How school funding reform could empower academy chains

26 Sep 16

Changes to how schools are funded will not tackle all the financial differences across the sector. Giving academy chains more power to distribute funding could help tackle regional inequities.

Announcing last autumn’s spending review, George Osborne pledged to “phase out the arbitrary and unfair school funding system that has systematically underfunded schools in whole swathes of the country”. The proposed solution – a ‘national funding formula’ – is set to standardise average per-pupil funding given to local authorities from 2018, as well as the formula they use to distribute funding to schools.  

Standard per-pupil funding between local authorities is a commendable step towards improving regional equity. It is important, however, that the pursuit of fairer funding does not introduce a rigidity into the system that is at odds with the expanding academy programme. The government’s long-term vision is, after all, a system in which all schools that are academies operating in ‘multi-academy trusts’ (chains). Under present arrangements, this means per-pupil funding will be calculated according to common national weightings, before being distributed to individual academies.

This is problematic. Research published by Reform last week highlights the importance of empowering chain leaders with financial autonomy. In the first survey of academy chain chief executives, pooling and redistributing funding across the chain was reported to be an effective method of providing short-term additional support to schools in areas of underperformance, preventing them slipping into long-term decline. If the academy programme is to address regional performance gaps, it is essential chain leaders are given financial flexibility.

However, many chain leaders were found to have insufficient financial autonomy. The report finds that 80% currently do not pool and redistribute funding, despite 30% wanting to. Expanding on the barriers they face, chain leaders most commonly cited resistance from the schools in the chain with comparatively strong finances. In addition to blocking flexible redistribution of funding going forwards, this also prevents the system’s significant financial reserves – much of which currently sits with individual schools – from contributing to lowering regional attainment gaps.

If funding continues to be given to schools rather than chains, a national funding formula will only exacerbate this problem. Chain leaders commonly cited a perception that funding belonged to the individual school rather than the chain as a whole. A message from government that the funding allocated to schools is now calculated according to a fair national formula will only strengthen this perception, and hamper the attempts of chain leaders to flex school funding when necessary.

Academy chains unlocked offers a solution. Funding should be given to chain leaders rather than individual schools. A national funding formula should be implemented, and should dictate the level of funding that a chain receives, but the ongoing distribution of funding between schools should be down to chain leaders to decide. This would tackle current regional inequities in average per-pupil funding, whilst affording chain leaders autonomy to flex funding when it is beneficial for the chain as a whole.

The need to update a funding system that arbitrarily entrenches regional attainment gaps is clear. But in doing so, the government must avoid undermining the professional autonomy that is the bedrock of a chain-led academy system.

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