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Howard Jackson

Will the NFF solve the regional funding gap for academies?

Howard Jackson looks at the introduction of the National Funding Formula in 2018 and its impact on the North/South funding gap

Posted by Stephanie Broad | August 30, 2016 | Law, finance, HR

Since the end of the industrial revolution, the north of England has struggled to compete with the more affluent south. Figures suggest that someone employed in the north of the country can earn as little as half of what their southern counterpart receives. However, various initiatives are helping to build the economic viability of the North. For example, plans for a ‘northern powerhouse’ aim to see cities such as Leeds and Manchester working together to create a collective force to rival London and the South East. But to maintain growth and create a sustainable environment for people to work and live in, the government must also ensure education provision in the north of the country is on a level playing field with the south. 

In order to do this, it is vital that the government tackles the disparity between the amount of funding granted to education providers in the north and south. Recent research from the Institute of Public Policy Research (IPPR) has found that the differences in funding between regions is most prevalent in secondary schools, with those in the north seriously lagging behind their southern peers, receiving on average £1,300 less per pupil than schools in London. Whilst the majority of secondary schools in England now have academy status, the Ofsted chief Sir Michael Wilshaw suggested that when it comes to raising standards and addressing this funding gap, ‘structural reform can only do so much’.  

It is entirely reasonable to expect some variation in the amounts of funding awarded to schools across the country, as different geographic areas have varying levels of need. For example, certain boroughs will have higher levels of deprivation whilst others will have a higher cost of living. However, over time the large discrepancies in funding between schools have become difficult to explain. Worryingly, up until March 2015 there was a difference of over 75% between the schools receiving the highest and the lowest rate per pupil. 

The problem lies in the fact that the amount given to this day is still based on historical spend granted to each school before the Dedicated Schools Grant (DSG) was introduced. Before the DSG, the amount of money ring-fenced for education was entirely at the discretion of the local authority. However, nowadays the per-pupil funding just does not reflect the needs of pupils in some areas of the country. With higher levels of deprivation and unemployment, it is the schools in the north of the country that are struggling the most. The CentreForum’s recent report identified just how prolific this problem is, as over half of the top 20 performing local authorities are in London, and only two (Trafford and York) are from the north. 

NFF – a refresher

To address this regional imbalance, the government plans to introduce a National Funding Formula (NFF) to help to balance the scales. Earlier this year the new education secretary Justine Greening announced the NFF will now be delayed until 2018. Whilst few would argue with the delivery of a fairer distribution of funding, the problem lies with the fact that some schools would stand to gain from the changes while others could find themselves out of pocket. To try to prevent this from happening, the Association of School and College Leaders (ASCL) has called on the government to ensure that no school will have its budget reduced in 2017-2018, as any sooner than this would mean that schools would have insufficient time to plan for any changes. 

Prepare for the future

For academies up and down the country, these are uncertain times. With this in mind, now is the time for academies to make sure they have all the processes in place to ensure that in the event of a change in funding, they are ready and prepared. 

Research that HCSS Education recently conducted revealed that one of the main ways that academies are generating savings is through much tighter controls over procurement and expenditure of materials. However, without the right tools, it is often difficult to calculate precisely where savings can be made. Alongside this, effective forecasting is a must to ensure that the budget is being constantly revisited and reviewed so that any cuts are factored into the financial strategy.  

A robust financial management system is key to navigating future changes. Whilst there are many different versions to choose from, it is recommended that academies introduce one that is designed specifically around the needs of the education sector. 

Whilst it may take years to finally overcome the funding gap for good, and with the introduction of the NFF now delayed until 2018, academies should not just sit tight and wait for a resolution. Academies must instead take matters into their own hands and ensure that they have the structures in place to be able to successfully navigate through any changes. Investing in a financial management system that is tailored to the education sector will give academies the ability to plan effectively for the future and concentrate more time and energy into what they do best: providing exceptional education. 

Howard Jackson is head of Education and founder of HCSS Education    

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