MFLs, although this is subject to revision:

  • A basic per pupil amount: primary £2,845, key stage 3 £3,951, key stage 4 £4,529.

  • Free school meals: primary £893, secondary £1,080.

  • Pupils living in areas of deprivation: between £237 and £894.

  • Looked-after children: £1,009 

  • Low prior attainment: primary £878, secondary £1,961.

  • English as an additional language: primary £505, secondary £1,216.

  • A lump sum for every school: primary £117,082, secondary £128,189.

  • Additional sparsity sum for small schools vital to serving rural ?communities: up to £53,988.

  • An area cost adjustment to increase minimum funding levels in areas ?with higher labour market costs.

Mr Laws cited the example of Cambridgeshire, which he said would see an increase in its per-pupil funding rate from around £3,950 to £4,225 per pupil – around £20 million in total.

He said Cambridgeshire was one of around 60 authorities that he expected to gain, including  Norfolk by an extra £16 million, Derbyshire by £14 million, and Surrey by almost £25 million.

ASCL deputy general secretary, Malcolm Trobe, said that the funding situation for some schools in historically low-funded areas was “very serious” and that many were “rapidly approaching the point where they can no longer meet student needs on the funding they receive”.

He added: “We therefore welcome the minimum per-pupil funding guarantee to help those areas that historically have been the lowest funded. 

“This raising up of the basic funding level in these low funded areas is a useful step towards a national fair funding formula.”

However, Mr Trobe added: “This good news is completely overshadowed by the reality that all schools and colleges will have a huge hole in their budgets caused by the pensions contribution rise. 

“This will have a catastrophic effect and lead to larger class sizes and reduced curriculum choice. We want the government to ensure that this increase in contributions is fully funded so that children’s education is not compromised.”  

Meanwhile, Martin Freedman, director of economic strategy and negotiation at the Association of Teachers and Lecturers, criticised the government’s record on fairer funding.

He said: “For all David Laws’ hand wringing about unfairness and the government once again promising that it is about to take the ‘first huge steps’, nothing is going to happen until after the general election. 

“In the meantime, there is little indication where the £350 million so-called ‘boost to schools’ will come from, and this amount pales into insignificance when compared with the £1.5 billion that this government has spent on just 170 free schools. 

“Drip-feeding money to local authorities to compensate for taking out huge sums to set up academies and free schools will not provide sufficient school places for the majority of children in this country.”

The Department for Education consultation on the allocation of the £350 million can be downloaded at


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