Summary
The Government introduced changes to the funding
system for schools for 2003-04 in good faith that these would
bring about improvements, and backed up the change with an increase
in funding of £1.4 billion. Although it was not explicitly
stated that every school was to receive more money, this was the
implication of official statements. The increases implied, however,
were greater than many institutions could reasonably expect to
receive when increased costs were taken into account. The result
was an outcry from certain sections of the schools community that
they were suffering from effective cuts to their budgets and that
only by making savings, including making teachers redundant, could
they survive.
Faced with these problems, the Government has retrenched,
putting money back into the Standards Fund and doing everything
it deems possible to provide certainty for schools about the money
they will be receiving in their budgets for next year. The extra
money amounts to £1.075 billion over the next two years;
£955 million for the Standards Fund and £120 million
in targeted supported for the LEAs with the lowest funding increases
in the last two years.
The Secretary of State and his officials told us
that they were unable to model the effects of this year's funding
changes to the schools level, and we acknowledge the difficulties.
It was, however, a serious weakness in the Department's strategy
to implement the funding changes without knowing how schools would
be affected. From our evidence, it appears that it was not until
March 2003 that the DfES came to realise the full extent of the
problems.
The danger for the DfES now is that it is attempting
to remedy the problems without a full knowledge of where those
problems occurred and the reasons for them. The DfES needs to
have information from schools as well as LEAs in order to gain
the full picture, and it needs information other than simply teacher
numbers.
The DfES, Parliament and all other interested parties
need hard evidence about what has happened across the country
in order to make judgements about how to proceed. Without that
hard evidence, the perception of a widespread funding crisis will
persist whatever the real position is, and that is damaging for
the whole schools system.
The DfES should undertake a survey of LEAs, seeking information
on individual schools to provide an assessment of how widespread
and how severe the problems with schools' funding have been for
2003-04.
The Government had hoped that the new system of funding
would be easier to understand than the old, and therefore would
bring clarity. This year's events suggest not only that that has
not happened, but that it might be a forlorn hope, given the variables
that the formula is attempting to reconcile.
However, earlier announcement of decisions
on education financing brings some welcome certainty for schools
and LEAs, and we expect the Government to continue to pursue this
aim.
An important question is whether the settlement being
provided for 2004-05 is designed to provide stability in the short
term before returning to allocations based on the full operation
of the FSS calculation, or if the 'flat-rate' approach being taken
for next year is the beginning of a long term trend. The Government
should make an announcement on its long term future plans for
the schools funding system as soon as possible, for the sake of
clarity and to enable a full public discussion on the best way
forward. Whatever approach it decides to take, clarity and early
settlement of budgets are vital to enable schools and LEAs to
plan effectively and to help prevent a recurrence of this year's
problems.
Hard evidence about how many schools were adversely
affected and to what extent is vital if the Government, schools,
LEAs and all other interested parties are to be able to plan responsibly
for the future of schools funding. Unless the scale of the problem
is quantified and the reasons for it fully understood, there will
be no certainty for schools, and no end to the criticism of the
Government.
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