Speech: Sam Gyimah: the importance of school funding reform

Thank you for that kind introduction.

It is a pleasure to be speaking to FASNA today. An organisation established by educationalists who wanted to take charge of their schools’ own destinies.

An organisation that recognises that autonomy drives innovation and pushes for ever higher standards for students.

And this government is committed to the very principles upon which you are founded.

Today, there are over 5,000 academies, free from local authority control, across England. And we are committed to moving toward full academisation during this Parliament – ensuring that every child has access to a school with the autonomy and freedoms, that you tirelessly champion, and that will allow pupils to flourish.


But, before I discuss the importance of our reforms to the role of the LA and schools funding, I would like to set out my position on something everyone is talking about right now and that’s Britain’s membership of the European Union.

It is better for Britain that we stay as part of the EU.

It will be better for British businesses to have full participation in the free trade single market – bringing jobs, investment, lower prices and financial security.

It will be safer because we can work closely with other countries to fight cross-border crime and terrorism.

We will be stronger because we can play a leading role in one of world’s largest organisations from within.

Helping to make the big decisions that affect us.

The task of reforming Europe does not end with the agreement secured by the Prime Minister.

But our special status gives us the best of both worlds – securing the benefits of being in the EU for families across the UK, but staying out of the parts of Europe that don’t work for us. So we will never join the Euro, be part of Eurozone bailouts or an EU super-state.

I believe that Britain is stronger, safer and better off in a reformed European Union. And I will continue to campaign for us to vote to remain.

Levels of spending in schools and consultation launch

But moving on, because – as we know – education is not an EU competence!

Realising potential and transforming education is central to this government’s mission of extending opportunity and delivering social justice.

The Spending Review was evidence of that: protecting core schools funding in real terms for the duration of this Parliament.

And this is a strong commitment because funding to schools is over £40 billion – the largest education budget given to primary and secondary schools in this country’s history.

That record level of funding has been driven by the additional funding we added to schools budgets through the pupil premium over the last Parliament. We are now delivering more than £2.5 billion a year to meet the Conservative manifesto commitment to target additional funding at the most disadvantaged students.

Larger budgets also mean an even greater imperative for us to ensure parents know that funding is being used in the best way possible to further their child’s life chances.

And I want to take this opportunity to thank sector groups for their constructive engagement with government to push this important topic further up the education agenda.

On Monday, the government announced the first stage of its consultation on fair funding. This is the first stage of our consultation as we seek views on the principles we use to design the formula, the building blocks we use to construct the formula, and the factors we include in the formula.

We want to develop a system of funding that is fair and transparent, with resources matched to pupils’ and schools’ needs consistently across the country.

This is a foundational element of the education system. It will be more important than ever to see the responses from across the education sector – helping us to make the right decisions on funding reform.

I look forward to seeing FASNA‘s response to the consultation, alongside other interested parties from across the entire education sector.

Linking government objective to funding reform

The government’s objective for education is straightforward: to deliver educational excellence everywhere. It is through this objective that we will deliver a highly educated society in which every child can reach their potential.

As the minister with responsibility for education funding, the word that focuses my attention the most is ‘everywhere’.

Everywhere means we must approach education with the aim to deliver a level playing field for all pupils. It must be an approach in which all our schools, teachers and, most importantly, pupils can reach their full potential.

And what do I mean by a level playing field everywhere?

It means:

  • high-quality teachers everywhere
  • high aspirations everywhere across the system
  • a funding system that is blind to irrelevant factors

It means a funding system that is wide-eyed to factors that impact educational success – be that special educational needs, disability or economic disadvantage.

The development of existing system

I don’t think anyone really disagrees with those principles.

But despite this, the current arrangements for funding our pupils could not be more different. In the current system, the difference between the highest average rate of funding and the lowest rate of funding is nearly £3,000.

In the current system, the difference in a school’s annual budget – the same school, with the same pupils – can vary by up to £2.5 million depending on the school’s location within England.

That cannot be the right system of funding if we are serious about educational equity and teachers having the right resources to support pupils with the same educational needs. My question – and I’m sure your question also – is how have we possibly ended up with a funding system like this?

The wide variations are driven by local authorities who determine their own local formula. Formulae that are complex, opaque, but crucially very different from one another.

And as well as widely differing local formulae, local authorities are making decisions to transfer money between their budgets for schools, for special needs and for early years.
Meaning that money allocated for schools may not reach frontline teachers.

This kind of decision-making is out of date, as more schools become academies, independent of local authority management and often operating in groups that cut across local authority boundaries and indeed regions.

And all of this is compounded by a system for allocating funding to each local authority area that is based, not on a calculation of local need, but by reference to local authority spending decisions that were made more than a decade ago, with no proper account of how circumstances have changed in that time. To say it another way: a year 7 pupil’s funding allocation is determined on educational needs in their area before they were even born.

But what do these points mean practically? It means the same child, in the same circumstances, can be funded vastly differently from one location to the next.

Right now, a parent that moved just a few miles from Haringey to Hackney would increase funding for their child by £1,000. Or choosing to educate your child in Darlington rather than Middlesbrough would be a difference of nearly £700.

And these are just 2 of the countless examples of the excessive funding variations, for the exact same child, that is evident across the whole of England.

Let me make my position clear:

  • this system is not fair to schools and teachers
  • this system is not fair to parents
  • most importantly, this system is not fair to young people

We’ve ended up with so much inequity of funding because in many cases locally, the distribution of funding has been decided primarily to protect past funding levels, irrespective of changes in the needs of pupils from year to year.

Let me give you one more example: in Reading, students receive on average £4,000 per pupil. In Wakefield, a local authority with a lower proportion of students on free school meals and a lower proportion with additional language needs, each pupil receives £4,500.

Simply put: areas in which educational needs are lower are receiving more funding.
As the IFS have acknowledged, the current system is one in which local authorities are not good at targeting funding towards the factors that influence educational needs such as disadvantage. Local authorities prefer, when designing their formula, to spread funding in the basic per pupil rate rather than targeting it at the pupils who deserve this additional funding – spreading the impact rather than targeting it at those with the highest needs in order to level the playing field.

It is a credit to your organisation that you continue to promote school autonomy across a system that is blatantly unfair to some of your schools.

Schools that work against the odds of the funding system and deliver outstanding outcomes for their students.

That is why it is this government’s intention to move toward a formula where we fund schools directly.

Removing the local authority middle man.

Placing funding directly in the hands of your outstanding school leaders who know how to use it best.

Principles of funding reform

The principles of our funding reform are simple:

  • fair
  • based on pupil needs and characteristics
  • transparent

We need to rebalance funding so that historically under-funded pupils receive what they deserve. To help schools in those areas drive forward ever-improving student outcomes.
Because we know that some schools have been resolute in their push for excellence in the absence of fair funding. In York, over 80% of schools are considered ‘good’ or ‘outstanding’ despite it being one of the most poorly funded areas within the country.

This is proof enough that excellence can be achieved everywhere in a fairly funded system.
But let me make one thing clear: fair doesn’t just mean equal. We know that funding must take account of differences in local area costs and local challenges. But fairness does mean that funding, everywhere in the country, should be dependent on need.

Let me stress this point again: when I think of funding reform, it is the pupil who is the front and centre. Our most important role is to ensure the right level of funding supports each and every pupil. Of course, schools and areas must be funded adequately, but our most important principle is to get the right level of funding to each pupil. We will achieve this by aligning our funding principles to educational needs.

And these points are recognised by the OECD who show that a well-designed funding formula can be the most efficient, stable and transparent method of funding schools. But, more importantly, one of its central recommendations is that funding must be responsive to students’ needs.

Funding equality achieved by funding those schools with similar characteristics at the same rate, and directing more funding to schools where pupils have higher educational needs. How can we believe in a level playing field with equality of opportunity when these disparities are common across the whole education funding system?

A national fair funding formula will realign our funding policy with the underlying objective of an educationally equal playing field.

Aligning funding to need – delivering educational excellence everywhere.

Sector bodies

I am also pleased that sector bodies and unions across the whole of education have engaged constructively on these issues and offered their support. A campaign driven by the F40 to address the clear inequity in the system, and a campaign that is supported organisations such as the ASCL, the NAHT and FASNA.

High needs

But, I know that funding reform is about more than just the schools budget – because the same arguments apply to our funding for high needs.

However, this is – bluntly – a more difficult area than the schools budget. We know that students with special educational needs and/or disabilities need additional funding to help them achieve their potential.

But, it is more difficult to put into a formula because high needs are less predictable.

That is why we must design a system that recognises this and allocates money to local authorities transparently and fairly without perverse incentives.

But, this isn’t just about fairness for pupils. This is about fairness for parents – who tirelessly look after their children with additional needs to give them best education possible.

It isn’t fair to the pupils or the parents that funding, as of right now, is not strongly enough related to need.

ISOS research for the department identified large inequities in the system: in one local authority the average funding for a student with a statement or on school action plus was £15,000 but in another local authority it was less than £4,500. How can this be the right system of funding?

A child’s type of care and support should not be determined on geography alone. The pupil who requires a speech therapist in Surrey is no different to the pupil who needs that support in Liverpool.

In the system as it stands today, we have now has seen some local authorities who are underfunded struggling to implement the SEND reforms of the Children and Families Act introduced in 2014.

I want a system of high-needs funding that means parents know their child will have funding that properly reflects their needs and not a system of funding linked to what was spent by that local authority in the past.

Parents and their children with high needs deserve to know that the funding they need will be there irrespective of where they choose to live.

They deserve that security. They deserve that equality.

Synthesis and finish

I think the case for change is very clear.

Local variation in funding has become so wide – that pupils are funded on the basis of geographic accident.

Funded as a result of history; not funded as a product of pupils needs.

We all agree that we cannot build opportunity that is equal for all children and young people in that kind of funding system.

That is why our national funding formula will be about fairness.

Individual pupils will be front and centre – ensuring that funding, in every school across the country, is best matched to pupils’ educational needs.

And through that, funding reform will be the foundation in ensuring educational excellence is achieved everywhere.

Thank you.

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