Deprived schools lost out under 'levelling-up' education funding reforms

Watchdog hails transparency boost but urges DfE to determine whether resources are being matched with need
Photo: Paul Doyle / Alamy Stock Photo

The most disadvantaged areas have lost out on funding under changes intended to “level up” schools funding, while money has been funelled to wealthier areas, the UK spending watchdog has found.

Average per-pupil funding for the most-deprived fifth of schools fell in real terms between 2017-18 and 2021-21, but increased by 2.9% for the least-deprived fifth, the National Audit Office said in a report today.

Over the same period, 58.3% of the most deprived schools saw a real-terms decrease in per-pupil funding.

Overall schools funding has increased since 2019, when the Department for Education announced that schools would get £2.6bn extra in 2020-21, £4.8bn in 2021-22 and £7.1bn in 2022-23.

But while the figures represent a 7.1% increase in real-terms funding since 2014-15, per-pupil funding in fact only increased by 0.4% in real terms over the same six-year period as pupil numbers rose.

And the NAO found that the biggest funding increases went to those areas that had received less cash in the past – which tend to be wealthier. More-deprived areas do still receive more money per pupil than less-deprived areas under the national funding formula, but the gap between the two has narrowed.

“Most London boroughs and cities with relatively high levels of deprivation, such as Nottingham and Birmingham, saw real-terms decreases in per-pupil funding allocations between 2017-18 and 2020-21,” the report said.

The funding increase followed the introduction of minimum per-pupil funding levels for all schools in England in 2018-19 as part of a new national funding formula. DfE said the change would support the government’s commitment to level up education funding – part of the “levelling-up” agenda, which aims to decrease regional disparities in wealth and productivity.

However, the NAO found that most schools – particularly those with high levels of deprivation – were unaffected, since their per-pupil allocations were already higher than the minimum funding level.

The new funding floor meant 3,150 schools – 15.6% of the total – got extra funding in 2021, to the tune of £266m. This included more than a third of schools in the least deprived quintile, but none in the most deprived group.

The report also found DfE had failed to account for the potential extra costs of dealing with the Covid-19 pandemic when it assessed 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,” it added.

The report called on DfE to evaluate the impact of the national funding formula and minimum funding levels over time. 

“The department should use this information to review whether it is meeting its objective of allocating funding fairly with resources matched to need, paying particular attention to the shift in the balance of funding away from more deprived schools to less deprived schools,” it said.

NAO head Gareth Davies said the report’s findings showed DfE had “met its objective of making the way it allocates school funding more transparent and consistent”, but it was “less clear whether it has met its objective of allocating funding fairly”.

“There has been a shift in the balance of funding from more deprived to less deprived local areas, ” he said. “Although more deprived areas and schools continue to receive more per-pupil funding than those that are less deprived, the difference in funding has narrowed. The department must evaluate whether this funding model is matching resources to need.”

A Department for Education spokesperson said areas with high proportions of students from disadvantaged backgrounds continued to receive the highest levels of funding under the new funding formula.

A DfE spokesperson said the national funding formula was "levelling up school funding and delivering resources where they are needed most".

"It ensures that the areas with high proportions of students from disadvantaged backgrounds are receiving the highest levels of funding, providing £6.4bn in funding for pupils with additional needs in 2021-22," they said.

“We are providing the biggest uplift to school funding in a decade – £14bn in total over the three years to 2022-23 – investing in early years education and targeting our ambitious recovery funding, worth £3bn to date, to support disadvantaged pupils aged two to 19 with their attainment.”

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