DfE demands £3bn in savings as financial pressures mount

Written by: Pete Henshaw | Published:
Image: iStock

Ministers want schools to find £3bn in savings by 2020, while plans for fairer funding threaten cuts to budgets in 48 areas across England. It means there is no sign of a let-up in the financial pressures facing schools in 2017. Pete Henshaw reports.

As the new year begins, there is little sign of respite from the huge financial pressures facing schools across England, with the government demanding heads find £3 billion of savings by 2019/20.

Meanwhile, plans for a fairer National Funding Formula (NFF) to be introduced in 2018/19 are progressing, but with no new money promised by ministers, thousands of schools will lose out under current proposals – many in inner city areas.

Last month, the Department for Education (DfE) published a second consultation on the NFF plans and is seeking responses by March 22. The consultation details its intention to split the Dedicated Schools Grant into four blocks – schools, high needs, early years, and central school services (such as admissions and education welfare).

Plans for the schools block would see a basic rate of per-pupil funding augmented based on 12 factors as outlined in the DfE’s first consultation, including deprivation, low prior attainment, English as an additional language, mobility, geographic issues and other factors such as the cost of rates, whether a school is on a split site and so on.

Calculations published as part of the new consultation show that if we applied the NFF to 2016/17 funding, 48 out of 150 local authority areas would have seen a reduction in their schools block funding.

Of the 11 worst affected areas, 10 are in London, while the biggest winners would have been Derby with a gain of 8.6 per cent, Barnsley (6.9 per cent) and Bedford (6.3 per cent) – see table, below.

The DfE has pledged transitional arrangements to help schools cope with reductions in funding. It also proposes a floor that “will limit the overall reduction to any individual school’s budget as a result of the introduction of this NFF to three per cent per-pupil”. The Minimum Funding Guarantee of -1.5 per cent per-pupil year-on-year will also continue, it says.

School leaders have called the funding shake up “vital” given the flaws in the current system. However, they warn that the real problem is with the overall levels of funding, which they say are “not sufficient”.

Details of the NFF proposals were unveiled last month at the same time as a National Audit Office (NAO) report that laid bare the financial pressures facing schools.

It reveals that ministers estimate that mainstream schools will have to find savings of £3 billion (around eight per cent) by 2019/20 “to counteract cumulative cost pressures, such as pay rises and higher employer contributions to national insurance and the teachers’ pension scheme”.

The DfE believes these savings are possible through better procurement (£1.3 billion) and a more efficient use of staff (£1.7 billion).

However, the NAO criticises the DfE for not clearly communicating to schools “the scale and pace of the savings required”.

The NAO states: “While it can show, on the basis of benchmarking analysis, that schools should be able to achieve such savings without affecting educational outcomes, it does not know whether schools will achieve them in practice.”

The DfE insists it has protected the schools budget in real-terms, but the NAO states that the overall schools budget does not provide for funding per-pupil to increase with inflation.

Furthermore, while the 2015 Spending Review set out an increasing schools budget from £39.6 billion in 2015/16 to £42.6 billion in 2019/20, the number of pupils is also set to rise during the same period by around 458,000. It means, the NAO says, that funding per-pupil will, on average, rise only from £5,447 in 2015/16 to £5,519 in 2019/20 – “a real-terms reduction once inflation is taken into account”.

The NAO states: “There are signs of financial challenges in secondary schools. The proportion of maintained secondary schools spending more than their income increased from 34 per cent in 2010/11 to 59 per cent in 2014/15, and the average size of deficit for those in deficit increased in real-terms from £246,000 to £326,000.

“For secondary academies, the proportion spending more than their income rose from 39 per cent in 2012/13 to 61 per cent in 2014/15. The DfE does not know with certainty why schools are overspending, or underspending to build up reserves, or for how long these patterns are sustainable.”

Malcolm Trobe, interim general secretary of the Association of School and College Leaders, said: “The wider problem is that the overall level of education funding is not sufficient. Reform of the school funding system is vital, but so is more investment.”

The National Association of Head Teachers pointed to its own research showing that two-thirds of schools believe they will have “untenable” deficits by 2020. General secretary Russell Hobby said: “School funding is not sufficient. A change in how funding is distributed is important but it will not solve this fundamental lack of investment.”

The Education Select Committee is also concerned and is due to question the minister for school standards, Nick Gibb, on January 31 about the proposed NFF.

Education secretary Justine Greening said: “Our proposed reforms will mean an end to historical unfairness and underfunding for certain schools. We need a system that funds schools according to the needs of their pupils rather than their postcode.”

The second consultation on the NFF is now open and all documents, including examples of how the NFF would look if applied to 2016/17 schools funding, can be found at http://bit.ly/2h5rGTK


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