Select Committee on Children, Schools and Families Second Report

3  Schools' funding

34. The schools' funding system was reviewed in the run-up to CSR 2007. However, it was decided that no reform was to be made in the immediate future: it is proposed to continue with the "spend plus" method of allocating Dedicated Schools Grant (DSG) for the three years from 2008-09 to 2010-11. During this period, there will be a further examination of the subject with a view to possibly developing a new formula for allocating DSG between authorities from 2011-12 onwards.

35. In the 2008-09 to 2010-11 settlement, the Government will hold back a margin of funding to distribute in line with ministerial priorities. Thus, for example, there may be a new allocation of DSG so as to provide additional resources for pockets of deprivation and to allow schools in previously 'under-spending' areas to catch up with others. The Minimum Funding Guarantee is to remain in place in 2008-09, but with the minimum increase in resources per pupil set at 2.1%, compared with 3.7 % in 2007-08.

36. The DCSF has recently announced allocations of DSG for 2008-09 to 2010-11. Basic per pupil allocations of DSG will rise by 3.1% in 2008-09, 2.9% in 2009-10 and 2.9% in 2010-11. Funding for ministerial priorities (allocated outside the DSG) will add 1.5%, 0.8% and 1.4% respectively to these figures, leading to an overall year-to-year rise per pupil of 4.6% in 2008-09, 3.7% in 2009-10 and 4.3% in 2010-11.

37. We asked the Secretary of State how the review of schools funding was progressing. He told us:

"We expect to do the substantial work on the schools funding review over the summer, and we have not yet published detailed terms of reference for that review[21]. The idea is to be able to inform decisions for three-year budgets following this spending review period, so we still have a number of years to prepare. We will need to look carefully at the underlying assumptions underpinning the current "spend plus" formula […] and how far they have changed, how far we need to make adjustments to the formula, whether we are getting the right balance between stability and deprivation and whether we need to do more to focus on pockets of deprivation within more affluent areas."[22]

38. The issue of the extent to which the schools funding formula takes account of deprivation and how it might be more targeted is one that our predecessors discussed on a number of occasions. The Secretary of State said:

"At the moment, within the overall dedicated schools grant, about 10%—slightly more than £3 billion; about £3.5 billion of that £36 billion DSG—goes on deprivation spend, so there is already a substantial chunk of expenditure there. However, that is within the context of an historical set of arrangements. Clearly, there is a balance to be struck between the pace of change and stability. I am not going to prejudge the review by saying that there is not sufficient focus on deprivation, but I certainly think that looking at whether there is a sufficient focus on deprivation is an important part of our work."[23]

39. Since we met the Secretary of State, further detail has emerged about the organisation of 14-19 education. In its proposals on funding, the Government says that "we do not propose fundamentally to change the current methodology". However, with the abolition of the Learning and Skills Council, funding for all 16-19 provision will be directed via local authorities and the move towards equal funding for equal work (that is, that the gap in funding between school sixth forms and FE colleges will be removed ) will continue. There is also discussion, as in the schools funding consultation, of a move to a 14-19 funding system.[24]

40. We will want to be kept informed of the review of schools funding as it goes through its different stages. With funding growing more slowly in the current CSR period than in the previous one, decision on calculating and distributing schools funding will be even more critical. The changes in funding to the 16-19 sector, and the implications for 14-19 funding, will also need to be examined carefully.

41. The Secretary of State clarified in evidence the Government's commitment to improving per pupil funding in the maintained sector compared with the independent sector. The aim is to bring the level of funding in the maintained sector to the level it was in the independent sector in 2005-06. The Government expects to have closed the gap on capital and progressed 30% of the way to the target by 2010-11 (the end of the CSR period).[25] The Secretary of State gave no indication of when he expected this level to be reached.[26] Without a timescale for achieving the target it is difficult to make a judgement about what progress is being made, but we will aim to monitor how this commitment is addressed in the schools funding review.

21   Since announced to Directors of Children's services on 31 January 2008. Back

22   Q 47 Back

23   Q 48 Back

24   DCSF/DIUS, Raising Expectations: enabling the system to deliver, Cm 7348, March 2008, pp 47-50. Back

25   Ev 21 Back

26   Qq 28-31 Back

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