National funding formula plans: summary and implications

The government has outlined its plans for reforms to the national funding formula. Alex Masters offers a concise breakdown of the announcement, explains the implications and asks industry experts for their reactions

Author details

Alex Masters is the former content lead for school business management at Optimus Education. She has a particular interest in HR, innovation and pupil premium funding.

The government’s announcement in summary:

  • The government has started the process of introducing a new funding formula from 2017-18.
  • It wants a national funding formula that ensures every school has funding matched to need.
  • Funding will get straight to the frontline and will not rely on local authorities to determine how much is allocated.
  • However, the local authority will retain its role in school funding until 2019-2020 to enable a smooth transition period.
  • Local authorities will also continue to play ‘a vital role’ in the distribution of funding for young people with high-level special educational needs.
  • The core schools budget will be over £40 billion next year. This includes the pupil premium - funding worth £2.5 billion a year will be targeted at the most disadvantaged pupils.
  • The second stage consultation will illustrate the impacts of the funding formulae across schools and LAs.
  • There will be a parallel consultation on a national funding formula for early years funding later this year.

The consultation proposes the following factors are considered:

  • basic per pupil funding
  • funding for additional needs (including deprivation, low prior attainment and EAL)
  • school costs
  • area costs.


  • This earlier-than-anticipated announcement means that SBMs now have the opportunity to reflect on the proposals.
  • It is SBMs' responsibility to get involved and have their say.
  • SBMs need to start preparing for the fact they will have to drive through the changes within schools when the NFF is introduced.
  • The changes should lead to consistency in terms of LA distribution.
  • The good news is that the Minimum Funding Guarantee has been retained. However, the level will be crucial.
  • The plan does not offer assurance for five-year forecasts for pupil premium as it is only guaranteed for the duration of current parliament.
  • There needs to be more clarity on capital funding arrangements.
  • There is yet not clarity on basic pupil led funding for primary, key stage 3 and 4 children.
  • While the aim is fairer per pupil finding, other adjustments to the formula may negatively impact anticipated overall gains.
  • The proposed changes could adversely affect many urban areas, including London.
  • There will be winners and losers across the board with concerns about potential reductions in budgets for some.

Expert responses

Fiona Millar - journalist and campaigner on education issues

'There is unfairness in the way school funding is calculated at the moment, and this is largely due to complicated historic arrangements in different local authorities that then became embedded when the last large scale funding reform was introduced in 2006.

'However it would be equally unfair to reform the system in a way that means some authorities benefit at the expense of others, especially if the losers are educating a high proportion of disadvantaged pupils. The proposed changes will adversely affect many urban areas, including London, so we would want to see a gradual phasing in of the new arrangements, and enough cash injected into the system to ensure that the less well funded authorities can benefit while more highly funded authorities can continue to provide the same standard of education without reducing the life chances of their pupils.'

Matthew Wheeler - NASBM head of professional standards

'The funding consultation contains good news and bad: the decision to consult in two stages makes for a more sensible debate. We have time to think about the broad principles and consider their implications. However, the DfE has included a number of items which won't please everyone: pupil premium is only guaranteed for the duration of the current parliament, the updated-every-five-years nature of IDACI funding means there will inevitably be unpredictable volatility at the outer edge of each school and academy trust's five year forecasts. Whilst staffing budgets can be turned around in that timeframe, it makes using revenue funding to fund capital works over the long term unwise. We need clarity on capital funding arrangements going forward too.

'Schools who are set to lose out under the arrangements will be pleased to see the retention of the Minimum Funding Guarantee - but level will be crucial. Those who are set to gain will want change implemented faster than providing an MFG for losers may allow.

'There is the million dollar question - what will the basic pupil led funding amount be for primary, Key Stage 3 and Key Stage 4 children? How much does it cost to "fairly" educate a child in England today before other factors are added in?'

Micon Metcalfe - director of finance and business at Dunraven School

'I think that the proposals in the stage 1 consultation all seem eminently sensible, however the devil will be in the detail. Any redistribution of funding will mean winners and losers if the funding envelope is to stay the same. Of interest is the Government's wish to 'hard fund' schools. This requires legislation so it can't be implemented until about 2019/20. It also means that local authorities won't be able to divert funds from the school block to support the High Needs Block. A consultation on High Needs has been launched at the same time and it is worth reading and considering both together. If LA's can't divert money into High Needs, it follows that there is a smaller pot to go around. It also means that although schools are getting an agreed per pupil amount, they will still have to fund the high incidence, low need SEN from their resources. This inevitably means that some children will have more spent on them than others.

'For now, business managers should be considering how the proposals differ from their LA's current funding methodology and whether that may have an impact. It is proposed to retain many but not all allowable factors. SBMs should also be submitting consultation responses, either in conjunction with other schools or on their own. Knowing that there is a proposal to change school funding once again in 2017/18 makes longer term planning difficult. I do not expect any detailed modelling to come out before academies set their 2016/17 budgets and maintained schools have set theirs already but it means what we may have projected over the next three to five years is really an unknown. I will be modelling various scenarios and scanning the horizon for the second part of the consultation. As ever, SBMs will need to think creatively about solutions for efficiencies in their schools.'

Russell Dalton - finance and business director at Pershore High School 

'The news regarding the consultation for the NFF is particularly good for my local authority, although I know there will be colleagues who are worrying about potential reductions in their budgets. Obviously the consultation document is quite lengthy, as you would expect for something of this nature, so I am sure we are all working hard on digesting each question to ensure that the feedback we give is thorough enough to ensure the NFF is fair for all. My concern is around the tight deadline, especially with Easter being in between, so I am actively encouraging SBMs to engage with the process as this will significantly affect every school.

'Whether you are a fan of the NFF or not we will have to embrace it as a profession and work more collaboratively to ensure it works for all schools. There will be "winners" and "losers" in the process but it could be argued that the "winners" have had to work with considerably less funding to date and therefore equalisation in some form is only fair. I do feel that SBMs will have to bear the burden of driving through the changes within schools when the NFF is introduced and that we need to be preparing for this now.’

Nina Siddle - business director at Keswick school 

'As an SBM in an academy within the lowest funded authority in the country, I welcome this consultation. As a region, we have wanted such a review for many, many years although would not expect it to make an immediate impact. My concern is that whilst we may finally gain on a fairer per pupil level of funding, other adjustments may be made to the formula which may mean that overall we don’t gain particularly as much as we may like. Also in a pocket of high deprivation, our academy benefits from relatively high deprivation funding, and in fact has this year lost its MFG funding because of this. Other schools in the area don’t all benefit from the deprivation funding and attract MFG. My thoughts are that as the per pupil funding possibly increases they will lose MFG protection and overall not see massive increases to funding.

'In respect of distribution, if this was done centrally then at least all LAs would be consistent, whereas at the moment this is not the case. It does however throw more concern over the position for LAs and their sustainability. With the gradual removal of the Education Services Grant, what their remaining dedicated grant will look like moving forward will be pivotal to how they continue to operate.'

Cate Hart - SBM consultant

'You should all read and respond to the consultation which has been launched. What are the discrepancies which are to be ironed out? Pupils are funded between £4200 and £6300 depending on location and local authority. Prior attainment funding varies enormously from a few pounds to thousands of pounds. Historically wealthy LAs have put extra funding into schools. While it is acknowledged that social factors should effect the funding, this has not always been the case.

'It was apparent from the monthly meetings at the DfE that getting this [the proposals, including basic per pupil funding, funding for additional needs, school costs and area costs] right is not going to be easy. Modelling was done on various LA schools and there would be winners and losers across the board. Plotting schools in rural areas was done, trying different factors and weightings to see the effects. Suggestions were made that there would be a period of protection for losers and maximum increases for gainers.

'It is the intention that by having a national formula, schools will be able to predict their budgets better, control the funding which will come directly to them, not via the LA, and ensure that pupils get a fair deal. It remains to be seen if this can really change for the better, or whether at the end of the consultation/implementation period, a new government may come along and change it all again! It is the responsibility of SBMs to be involved and have your say, looking at the likely impact to your school and informing the SLT and governors as soon a possible so action can be taken.'




Last Updated: 
07 Mar 2016