Autumn Statement 2015 – school funding changes explained

The Chancellor, George Osbourne, has announced changes to the way schools are funded in the latest government spending plans. The introduction of a national funding formula in England would close the gaps between areas and prevent disadvantaged pupils losing out. A consultation could happen as early as 2016, and changes to the system in 2017-18. A recent National Audit Office investigation found schools in some of the poorest areas saw funding fall by more than 5% between 2010-11 and 2014-15 despite additional pupil premium funds.

Steve Gibbons, Professor of Economic Geography and expert in the economics of education at the London School of Economics has researched pupil funding. He explains what the changes could mean:

“My initial reaction is that reform to the funding rules makes a lot of sense. At present funding is determined by local authority level factors (including demographics and teacher costs). Local authorities then allocate money to schools, but not in ways that necessarily compensate schools for the specific disadvantaged intakes they face. This creates all sorts of anomalies.

For example a school in a rich neighbourhood in a deprived London borough can end up receiving high income per pupil because the borough faces high levels of deprivation and high staff costs. On the other hand a school in a deprived neighbourhood in an affluent local authority in the north could receive low funding per pupil, because there are low staff costs, and the population as a whole in the local authority is relatively well off.

As we showed in our 2012 paper on these funding differentials they have real consequences for student achievement with students in schools in a higher-funded local authority performing better than students in neighbouring schools in lower-funded local authorities.

Linking funding directly to school circumstances would help address these disparities. However, it is unclear to me how compensation would be made for different staff costs under the new system, a factor which largely explains why London schools end up receiving more revenue per pupil than schools in other cities with more disadvantaged intakes.”

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