David Laws, Executive Chairman of the Education Policy Institute (EPI)

New analysis from the @EduPolicyInst of the government’s latest school funding settlement finds that funding increases are set to disproportionately benefit pupils from more affluent backgrounds.

In July, the Prime Minister unveiled the government’s school funding settlement for 2021/22, which included details of how funding would be allocated to schools in England through the National Funding Formula.

This funding settlement forms part of the government’s overall plans to increase the schools budget by £7.1bn in cash terms by 2022-2023 – part of a wider government pledge to “unite and level up the nation.”

However, a new paper published today (Friday 7th August) by EPI "School funding allocations 2021-22" shows that, because of the way that the government allocates funding to schools, pupils from disadvantaged backgrounds (those eligible for free school meals) will receive less additional funding from the government’s latest settlement than their better-off peers. 

The analysis shows that over a four-year period, disadvantaged pupils will have received real terms funding increases at around two-thirds the rate of their better-off peers.

Key findings 

Under the 2021/22 funding plans, in primary schools:

  • Disadvantaged pupils will receive a real terms funding increase of 0.6%, while their more affluent peers are set to receive a funding increase of 1.1%.
  • White British pupils will see real terms increases of 1.4%, compared to 0.5% for non-white British pupils.
  • Pupils for whom English is their primary language will see real terms increases of 1.2%, compared to 0.3% for pupils for whom English is an additional language.

Under the 2021/22 funding plans, in secondary schools:

  • Disadvantaged and non-disadvantaged pupils will both receive real terms funding increases of 0.5%. 
  • White British pupils will see real terms increases of 0.7%, while non-white British pupils see increases of 0.3%.
  • Pupils for whom English is their primary language will see real terms increases of 0.6%, while pupils for whom English is an additional language will receive increases of 0.2%. 

Differences in pupil funding allocations become even more pronounced when examining funding changes since 2017/2018, the last year before the introduction of the government's National Funding Formula.

Change in per pupil funding by pupil characteristics between 2017-18 and 2021-22 (real terms)

Between 2017-2018 and 2021-22, in both primary and secondary schools:

  • Disadvantaged pupils will have received increases at around two-thirds the rate of their more affluent peers.  
  • White British pupils will have seen increases at nearly double the rate of non-white British pupils.
  • Pupils for whom English is an additional language will have received increases at half the rate of pupils for whom English is their primary language.

Why pupils from certain backgrounds are receiving more additional funding than others

The National Funding Formula for schools, introduced from 2018, is built on the principle that pupils with the same characteristics should receive the same level of funding, regardless of where in the country they go to school.

However, the Prime Minister’s drive to “level up” school funding appears to be distorting this aim. A policy of “levelling up”, which guarantees minimum levels of funding for all schools, means that more funding is directed towards schools that have previously been funded at a lower rate; schools which on average, have fewer pupils from poorer backgrounds.

While the school funding system in England remains progressive, with pupils from low income backgrounds continuing to attract more funding overall than their more affluent peers, analysis shows that the link between school funding and pupil need is beginning to be unravelled.

These changes come at a time when there is emerging evidence of the disproportionate effects of the COVID-19 pandemic on pupils from disadvantaged backgrounds. EPI research has shown that poorer pupils are already 18 months in learning behind their peers by time they finish their GCSEs, and even prior to the pandemic, progress in narrowing that gap was beginning to stall.

Sector Response

Kate Green MP 100x100Kate Green MP, Labour’s Shadow Education Secretary, said:

“While more money for schools is welcome, this research shows that the National Funding Formula is neither efficient nor effective at directing money to schools serving the most disadvantaged.

“If the Government really wants to ‘level up’ and get value for the taxpayer, it should prioritise ensuring the largest funding increases reach the students who need the most support. Especially at a time when Covid-19 threatens to widen the attainment gap further.

“This formula is a nonsense that claims to fund schools fairly but actually bakes in inequality.”

Layla Moran100x100Liberal Democrat Education Spokesperson Layla Moran said:

"It should be an absolute priority for Government to tackle the attainment gap, which has meant that even before the pandemic, disadvantaged children are on average a year and a half behind their more affluent peers by the time they take their GCSEs. 

"Every child, no matter their background, deserves the very best start in life but this Government’s funding policy fails to take account of the additional support some pupils need to help them thrive during their time in school."

Avis Gilmore, Deputy General Secretary of the National Education Union, said:

"While the Government has promised levelling up in school funding this EPI report shows that the reverse is happening - with more of the extra funding going to richer areas than to the poorest areas.

“The NEU published data in October 2019 which showed that, even taking into account the planned funding increases for 2020, schools serving the poorest students had suffered most under the Conservatives. Primary schools serving the most deprived intakes had seen their annual funding per pupil fall on average by £382 in real terms since 2015, compared to £125 for those with the least deprived intakes. The figures for secondary schools were even greater, with those serving the most deprived intakes losing £509 in real terms per pupil compared to £117 for those with the least deprived intakes.

“This EPI report hows that the Government is increasing that gap, not closing it, through the way it is distributing its 2020 funding increase, with bigger increases going to those schools with fewer disadvantaged students.

“The cuts schools and colleges have suffered to their budgets since 2015 have impacted greatly on children and young peoples education. While we welcome the extra money being given to schools and colleges it is still not enough to address the current shortfall in funding. Focusing the additional funding available away from those students with the greatest need will result in many children not getting the education they deserve.”

Jon Andrews, author and Deputy Head of Research at the Education Policy Institute (EPI), said:

“Our analysis shows that the longstanding link between school funding and pupil need is being eroded by the policy of ‘levelling up.”

“By directing a proportion of additional funding towards schools with historically lower levels of funding, the government is ensuring that pupils from more affluent backgrounds see greater increases than those from poorer backgrounds. The result is that over a four-year period, disadvantaged pupils will have received funding increases at around two-thirds the rate of their better-off peers.”

David Laws, Executive Chairman of the Education Policy Institute (EPI) said:

“School closures this year will have been especially harmful for the learning outcomes of the poorest pupils. Those from disadvantaged backgrounds will need maximum support to ensure their life chances are not damaged by this period of disruption. But by skewing extra funding towards more affluent pupils, the government’s approach of ‘levelling up’ school funding is fundamentally at odds with this goal.”

“Now more than ever, we need well-targeted policies to prevent a real social mobility setback in this country. There appears to be very little evidence of this in the government’s latest school funding plans.”

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