New funding formula has seen cuts for poorer schools while less deprived receive more

More than 30 per cent of the least deprived schools have seen funding increase, while well over half of the poorest schools face real-terms cuts

New funding formula has seen cuts for poorer schools while less deprived receive more (Photo by Leon Neal/Getty Images)

The most deprived schools are losing out on funding due to cuts which have seen a “relative redistribution” of resources to schools in wealthier areas, a new report has found.

The National Audit Office (NAO) found that the national funding formula for England has resulted in cuts for many poorer schools, despite claims of “levelling up” from government.

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At a glance: 5 key points

– The NAO’s report found 37 per cent of the least deprived fifth of schools saw a rise, with an additional £266million allocated to 3,150 schools in 2020-2021, although none were in the poorest fifth.

– A total of 58 per cent of the fifth most deprived schools have seen real-terms cuts to per pupil funding, rising to 83.6 per cent in Inner London

– Cities like Nottingham and Birmingham, which have high levels of deprivation have seen cuts to funding while those areas with low levels of deprivation in the South West and South East received increases

– Since 2017-2018, average funding per pupil for the most deprived fifth of schools has fallen by 1.2 per cent in real-terms, to £5,177

– Over the same period, funding for the least deprived fifth has increased by 2.9% in real terms, to £4,471

What’s been said?

The head of the NAO Gareth Davies said: “The Department for Education has met its objective of making the way it allocates school funding more transparent and consistent. However, it is less clear whether it has met its objective of allocating funding fairly.

“Although more deprived areas and schools continue to receive more per-pupil funding than those that are less deprived, the difference in funding has narrowed.

“The department must evaluate whether this funding model is matching resources to need.”


The national funding formula was first introduced in 2018-19.

It mandated a minimum per-pupil funding level, but as most deprived schools were already receiving above the minimum they didn’t see an increase.

While overall funding from the Department for Education (DfE) to schools rose from £36.2 billion in 2014-15 to £43.4 billion 2020-21, an increase in pupil numbers meant it amounted to a real terms per pupil increase of just 0.4%.

At the same time the DfE estimated that between 2015-16 and 2019-20, cost pressures on schools outstripped funding increases by £2.2 billion, mainly because of rising staff costs.