Funding

Introduction

Spending on education can be expressed in many different ways. Actual cash figures are little use on their own as they are not adjusted for inflation. However they can be a useful when looking at current total spending. It is important to remember that some tables deal with UK spending whereas others only cover spending in England.

An excellent source of information on funding both from central government to local authorities and from local authorities to schools is the school funding section on the teachernet website:

 www.teachernet.gov.uk/management/schoolfunding

For example, this link enables the visitor to read letters which have gone from central government to local authorities in relation to school funding.

Total Education Spending

When looking at total spending on education by central and local government it is useful to look at The Statistical Volume – Education and Training Statistics published on the DCSF website. A brief overview shows:

2008

• Expenditure on education services by central and local government in the UK 2007-08 was estimated at £76.2 billion
• £4.4 billion was spent on early years
• £21.3 billion was spent on primary education
• £24.0 billion was spent on secondary education
• £8.7 billion was spent on post secondary and non-tertiary education
• £11.5 billion was spent on tertiary education
• £49.8 billion was estimated as local authority expenditure and £26.4billion as central government expenditure
• Expenditure on education services by central and local government in the UK increased by 69% in real terms between 1990-91 (£41.8 billion) and 2006-07 (£70.7 billion)
• Estimated expenditure on education services by central and local government in the UK in 2007-08 represented 5.4% of Gross Domestic Product – an increase of 0.1% from 2006-07

Education and Training Statistics for the United Kingdom 2008 (PDF file)

2007

• Expenditure on education services in 2006-07 was estimated at £71.5 billion
• £4.1 billion was spent on early years
• £41.6 billion on schools
• £8.6 billion on further education
• £10.7 billion on higher education
• Of the overall spending £46.0 billion was spent via local government and £25.5 billion by central government
• In 2006-07 spending on education was 5.5% of Gross Domestic Product. This has increased from 2000-01 when it was 4.6% and 2005-06 when it was 5.4%
• Capital spending increased from £2.4 billion in 2000-01 to £5.8 billion in 2006-07

 Education and Training Statistics for the United Kingdom 2007

1995-2005

Expenditure in England 1995–2005 was analysed in Statistical Bulletin Statistics of Education: Education and Training Expenditure since 1995–96

www.dfes.gov.uk/rsgateway/DB/SBU/b000612/index.shtml

It lists the increases in spending in real terms at several levels and on several sectors, for example primary schools, secondary schools and further education. It shows that during those 10 years recurrent (i.e. ongoing funding not capital spending) was spent mostly on primary schools (33%) and secondary schools (44%). On higher education it explains that real terms spending decreased between 1995 and 1996, remained broadly constant between 1997 and 2003 and then increased, with plans for a further increase in 2004-5. It has a useful glossary of terms at the end, for example – real terms is defined as expenditure measured against a standard base year, making allowances for changes in purchasing power as a result of inflation. There does not seem to be a later version of this bulletin than 2005.

Spending per pupil

Many comparisons are based on spending per pupil. This can of course be affected by the number of pupils. The latest figures in the Time Series show a doubling in real terms in spending per pupil from 1997.

www.dcsf.gov.uk/rsgateway/DB/TIM/m002012/index.shtml

Value for Money

Another important report regarding funding is the Departmental Report each year from the DCSF, which sets out the plans for Government spending. This report looks at the work of the whole department. This report seems to increase in size every year as this Department takes on more and more areas. It has a detailed analysis of spending, some of it provisional for recent years as analysis of what has actually been spent may take some time.

DCSF Departmental Report 2009 (PDF file)

Central to local government

Each year the Government agrees a local authority finance settlement which includes spending on education through the Revenue Support Grants. The Department of Communities and Local Government has this responsibility.

 www.local.communities.gov.uk/

For local authority expenditure on education, central Government determines an appropriate level of spending by local authorities across all their services, Total Standard Spending, and, within that, a level of Education Standard Spending.

It also determines how to distribute this spending total between authorities in the form of Standard Spending Assessments (SSAs).

Education Standard Spending (ESS) is the level of spending that the Government considers appropriate for authorities collectively to spend on education in order to provide a standard level of service.

Standard Spending Assessments (SSAs) are not spending targets. Each Local Education Authority determines its own budget and decides how that budget should be allocated among and within its services.

The money to local authorities for schools is through a ring fenced grant to local authorities, the Dedicated Schools Grant.  There is a Minimum Funding Guarantee (MSG) i.e. a guaranteed minimum increase in every school’s per pupil budget. The Standards Grant and the Standards Grant (Personalisation) are grants to support specific aims. A recent Parliamentary Answer gave the levels of the MSG in each local authority.

Pupils: Per Capita Cost

School Funding 2008-11

A big change in recent years has been that school funding is now planned over three years, so that local authorities have an indication of their funding for schools for two years ahead. This was announced by Minister Jim Knight in November 2007.

Ministerial Statement (Word file)

There is a large amount of information about school funding, in particular the funding announcement on the Teachernet website.

There is an Excel spreadsheet which shows a summary of the Dedicated Schools Grant. This shows the spending per pupil in different local authorities.

Dedicated Schools Grant 2008-11 (Excel file)

A new indicator has been introduced to distribute funding for deprivation in some school funding allocations from 2008 using tax credit data:

Guidance on the Tax Credit Deprivation Indicator (Word file)

Dedicated Schools Grant

A review is underway of the Dedicated School Grant. Its terms of reference were announced in January 2008. The aim is to develop a single, transparent formula that will be available for use in distributing the DSG to local authorities from 2011 to 2012. The development phase of the review started in February 2008 and will continue until late 2009, with consultation on specific proposals in early 2010. Ministers will announce broad decisions from the review in summer 2010. 

DSG Formula Review 

Work is also underway to develop a single formula for early years funding:

Early Years Funding Reform 

The Teachernet website also gives information about the funding settlement for 2006-08.

School Funding Settlement 2006-08 

From local authorities to schools

Apart from academies, which receive their money direct from Whitehall, all other maintained schools get their money via the local authority through a formula.

A Parliamentary Answer gave the projected spending on academies:

Academies: Finance

Schools Forums have power to make some decisions about the how much of the schools budget is retained for centrally retained items. These are local groups of heads and governors and others, the local authority having observer status.

School spending

An Excel spreadsheet on the DCSF website lists expenditure incurred directly by schools per pupil since 1992, however there have been several changes in the allocation of funds during that time. It does show a large increase in spending. As pupil numbers fall however this can have an effect. The table refers to maintained schools and it is not clear if the latest figures include academies.

School based expenditure per pupil since 1992-93 (Excel file)

Capital spending and PFI

Repairing and Replacing Schools

Money to improve school buildings comes from Central Government either in the form of grants or permission to borrow.

Capital Investment for Schools 2008-11

In 2007 Jim Knight MP (Minister for Schools and Learners) announced that £21.9 billion would be invested in schools between 2008 and 2011. This investment is for buildings and ICT as was allocated to the DCSF as part of the Comprehensive Spending Review 2007.

Capital Investment for Schools

The Government has plans to create school buildings that are ‘fit for 21st century teaching and learning’. Capital expenditure has risen from £700 million in 1996-7 to £6.4 billion in 2007-08 and will rise to £8 billion in 2010-11.

The Teachernet website has a table of how the funding is allocated:

Key to table:

Funding for Local Authorities and Schools (Devolved)

This is direct investment to every school so that locally decided improvements can be made to unmodernised schools and that modernised schools are properly maintained. Funding is allocated on the basis of (a) relative needs, (b) the amount of modernised or unmodernised schools and (c) pupil numbers.

Long-term programmes (Strategic)

This investment is part of the Building Schools for the Future programme (see below).

Targeted programmes (Targeted)

This will support priorities with the highest need. It will support higher standards and diversity; diploma provision, improving buildings for children with special educational needs and disabilities.

Creating schools for the 21st Century: Funding

Funding for Capital Spending

Modernisation Schools Capital Funding is allocated to a Local Authority (LA) to meet the capital needs of schools. Modernisation is allocated to LAs on a formula that takes into account building need and pupil numbers. The funding is allocated as a mixture of grant and supported borrowing and determined at the beginning of the three year review period and fixed for the three year period.

Modernisation Schools Capital Funding

Private Finance Initiative/ Public Private Partnerships

The Private Finance Initative/Public Private Partnerships involve LAs buying asset based services from the private sector, such as school buildings, sports halls and buying specific services such as ICT or catering equipment.

Usually the contractor owns and operates the buildings/facilities/equipment and would be able to generate income from commercial use outside school hours.

There is a competitive process as private companies bid for contracts. The contracts are not fixed or guaranteed but are dependent on how the contractor performs.

The government argues that ‘public private partnerships improve the service that the public sector provides and raise educational standards by improving school buildings, improving classroom facilities and by contracting out certain services teachers can concentrate on teaching rather than dealing with distractions’.

The Teachernet website has more information about PFI/PPPs

Devolved Formula Capital

Devolved Formula Capital is an amount allocated each year to primary and secondary schools to be spent by them on buildings, ICT and other capital need.

Allocations are announced at the beginning of each three year period and vary according to the number of pupils in a school. In 2007-08 a typical primary school received approximately £34,250 and a typical secondary school £113,000.

Schools Devolved Formula Capital

A copy of the Department for Education and Skills Review of Devolved Formula Capital Funding report (Feb 2007) is available to view by clinking this link:

DES Review of Devolved Formula Capital Funding (PDF file)

Recent Developments to Capital Spending (March 2009)

In March 2009 there was an announcement of school modernisation projects across England.

100 Local Authorities will share £499 million brought forward from the 2010-11 budget. There is also another £390 million available for school heads to invest in smaller projects as they see fit (e.g. building new classrooms, improving ICT facilities etc) There is also £30 million available for play areas.

Overall schools capital spending in 2009-10 will now be £7.943 billion up from under £700 million a year in 1997.

DCSF Press Release 

Building Schools for the Future

Building Schools for the Future (BSF) is the new approach to capital investment. It supports the government’s educational reform agenda by bringing investment in buildings and in ICT

The aim of BSF is that by 2011 every local authority in England will have received funding to renew the schools in greatest need.

By 2016 major rebuilding and remodeling projects should have started in every local authority.

The second annual report (Dec 2008) gives the most recent information on the progress of BSF.

Evaluation of Building Schools for the Future (PDF file)

A useful source of information about the government’s plans for school buildings is the government publication ‘Better Buildings, Better Design, Better Education’ (May 2007) available to download by this link:

Buildings, Better Design, Better Education (PDF file)

Capital Fund: Standards and Diversity Fund

Another recent development (Jan 2008) was £327 million to support raising standards and increasing choice and diversity of school provision. Under this fund there were specific priorities for:

• Expansion of successful and popular maintained schools
• Support new entrants to maintained sector
• Surplus place removal
• Fresh start
• Federations of schools working under a single trust
• Development of facilities at maintained boarding schools, non-maintained special schools and schools in the music and dance theme.

Teachernet: Schools Capital News

November 2009

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