Contact: Sarah Pook, (01962) 84 7045; [email protected]

1 Summary

1.1 The Minister for Schools and 14-19 learners, Jim Knight, announced on 25 June 2007 the broad framework for the schools, early years and 14-16 funding arrangements for 2008-11. The Dedicated Schools Grant (DSG) which provides core funding for schools to local authorities will continue to be distributed in 2008-11 using the spend plus methodology used for 2006-08, rather than through a single formula. However there will be a formula review to look at the DSG distribution in the longer term. The aim of the review will be to produce a single transparent formula available for use from 2011/12. On 2 August 2007 the Department for Children's, Schools and Families (DCSF) published the terms of reference for the DSG formula review. Local authorities, schools forums and other stakeholders are invited to comment on the terms of reference for the DSG formula review and the key issues for the review by Friday 2 November 2007.

1.2 The terms of reference for the review are attached as Appendix A and the draft response to the consultation as Appendix B.

1 Recommendations

1.1 To approve the consultation response for agreement by Cabinet.

2 The consultation

2.1 The terms of reference set out the aims and objectives for the review, and the detailed issues to be considered including Additional Educational Needs (AEN), high cost pupils, area costs, sparsity, early years, 14-19 funding and interactions with other specific grants including Schools Standards Grant (SSG) and Schools Development Grant (SDG). It proposes the working methods of the review group which will be very similar to the approach adopted to formula review in 2000-2002 with a formula review sub group reporting to the main Schools Funding Implementation Group (SFIG) and then encouraging stakeholders beyond the sub group to submit papers and attend the appropriate parts of meetings where these papers are discussed. Finally the terms of reference set out the proposed timetable

July 2007 Launch review

End Oct 2007 Deadline for comments on terms of reference

Nov-Dec 2007 DCSF analyse responses

Jan 08-Jun 09 Development phase

Jul-Sep 09 Develop consultation proposals

Oct 09 - Mar 10 Consult

Apr-Jun 2010 Build up to decisions

July 2010 Ministers announce broad decisions

Oct 2010 School funding settlement for 2011-12 onwards.

3 The County Council's response

3.1 The draft response attached sets out the key areas of support and the key issues of concern. The review is to be welcomed as the continuation of the spend plus approach set up for 2006-2008 into 2008-11 means a continued move away from a transparent formula funding approach with funding increasingly removed from an assessment of needs and demand. The apparent focus in the terms of reference on the broader children's agenda is also welcomed, particularly the comment that the DCSF is the lead government department for all children's issues and the consideration of further increases in flexibility for local authorities to use the centrally retained part of their Schools Budget to support the delivery of Every Child Matters.

3.2 However, it is of concern that whilst the aim of the review is set out, the objectives are not clear nor are the principles or characteristics expected of a successful formula. These principles were defined for previous reviews and it is important that they are set out for this review in order to give a framework for success. Such principles need to be developed again and should be appropriate for the development of a formula which is expected to have a reasonable lifespan. They might include:

a. The criteria should be transparent and the resulting distribution capable of easy replication by local authorities and other stakeholders;

b. The formula should use data that is already collected, which could describe characteristics of children within an authority's schools, or the characteristics of an authority as a whole;

c. Data should to be robust in terms of collection, integrity and lifetime.

3.3 Further, the formula reviews following the 2003/04 "funding crisis" made predictability and stability a high priority. It should be clear in the objectives what emphasis is being placed on these key issues. This would then ensure the degree of change is monitored and modelled, along with the extent to which change is achieved through the formula or through transition and damping arrangements.

3.4 Whilst the 14-19 agenda through the development of diplomas is recognised as an issue by the DCSF, the issue of the return of post 16 funding to local authorities from the Learning and Skills Council expected in 2011 is not set out as an issue for consideration and should be.

3.5 The DCSF is also expected to launch further consultations on the future of Schools Forum for 2008 and longer term for 2011 and beyond. The DSG review will need to be closely linked with the role of the Schools Forum for 2011.

3.6 Finally and fundamentally the review should also consider whether schools funding should continue to be channelled through DSG as a ring fenced grant. In its response to the Formula Grant consultation, Cabinet commented

"Government support should be provided as far as possible as general formula grant, not as specific grants. The Dedicated Schools Grant should be reabsorbed into formula grant, as the continuation of ring-fenced funding of the Schools Budget runs counter to the objectives of the Children Act and the Government's proposals for integrating the funding arrangements for Connexions and 14 to 19 year old provision."

4 Legal implications

4.1 There are no legal implications from the consultation.

5 Financial implications

5.1 The financial implications will arise from the review itself, this report addresses the financial implications for the consultation on the terms of reference.

6 HR implications

6.1 There are no HR implications.

7 Impact assessment

7.1 An impact assessment will be important at the stage of implementing any changes to formula funding in preparing the budget for 2011.

Section 100 D - :Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

The Minister for Schools statement to Parliament on 25 June 2007

http://www.teachernet.gov.uk/docbank/index.cfm?id=11544

School, early years and 14-16 funding arrangements 2008-11, Summary of decisions announced on 25 June 2007

http://www.teachernet.gov.uk/docbank/index.cfm?id=11544

NB: the list excludes:

1. Documents which disclose exempt or confidential information as defined in the Act.