Education governance – next steps: executive summary

Summary of the Government's vision of an education system which is led by schools and teachers.

Chapter 8: Funding

Key points

With respect to the funding questions, the balance of support was against devolving a greater range of responsibilities to schools, for fear this would create excessive bureaucracy, bring too much risk to school level and distract from leading teaching and learning. However, some respondents did express the wish that schools should have more flexibility, particularly in the fields of procurement and staffing.

In terms of funding, there was a belief that funding should take account of ASN, measures of deprivation and the particular challenges to provision in both rural and deprived urban areas.

Several respondents stated that funding should follow the child, particularly in the case of ASN or personal circumstances (deprivation). Others cautioned against a total application of this principle, saying that less popular schools may lose out, and the result may be a transfer from deprived to affluent areas. It was also noted that each child had base costs which should be taken into account before additional funding was added.

The consultation document briefly explained the current funding system and suggested a core set of principles to support a new funding formula. Respondents to the consultation were asked their opinion on the principles suggested and what further controls over funding should be devolved to schools.

8.1 Principles

Organisations who commented on the principles did not have any significant objection to the principles of excellence and equity and the large majority of individual respondents who commented on the principles agreed with them in general. However, respondents raised a number of issues regarding the meaning of these principles and how they can be measured and put into practice:

  • Calls for transparency on how allocations were made (though some claimed that they were already being transparent in their area);
  • Additional principles for adaptability, affordability and ease of administration were asked for;
  • A need to ensure GIRFEC principles were taken into account in the provision of local services;
  • Various responses alternatively supporting universality and targeted services;
  • Concern that "one size does not fit all", both for individual pupils and schools, and failure to account for needs specific to local areas;
  • Some disagreement with simplicity, as one respondent in particular put it, 'It may be that we should be prepared to compromise simplicity in favour of fairness';
  • Certain organisational respondents stated "value for money" should not be the criterion for determining funding. Similarly, some individual respondents felt that the criterion 'value for money' relates to a business context and should not be applied in the context of education because educational outcomes cannot be quantified in the same manner as monetary gains; and
  • The charitable status of independent schools was criticised.

8.2 Formulae

Among organisations, there was frequent support for the concept that "funding should follow the child", with the belief that this would ensure that a child would bring sufficient resources to the school for their education. However, the concept was not universally supported, with some concern that less popular schools would lose out and find it difficult to meet their obligations.

There was no clear consensus as to what 'funding should follow the child' meant to respondents; for example whether money would be held at a local authority level or allocated to the school.

Organisations and individual respondents put forward a number of factors for consideration in designing a formula.

  • Taking account of additional support needs (both generally and with specific mentions of blind and deaf children, forces children and mental health);
  • Deprivation. There were a variety of views on what should be used with criticisms of allocations using both Free School Meals and SIMD [1] . Principally the criticism of SIMD was that it did not favour deprived children who lived in affluent areas. Schools in "good areas" may suffer. A few individual respondents argued that Free School Meals do not accurately track disadvantage because some of those who are eligible do not take them up due to a perceived stigma attached to them;
  • Rurality/islands. It was pointed out that staff and buildings in smaller schools were relatively expensive as a proportion of costs. A few individual respondents also noted that schools in rural areas might need extra funding for transport;
  • Age and state of school buildings. Some individual respondents felt that the age and state of school buildings should be considered. Older buildings are more expensive to maintain or might need to be renovated or replaced;
  • Some respondents stated that certain children should attract additional premiums that might follow them. This would include poorer children, or children with ASN, so that they would bring resources that might otherwise be withheld due to the affluence of the area. A number of other respondents disputed this, with a claim that more affluent areas would benefit compared to poorer areas, both because of a move from existing formulae and more "successful" schools doing better with placing requests;
  • A group of respondents claimed that, without incentives, heads would be unwilling to take children with additional needs ( e.g. ASN, EAL). Others wished that local authorities would continue to manage resources for ASN so that economies of scale could be utilised;
  • Payment by results or attainment was criticised as it was believed this would create a range of perverse incentives and unnecessary competition between schools.

8.3 Functions at differing levels

Responses on what further financial responsibilities should be devolved to schools yielded a similar range of responses to questions in the wider review.

A large number of organisational respondents and around half of the individual respondents who commented on this issue were against any further devolution to schools, as creating further bureaucracy for headteachers, who should concentrate on leading, teaching and learning. Individual respondents were also concerned that headteachers do not have the required level of proficiency in accounting.

However, a few organisations and roughly half of the individual respondents who commented on the issue wished for schools to have greater flexibility and devolution over matters such as staff recruitment, procurement and a very small number who wished for schools to make decisions about ASN. Some of these individual respondents highlighted, as an advantage of more control over funding at school level, that head teachers know the individual needs of their school.

Conversely there were a number of responses who felt that HR, payroll, procurement and other support functions should be held at a higher level than the individual school. Economies of scale might be available to wider areas and some respondents suggested this could be done at a local authority while others that certain functions could be held at a regional level.

In particular, devolution of certain large expenditures was seen as creating an element of risk for schools, particularly in the cases of long-term sickness or the mix of long-serving staff, who might be more expensive, as well as capital, building and maintenance costs.

Local authorities were alternately supported for having knowledge over a wide range of support and wider social services that could help schools and individual children. However, others saw local authorities as encumbering school initiatives or pursuing varying policies at an inconvenience to other stakeholders or with patchy success.

8.4 Transition issues

The following issues with transitioning to a new system were noted:

  • Existing legal responsibilities - including whether the school would be the employer (not the local authority) and how VAT would still be reclaimed to avoid a 20 per cent uplift in purchasing costs;
  • Clarity would be required on the status of existing PFI liabilities and ownership of the school estate;
  • Borrowing powers would need to be clarified, as mostly these lie with local authorities;
  • Several respondents required assurance that they would not lose funding under a new system;
  • Heads would require training in financial management, or resource within their schools, should they take on new responsibilities.


Email: Stephanie Gray

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
Regent Road

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