The Importance of Teaching: Schools White Paper:
School Funding

8.1 The funding of schools should be fairer and more transparent, enabling schools to meet the needs of their pupils. Extra resources should clearly follow those pupils who might need extra help and support, such as pupils from poorer backgrounds. Our current system falls well short of this. Over recent years, more money has gone into schools’ budgets overall, but its distribution has not been fair. At present, as demonstrated by the graph below, inequalities in the funding system lead to huge variation in the money similar schools receive. We compared 72 secondary schools outside London, with similar size and intakes and found a variation in funding per pupil from just below £4,000 to well over £5,500¹⁰¹.  

Variation in budget share plus grants per pupil in 72 secondary schools without sixth forms, with 1,000-1,250 pupils of which between 9-13 per cent are eligible for free school meals, outside of London.
 

8.2 At the same time, only around 70 per cent of the money that is intended for the most deprived pupils is actually allocated to schools on that basis¹⁰². And the funding system has become increasingly opaque and unresponsive, with the money that schools receive depending more on what they received in the past than the characteristics and needs of pupils in the school now. Post-16 funding, although distributed on a more transparent basis, is also inherently unfair, with school sixth forms being funded on average £280 more per student than general FE colleges and sixth form colleges¹⁰³.

8.3 The protection of the schools budget in the recent Spending Review, which sees real terms growth in school funding at a time when cutting the budget deficit is an urgent national priority, does not mean that there is no need for efficiencies to be made, and is a major investment in the future of the country. Our aim is that money is distributed more fairly so that it is the schools most able to make efficiencies which are asked to so do.

8.4 At the same time, we need to secure better value for money from capital expenditure. With more limited capital resources, we must make sure that money is spent wisely, allocated more efficiently and in a much less bureaucratic way. By doing so we can make sure that our existing school buildings are fit for purpose and meet the growing need for new school places.

8.5 If we are to help the most disadvantaged and encourage new providers into the state school system, we need to reform the way in which schools are funded, ensuring resources go straight to the front line and making funding overall more equitable, transparent and geared towards the most disadvantaged.

We will:

• Target more resources on deprived pupils over the next four years, through a new ‘Pupil Premium’: extra money for each deprived pupil. We will be spending £2.5 billion per year on the Pupil Premium by the end of the Spending Review period.
• Consult on developing and introducing a clear, transparent and fairer national funding formula based on the needs of pupils, to work alongside the Pupil Premium.
• In the meantime, increase the transparency of the current funding system by showing both how much money schools receive on a school-by-school basis and how they spend their funds.
• End the disparity in funding for 16–18 year-olds, so that schools and colleges are funded at the same levels as one another, and at the levels of the most efficient.
• Devolve the maximum amount of funding to schools, making information and tools available to governors and head teachers which will support them in making good spending decisions.
• Take forward the conclusions of the review of capital spending, cutting bureaucracy from the process of allocating capital and securing significantly better value for money.