New funding formula could cause further cuts after 2020, report says

The new funding formula could lead to cuts of seven percent of spending per pupil after 2019- 20.

According to a report published by the Institute for Fiscal Studies, around 1,000 schools could see further financial strain as a result of the new funding formula.

The consultation over the new finance strategy closes today, 22 March, and the government believes the new formula will ensure that schools in different parts of the country receive a similar level of funding.

The report states that moving to a single funding formula “inevitably creates winners and losers”, and so the government has put in place transitional protections for schools.

The plans will ensure that no school sees a fall in its budget of more than three per cent in cash-terms until 2020.

Around 1,000 schools will still be more than seven per cent above the funding level dictated by the main formula which could see them see cuts when the protection period ends.

As a result of such protections, only 60 per cent of schools will be on the main formula by 2020.

The government has also placed a cap on the gains schools can experience of 2.5 per cent in 2018–19 and a further three per cent in 2019–20. The net cost of these transitional arrangements is around £290 million in 2019­–20, which temporarily boosts spending per pupil by about 0.7 per cent in cash-terms.

The government has provided no guidance to schools about what will happen after 2019­–20.

Luke Sibieta, an author of the report said: “If fully rolled out across England, a national funding formula would ensure similar schools in different parts of the country receive a similar amount of funding.

“While this has been the ambition of successive governments, they have consistently shied away from the hard choices such a reform entails. The current government is to be applauded for making specific proposals and setting out the reasons for the choices it has made.”

Chris Belfield, another author of the report also said: “Somewhat inevitably, this reform creates winner and losers, and it comes at a time of severe pressure on school budgets as we are currently in the tightest four-year period for per-pupil spending in English schools since at least the early 1980s.

“The government has put in place transitional protections to help smooth the transition process up to 2019–20. However, there is significant uncertainty about what will happen after 2019–20.

“This is a big omission considering only 60 per cent of schools will be on the main formula in 2019–20. The formula could imply around 1,000 schools would face a further 7% cut to their budgets in the next parliament.”