IFS cites ‘significant winners and losers’ from schools funding formula reform

Posted On: 
22nd March 2017

Ministers have been urged to drive more cash into the education system as a leading think tank warned of “significant winners and losers” over reforms to the schools funding formula.

Education Secretary Justine Greening
PA Images

The Institute for Fiscal Studies said that though the reforms are “broadly sensible”, “long overdue” and a “welcome change” it comes as some schools are facing “protracted cuts”.

"Implementing this reform at a time when there is already considerable pressure on school budgets will inevitably be difficult," the IFS warns.

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It comes as the National Governors Association (NGA) urged the Government to press ahead, but warned that schools face funding shortfalls that could offset the benefits that stand to be gained from the changes.

The Department for Education says the new funding formula will improve fairness as it redirects money from well-funded city schools to those in rural and coastal settings.

The Government however faces strong opposition from Tory MPs, with backbencher Geoffrey Clifton-Brown predicting last week that the plans would be defeated in the Commons unless ministers change tack.

In its report the IFS found that the formula “diverts funding away from schools with the most deprived student population and towards those with average levels of deprivation”.

The Government has proposed protecting school budgets so that no school can lose more than 3% funding per-pupil in cash terms until 2019-20, and no school can gain more than 5.6%.

Due to the protections and the fact that a number of schools are a “long way” from their implied formula allocations, around 60% of schools will be on the main formula by 2019-20, the IFS said.

Around 1,000 schools after 2020 would still be more than 7% above the funding level dictated by the formula, which suggests they will face further cuts, the IFS added.

Chris Belfield, one of the authors of the IFS report, said: " Somewhat inevitably, this reform creates winners 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% 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."


Yesterday head teachers from 3,000 schools wrote to their local MPs and ministers urging a rethink on changes to the funding formula, which they argued ignores inflationary cost pressures faced by schools.

But Emma Knights from the NGA said the changes were “right”, before adding that a shortfall in cash in the education system meant some schools that stood to gain from the policy would lose out.

“People do understand that the current system can't be defended and we do need a way of making sure we are distributing money across the country fairly,” she said.

However she said that concerns over funding meant the policy was creating “even more controversy that was expected”.

Ms Knights argued that the new formula had highlighted a shortfall "in the basic building block to educate a child".

"So actually we are saying we need more per pupil in every school across England and that of course is a different issue.

"That's about the amount of money we need rather than how we distribute it across the country."