School Funding 2004-05 and 2005-06

Following Charles Clarke's recent Statement on School Funding, here is a brief of the key areas, as issued by the Government.


A Minimum Increase in Funding for Every School

Every school receives funding in two main ways:

	Funding relating directly to pupil numbers, to pay for things such as teachers’ salary costs; and
	Funding relating to fixed costs, such as cleaning, repairs and heating, which do not vary with pupil numbers.

We have worked closely with head teachers and local government to ensure that the per pupil guarantee reflects this.


How the per pupil guarantee will work

A school whose pupil numbers stay the same between 2003-04 and 2004-05 will be guaranteed a 4% increase in its overall budget next year.

A school whose pupil numbers decline will be guaranteed a funding increase of more than 4% per pupil because schools in this position still have to pay costs such as cleaning, repairs and heating, which do not reduce when pupil numbers go down. However, with a reduction of around 50,000 pupils in the primary sector this year, and a similar reduction expected next year, there will still inevitably be a reduction in cash budgets – and so possibly staff numbers - in a significant number of schools.

A school whose pupil numbers are increasing will be guaranteed at least a 4% increase for all their existing pupils. Since costs such as cleaning, repairs and heating do not go up when their pupil numbers rise, they will not receive so much for their additional students. However, these schools will be guaranteed an overall budget increase of at least 3.4% per pupil.

Most schools will get more than the guarantee. The LEA will decide which schools in their area need more money.

There will be special arrangements for very small schools and special schools.


Average Schools’ Costs

We promised we would introduce a minimum funding guarantee for every school, taking account of the average cost pressures on their budgets.

Working very closely with head teacher representatives and local government we have spent the last few months looking in detail at what the relevant, unavoidable cost pressures on school budgets will be.

These pressures include increases in teachers’ pay, where we have assumed an inflation-led settlement, in line with the evidence we have given to the School Teachers’ Review Body.

Our best estimate is that the combined effect of these factors on the average school will be 3.4% next year.

To more than cover these average costs we will set the level of the minimum funding guarantee at 4% next year, where pupil numbers do not change.
Of course cost pressures will vary between individual schools – for example because of differing staffing structures.

Over and above the minimum funding guarantee to schools we are giving LEAs the resources and flexibilities to deal with this variation in cost pressures. LEAs have a responsibility to ensure that they target resources to the schools that need them most.


Extra Help for Schools Affected by This Year’s Problems

We recognise that there are some schools which will face unavoidable difficulties balancing their budgets next year.

Targeted grant

We are making available £120m next year, and around half as much the year after, for around a third of local authorities who will have the smallest increases in support for education over this year and the next year.

We are allocating this money so that LEAs can help schools that have been in difficulties and they can plan together how to balance budgets by 2006-07.

We will expect schools and LEAs to use this targeted grant to implement a costed, credible plan to balance budgets which protects education standards.

Universal support

In addition to the targeted grant, if any LEA can put forward a compelling argument that additional, transitional, funds are needed for schools in the short term, to avoid real damage to children’s education, we will consider bringing forward grant payments, so that the LEA will have funds available in 2004-05, with the expectation of a reduction to what they will receive in future years.

This would be a maximum of £300,000 or 0.2% of each authority’s total education resources in 2004-05 if that is higher.

There will be strict criteria attached to this support. Again, we will expect schools and LEAs to use this support to implement a costed, credible plan to balance budgets.

Ensuring Money Reaches Schools

As we said in July, the large increases in central education spending in some authorities this year significantly reduced the funding that could be made available to individual schools.

The minimum funding increase for every school for the next two years is being backed by significant additional resources for local authorities. Every LEA will receive at least a 5% increase in support for education, per pupil.

Therefore, we are:

	first, insisting that every local authority passes on the additional resources it will receive into its overall spending on schools and other education services – this is called “passporting”. Every LEA is expected to do this, unless there are wholly exceptional circumstances that make it impossible; and
	second, introducing regulations that will cap LEA spending on central education budgets so that it rises no faster than spending passed on to schools. LEAs will be able to ask for an exemption if there are exceptional local circumstances.