LGA response to the Department for Education’s consultation on implementing the Direct National Funding Formula

We are pleased that the Department for Education (DfE) recognises that implanting the formula is a complex task and that it should continue to be phased in over a number of years to avoid any negative impacts on schools or councils.

Education and schools

08 Sep 2022

About the Local Government Association

The Local Government Association (LGA) is the national voice of local government. We work with councils to support, promote and improve local government.

We are a politically-led, cross party organisation which works on behalf of councils to ensure local government has a strong, credible voice with national government. We aim to influence and set the political agenda on the issues that matter to councils so they are able to deliver local solutions to national problems. The LGA covers every part of England and Wales, supporting local government as the most efficient and accountable part of the public sector.

Key points

While the LGA does not support the introduction of a direct National Funding Formula (NFF) for all schools, we are pleased that the Department for Education (DfE) recognises that implanting the formula is a complex task and that it should continue to be phased in over a number of years to avoid any negative impacts on schools or councils.
We continue to call for the flexibility for Multi-Academy Trusts to move away from their NFF allocations, via the General Annual Grant, to be available to all schools.
We welcome the Department for Education’s (DfE) acknowledgement that councils should retain a degree of flexibility to transfer funding from the schools to the high needs block to meet increasing demand for support for children and young people with Special Educational Needs and Disability (SEND). Multi-year transfers, where agreed by the Secretary of State, will help councils and schools to develop longer-term arrangements to support children and young people with SEND and make more efficient use of resources.
It will take several years for the proposals set out in the Green Paper to be taken through the legislative process, before coming law. In the meantime, making additional high needs funding available via the ‘safety valve’ and ‘Delivering Better Value in SEND’ programmes is welcome, but the Department must go further and develop a plan that eliminates every council’s Dedicated Schools Grant deficit.

Consultation questions

Do you agree that local authorities’ applications for transfers from mainstream schools to local education budgets should identify their preferred form of adjustment to NFF allocations, from a standard short menu of options? Do you have any other comments on the proposals for the operation of transfers of funding from mainstream schools to high needs?

We support the proposal for councils to be able to identify their preferred form of adjustment to NFF allocations from a standard menu of options. We agree that simplification of the adjustment process will make it more straightforward for schools and councils locally and increase consistency. Such an approach may also help to identify broader trends in high needs spending and help inform future funding decisions nationally.
Do you agree that the direct NFF should include an indicative SEND budget, set nationally rather than locally?

We agree that the schools should continue to receive an indicative SEND budget, but we believe that councils, with the agreement of schools in their local areas, should be able to move away from the from the direct NFF. The consultation document acknowledges that “it is unlikely that any formulaic approach would be able to reflect the precise cost of supporting every pupil with SEND in each school.”, but that is more likely to be achieved with a degree of local flexibility.

We understand the need for greater consistency of approach across the SEND system, including through a single, digitised Education, Health and Care Plan (EHCP) as set out in the SEND Green paper. The Green paper does however acknowledge that even in such a system there will be a need for some flexibility to reflect available provision and differing levels of need. We are concerned that too great a focus on the ‘national’ part of the system could raise expectations amongst parents and carers that the same support will be available in every area and delivered in the same way. Any future funding arrangements should seek to strike the balance between national standards and a need for flexibility to meet local need.
Do you have any comments on the proposals to place further requirements on how local authorities can operate their growth and falling rolls funding?

We support the first approach set out in the consultation to retain some local flexibility for councils in their operation of growth and falling rolls funding, while also allowing for improved consistency and fairness in how this funding is allocated in the context of the NFF. The direct NFF must ensure that a standard growth criteria targets funding promptly where it is required and relative to other available funding and that councils can ensure the criteria can be managed within the ringfenced allocation.
Do you believe that the restriction that falling rolls funding can only be provided to schools judged “Good” or “Outstanding” by Ofsted should be removed?

We support the proposed removal of the restricting falling roles funding to only those schools rated as ‘good’ or ‘outstanding’ by Ofsted. As the consultation document notes, the current restriction reduces the flexibility of some councils to ensure sufficiency of school places in the future.
Do you have any comments on how we propose to allocate growth and falling rolls funding to local authorities?

We support the proposal to re-baseline the total amount of growth funding, nationally, to better reflect current spending patterns on the basis of 2023-24 spend. We also support the proposal to allocate funding between councils on the basis of growth and falling rolls by calculating councils’ allocations on the basis of areas (MSOAs, within local authority areas) which have either seen growth or (significant) declines in pupil numbers.
Do you agree that we should explicitly expand the use of growth and falling rolls funding to supporting local authorities in repurposing and removing space?

We agree that the Department should explicitly expand the use of growth and falling rolls funding. This will give councils greater flexibility to respond to changes in the size of the school-aged population, particularly in the context as pupil numbers start to decline.
Do you agree that the Government should favour a local, flexible approach over the national, standardised system for allocating growth and falling rolls funding; and that we should implement the changes for 2024-25?

We agree that the Government should favour a local, flexible approach for allocating growth and falling rolls funding and that this should be implement for 2024-25. The consultation rightly acknowledges that councils have and will continue to have under proposals set out in the Schools White paper, a duty to ensure sufficiency of school places and that growth and falling rolls funding sits under the sufficiency duty.

While we understand that the lagged funding system would compensate any councils who have had to overspend to meet a significant rising demand, the Department should also provide additional in-year funding where new places are unaffordable. The likelihood of any exceptional circumstances regarding growth funding allocations is a particular risk as the school system implements and adjusts to the direct NFF.
Do you have any comments on the proposed approach to popular growth?

We agree that maintained schools should also be able to access popular growth funding, reflecting the arrangements already in place for academies.
Do you agree we should allocate split site funding on the basis of both a schools’ ‘basic eligibility’ and ‘distance eligibility’?

Any changes to the allocation of split site funding should not result in any schools immediately losing funding and we would therefore support the introduction of a taper or similar arrangement that would give those schools several years to plan for and adjust to reduced levels of funding.
Do you agree with our proposed criteria for split site ‘basic eligibility’?

As per our response to question 9.
Do you agree with our proposed split site distance criterion of 500m?
As per our response to question 9.
Do you agree with total available split sites funding being 60% of the NFF lump sum factor?

We have no comments on this proposal.
Do you agree that distance eligibility should be funded at twice the rate of basic eligibility?

We have no comments on this proposal.
Do you agree with our proposed approach to data collection on split sites?

We have no comments on this proposal.
Do you have any comments on our proposed approach to split sites funding?

We have no comments on this proposal.
Do you agree with our proposed approach to the exceptional circumstances factor?

We do not support the proposed approach to the treatment of exceptional circumstances factor. We do not believe that a single national formula can reflect the circumstances of individual schools currently in receipt of exceptional circumstances funding and it would be helpful for the Department to provide evidence that super-sparse schools, for example, will not lose out as a result of the move to the use of a single factor. In the absence of this evidence we believe that exceptional circumstances funding should continue to be allocated via councils.
Do you have any comments on the proposed approach to exceptional circumstances?

We have no additional comments on this proposal.
Do you agree that we should use local formulae baselines (actual GAG allocations, for academies) for the minimum funding guarantee (MFG) in the year that we transition to the direct NFF?

We agree that local formulae baselines for the MFG should be used in the year that the direct NFF is introduced to ensure schools are protected against year-on-year loses.
Do you agree that we should move to using a simplified pupil-led funding protection for the MFG under the direct NFF?

We support the proposed move to a simplified pupil-led funding protection for the minimum floor guarantee under the direct NFF.
Do you have any comments on our proposals for the operation of the minimum funding guarantee under the direct NFF?

We agree that under the direct NFF adjustments to the baselines such that schools that change their year-group structures will not receive unfair overprotection compared to other schools.
What do you think would be most useful for schools to plan their budgets before they receive confirmation of their final allocations: (i) notional allocations, or (ii) a calculator tool?

While schools will be best placed to inform the Department’s decision, we believe that a calculator tool that utilises a school’s pupil data would give a more accurate indication of future funding and allow for budgets to be set with greater certainty.
Do you have any comments on our proposals for the funding cycle in the direct NFF, including how we could provide early information to schools to help their budget planning?

The provision of notional allocations has created confusion amongst schools under the soft approach to determining schools block funding formulae. A calculator tool, prepopulated with the most recently available data for schools would be most beneficial in aiding school budget planning however the exclusions from this tool (e.g., transfers, de-delegation, exceptional circumstances, growth/falling rolls funding) should be made clear and timeframes for final allocations communicated to schools. We would expect that under the direct NFF final allocations will be published more quickly than in the current system of local decision making and ESFA ratification. This should be an aim from the proposals for the funding cycle, not for current timeframes for schools to be maintained.
Do you have any comments on the two options presented for data collections in regards to school reorganisations and pupil numbers? When would this information be available to local authorities to submit to DfE?

We have no comments on this proposal.
Regarding de-delegation, would you prefer the Department to undertake one single data collection in March covering all local authorities, or several smaller bespoke data collections for mid-year converters?

To minimise the burden on councils we would support a single data collection. The option of smaller data collections for mid-year converting schools should also be an option in exceptional circumstances, i.e., if they are significant numbers of such conversions.
Do you have any other comments on our proposals regarding the timing and nature of data collections to be carried out under a direct NFF?

We are concerned that an October deadline will restrict the extent to which councils can consult with schools and Schools Forum in the autumn term. To facilitate this a deadline in the second half of term into November would be more achievable.