17th March 2017

The implications of the National Funding Formula for schools

New analysis by the Education Policy Institute finds all schools in England face real terms cuts in funding per pupil, even after the introduction of a new national funding formula.

The report, The implications of the National Funding Formula for schools, also finds that half of primary and secondary schools face large real terms, per pupil, cuts in funding of between 6-11 per cent by 2019-20.

The Government consultation on the introduction of a new national funding formula (NFF) for schools closes on the 22nd March. To inform this important consultation, EPI has considered what the impact of the NFF will be, who the winners and losers are, and its analysis puts the NFF into the context of wider financial pressures on the schools system.

You can read the report in full here

Local, regional and parliamentary constituency breakdowns can be found below.

Key findings


There are clear disparities within the existing school funding system in England, meaning the Government is right to proceed with its plan to introduce a new national funding formula (NFF).

The Government’s proposals are unlikely to satisfy many local areas which have been relatively lower funded and have campaigned vocally for a new formula. The Government’s plans to allocate relatively more funding to disadvantaged and low attaining pupils mean those lower funded authorities are unlikely to see the increases that they have hoped for. However these decisions made by the Department for Education are rational for a government which wants to reduce the significant attainment gaps which limit social mobility.

Even though a greater share of funding is proposed to be allocated to disadvantaged pupils, EPI research finds that the overall impact of redistributing the schools budget results in shifting funding away from the most disadvantaged pupils towards what is considered the ‘just about managing’ group.

We find that:

  • The most deprived primary and secondary schools (those with more than 30 per cent of pupils on free school meals) experience a small net gain of £5.6m, overall, but the most deprived secondary schools will actually see falls.
  • Other primary and secondary schools (those with less than 30 per cent of pupils on free school meals) gain an additional £275m overall. Many of these schools have very low levels of disadvantage.
  • Pupils who live in the least deprived areas (as measured by the Income Deprivation Affecting Children Index) experience the highest relative gains.
  • Additional funding for low prior attainment means that the lowest performing schools in the country are set to gain £78.5m more, overall, than the top performing schools. This is particularly acute in London, where we find a net loss to the highest performing primary schools of around £16.6m overall.

We also consider the impact of inflationary pressures (highlighted by the National Audit Office) and the removal of the Education Services Grant, when assessing overall changes to school finances between 2016-17 and 2019-20.

We estimate that by 2019-20:

  • There are unlikely to be any schools in England which will avoid a real terms cut in per pupil funding by 2019-20, even in areas benefiting from the new formula;
  • Indeed, up to half of primary schools and around half of secondary schools will be faced with significant real cuts in funding per pupil of between 6 and 11 per cent by 2019-20;
  • This amounts to an average real terms loss of £74,000 per primary school and £291,000 per secondary school.
  • This equates to, on average, the loss of almost 2 teachers across all primary schools and 6 teachers across all secondary schools.

Without additional funding beyond 2020, there is a risk of further budget losses for around 5,000 schools, including around 880 schools that would lose more than 10 per cent of their budget
 if the Government decides to remove the NFF transitional protections beyond 2020.

Further documents: 

Local authority, regional, and parliamentary constituency findings (Excel)