This report by the National Audit Office (NAO) has found that while government funding per pupil has remained virtually unchanged since 2014, a new national funding formula has contributed to a shift in the balance of funding from more deprived schools to less deprived schools.
According to the report the Department for Education's total funding for mainstream schools increased from £36.2 billion in 2014-15 to £43.4 billion 2020-21. However, the increase in pupil numbers meant real-terms funding per pupil rose by only 0.4%. The Department plans to increase school funding in 2021-22 and 2022-23, so total and per-pupil funding is expected to rise in real terms by around 4%.
Between 2015-16 and 2019-20, cost pressures on mainstream schools were estimated by the Department to have exceeded funding increases by £2.2 billion, mainly because of rising staff costs. Teaching staff costs increased by an estimated £3.6 billion (17%) during this period because of rises in teachers' pay costs and higher pension and national insurance costs. The cost of supporting an increased proportion of pupils with education, health and care plans also grew by around £650 million between 2015-16 and 2020-21. Overall, funding increases were projected to exceed cost pressures in 2020-21.
However, the Department did not take account of the potential impact of COVID-19 as part of its assessment of cost pressures. While the Department provided schools with funding during the early stages of the pandemic for exceptional costs, and later in 2020 to help schools cover costs arising from staff absences, several stakeholders told the NAO that this funding would be insufficient.3 The Department also provided funding for the extra costs of providing free school meals in early 2021, and plans to spend a further £3.1 billion between 2020-21 and 2024-25 to help pupils to catch up on learning lost during the pandemic.
The Department implemented a new national funding formula in 2018-19, which means funding for schools is now allocated more transparently and consistently. It allocates three-quarters of school funding based on pupil numbers, and the remainder is based on factors relating to the characteristics of pupils and schools. Before 2018-19, local authorities received a per-pupil funding rate largely determined by the rate they had received in the previous year. The Department did not calculate funding at school level or explicitly base funding on need, which meant similar schools in different local authorities could receive quite different funding allocations.