Schools national funding formula


The Department for Education has published a suite of documents about stage 2 of the national funding formula.

  • An executive summary outlines the proposals and the effect on schools, and the consultation document explains these in detail.
  • The effect on each school and area is shown in full in the impact tables.
  • There are technical notes to accompany these tables, including an Area Cost Adjustment annex which shows the ACA weightings.
  • Also there are illustrative allocations for new and growing schools.
  • The equalities impact assessment considers how the proposals relate to the 8 protected characteristics identified by the Equality Act 2010.

Current arrangement & purpose of change

The dedicated schools grant (DSG) provides the core budgets for all schools, early years provision and additional support for children and young people with high needs. It also covers some of local authorities’ continuing duties in education. It is currently allocated to local authorities from the Education Funding Agency of the Department for Education in three notional blocks: schools, high needs, and early years. In consultation with their schools forum, local authorities make decisions about the split in funding between the blocks, and the local formulae that determine the allocations for individual schools and early years providers. (Initial allocations of high needs funding to local authorities are the source of the majority of place funding for special schools and units, colleges and other post-16 providers, and of the top-up funding for children and young people with high-cost SEN and disabilities.) Local authorities also hold some DSG centrally to spend on schools and central services.

It is proposed to create a fourth block of the DSG, to fund those duties that local authorities carry out both for maintained schools and for academies, such as admissions and education welfare services. This new block – the central school services block – will be introduced from 2018-19.

The total funding will be distributed to the four blocks of the DSG using new formulae. These will result in changes to budgets and a redistribution of funding between local areas and institutions, but will not reduce the national total provided to schools and local authorities.

A school-level formula (a hard national funding formula) will be used from 2019-20, whereby each school’s budget will be set nationally. It will apply to the
funding for 5-16 year olds for all mainstream schools so that all schools will be funded through a single, national approach. This will remove the additional layer of variation and complexity created by the current existence of a different formula in every local authority.

Proposed arrangement

The dedicated schools grant will be divided into 4 blocks – for schools, high needs, early years and central school services.

  • The schools national funding formula will comprise 13 weighted factors including a mobility factor.
  • The high needs formula will comprise 9 weighted factors.

The pupil premium, pupil premium plus and service premium will continue to operate through the separate pupil premium grant. With the exception of an adjustment to the pupil premium plus, these grants are unaffected by the proposals. The early years pupil premium will be retained in its current form.

In 2018-19 the DfE will calculate notional budgets for schools according to the national formula. These will then be aggregated and allocated to local authorities as the schools block for distribution to schools according to the locally agreed formula.

From 2019-20 and beyond, local authorities will continue to have flexibility on some limited parts of the formula, particularly in relation to funding for pupil growth. They will continue to make decisions about how to spend their high needs, early years and central school services blocks. The difference under a hard formula is that there will be limited flexibility for local authorities in how they allocate the schools block funding. With the exception explained below, this will be ring-fenced and local authorities required to pass all of that block’s funding to schools and not to move it to other DSG blocks.

The exception seeks to address risks to support for pupils with SEN and disabilities. In 2018-19, local authorities will have a limited ability to move funding between the schools and high needs blocks, following local consultation and with the explicit agreement of the schools forum and a majority of their schools. As now, they will continue to be able to provide additional support – through their high needs block and outside the main school budget share – to schools supporting large numbers of pupils with high needs.

From 2019-20 it is intended for there to be some continuing local flexibility to take account of schools’ and local authorities’ collective responsibilities for children and young people with SEN and disabilities. The scope of this has yet to be decided.