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News - 7 January 2013

Transparent Funding Formula for schools

Following a consultation, the Government has confirmed arrangements for the new Education Services Grant - funding for local authorities and academies for education services for 2013-14 including the dedicated schools grant (DSG) and indicative allocations of the pupil premium.

Peter Ham Auditor and Head of Schools and Charities at ABDS comments:
“The Education Services Grant (ESG) will be allocated to local authorities and academies on a per-pupil basis. This will remove the link between the amount spent on education services by individual local authorities and the funding allocations for academies.

The funding for the ESG comes from a transfer from local government of £1.04bn in 2013-14, which is £180m less than the Department for Education proposed in July.

Peter Ham continues:
“The reduction in the funding transfer for the ESG means that less money will be transferred from local authority budgets but it does not mean that academies will receive less money through the ESG. Final ESG allocations for academies will be issued by 31 March 2013 along with confirmation of the academy's 2013/14 General Annual Grant.”

The DfE hopes to also protect academies from turbulence by capping year-on-year reductions in their education services funding.

There are two types of transitional protection for academies that will apply in 2013/14 and 2014/15.

  • The ESG rate for academies in 2013/14 and 2014/15 using money from the DoE’s budget. Therefore the rate for academies will be £150 per pupil in 2013/14 and £140 per pupil in 2014/15.
  • The DfE will protect academies from destabilising budget reductions by ensuring that no academy will see more than a 10% reduction from the published 2012/13 LA block LACSEG rate for their local authority.

For those academies whose current per-pupil LA block LACSEG allocations are higher than the published 2012/13 rates, the DfE will ensure that the reduction in their per-pupil funding is no greater than 20% in 2013/14.

There are exceptions:

  • For special academies, a multiplier of 4.25 will be applied to the rate for academies. Special academies will receive £637.50 per pupil in 2013/14 and £595 per pupil in 2014/15. ESG allocations will be calculated using 2013-14 planned places.
  • For alternative provision academies a multiplier of 3.75 will be applied to the rate. AP academies will receive £562.50 per pupil in 2013/14 and £525 per pupil in 2014/15. ESG allocations will be calculated using 2013-14 planned places.

Schools Minister David Laws said:
"We are now reforming the way that local authorities and academies are funded for education services. The funding for education services will be fairer, simpler and more transparent as a result."

Peter Ham continues:
‘’Academies will now have the means to invest in services that best meet their needs, not just the power to choose which services providers they use, but who they perceive to be the best.”

If you need any help and advice with Academy Schools or Charities, contact Lavinia Newman or Peter Ham now to discuss how ABDS can help bring their experience to these matters.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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