It’s hard to say “National Funding Formula (NFF) for schools” without people’s eyes glazing over before you get to the end.

When I was an adviser at the Department for Education a decade ago, I probably worked more on the schools funding formula than anything else. I came to dread the meetings with ministers where we’d try to wade through a dense set of decisions about sparsity factors and area cost weightings.

I think it’s fair to say they came to dread them, too.

But the way we distribute cash to schools is very important. And, when it goes wrong, suddenly everyone becomes very interested indeed. Department old-timers are still scarred by the 2003 school funding crisis, which was largely caused by confusion.

A new funding model

Fast forward to 2022 and the National Funding Formula is back in the news as it features in the new Schools Bill, which has just started its lengthy journey through Parliament.

It’s been a long time coming as the coalition set out plans to move to one in the 2010 White Paper.

The basic idea is a simple one: rather than have 151 different local authority funding formulae, based on outdated allocations from the DfE, have a single national formula that’s transparent and fair.

The criteria within that formula can be adjusted in line with the priorities of the DfE, and components can be added or removed as desired.

The current model has 15 elements, with a core per-pupil amount and then additional amounts depending on the relative disadvantage of pupils, the location of the school and its premises.

Having a nationally uniform system will become increasingly important as we move to a multi-academy trust-based system, where many trusts run schools across multiple LAs.

Now comes the hard part

Implementation, though, is a lot less simple than the idea; which is why it took until 2018 to get a national formula to allocate money to LAs and will take at least until 2024-25 for funding to go directly to schools.

Why has it taken so long? Well, moving to any new system that significantly rejigs budgets can only be done one of two ways.

Either you have some winners and some losers, and the losers make a lot more noise. Or you give everyone more money but some more than others; which is pretty hard when the schools budget is being cut overall.

Essentially the DfE has done it by ensuring schools don’t fall below a cash floor - so while most are poorer than they were in real terms, they have at least some stability.

When additional cash has gone into the system, this has mostly gone to schools that were underfunded according to the formula calculations.

In practice, this has meant more money going to schools with fewer disadvantaged pupils.

This is because the government pledged, in 2019, to “level up” the core amount of per-pupil funding, which inevitably reduces what is available for additional factors such as low prior attainment and poverty.

The Education Policy Institute has calculated that, between 2017-18 and 2021-22, the average secondary pupil on free school meals (FSM) saw their allocation increase by 3.5 per cent but a non-FSM pupil got an increase of 5.9 per cent.

So, for example, a grammar school would have seen a much bigger overall increase than the secondary modern down the road.

Avoid making a bad situation even worse

The big question for the final stage of NFF implementation is how the DfE can avoid making this even worse.

A number of LAs in more disadvantaged areas have used their discretionary powers to keep funding for poverty higher than nominally allocated by the formula.

These include many authorities, like Middlesbrough, Blackpool, Hartlepool and Wolverhampton that are, rhetorically at least, “levelling up” hotspots with new Conservative MPs. Redistributing funding in these areas away from the poorest schools doesn’t seem like a great idea.

The other big challenge will be authorities that use their discretion to give a larger “lump sum” to all schools. This happens in mainly rural authorities like Cumbria, North Yorkshire, and Derbyshire, as they are trying to protect smaller schools, which are less efficient.

And guess what - these places all have Tory MPs too.

All this makes it likely that we’re still some way away from the final implementation of the NFF and it may not happen until after the next election.

Mechanisms for change

Once it is in place it will pose a challenge and an opportunity to any new government that comes into power. In the past, the school funding system has been so complicated that it’s not been a particularly useful policy lever.

But in the future, the secretary of state will be able to add or remove criteria and adjust levels too, which should make it a more flexible and adaptable system based on the needs of the day.

Would Labour want to see more funding allocated on the basis of poverty? Well, now there will be a mechanism for doing so. How prepared politicians are to use this new power will depend on their level of risk appetite.

And how many meetings about funding formulae, with people like me, they can stand.

Sam Freedman is a former senior policy adviser at the Department for Education and a senior fellow at the Institute of Government