Four significant changes have emerged after the Department for Education set out how local authorities are to be given allocations through the National Funding Formula (NFF) in 2025-26.
Local authorities have generally moved closer to following the NFF for next year, Department for Education data shows, although nearly one in six are still not mirroring the formula.
The DfE has published how local authorities are allocating the Dedicated Schools Grant in their areas for 2025-26, including how many councils are not delivering the recommended minimum per-pupil funding levels.
The NFF sets out how funding for schools should be distributed across various factors, including free school meals, deprivation and pupils with English as an additional language (EAL).
In 2025-26 it will incorporate grants for teacher pay and pensions, which had previously been allocated separately. This means that funding factors in the formula have increased slightly on previous years.
The NFF has been “tightened” for 2025-26, meaning that local authorities that were outside of any recommended funding on a factor by more than 2.5 per cent were required to increase their allocation by 10 per cent to get it closer to the NFF’s recommended funding value.
1. More funding deducted through ‘capping and scaling’
There has been a slight rise in the number of local authorities placing a cap on pupil funding increases for next year, the DfE data shows.
Local authorities can use “capping and scaling” to set a limit - the “cap” - in the NFF at which increases in per-pupil funding are deducted. The scale sets the percentage of funding above the cap that is deducted. Funding cannot be reduced below the minimum funding guarantee.
For 2025-26, some 45 local authorities are using capping and scaling, and deducting £65 million in funding through this. This is an increase compared with the 41 local authorities that used it to deduct £48 million in 2024-25.
2. The 25 local authorities not mirroring the NFF
Of 152 local authorities, 25 are not paying within 2.5 per cent of the NFF value across at least one factor. For example, Camden is outside these bounds on factors such as free school meals, EAL, mobility and deprivation.
This is a full list of the local authorities with at least one factor more than 2.5 per cent outside of the NFF values:
- Camden
- Hackney
- Kensington and Chelsea
- Southwark
- Wandsworth
- Westminster
- Brent
- Croydon
- Merton
- Sandwell
- St Helens
- Manchester
- Stockport
- Barnsley
- Sheffield
- Kirklees
- Bristol
- Brighton and Hove
- Swindon
- Slough
- Wokingham
- Medway
- Telford and Wrekin
- Hertfordshire
- Surrey
3. Three councils allowed to pay below minimum levels
The NFF sets a minimum per-pupil funding level - £4,955 for primary pupils, £6,221 for key stage 3 students and £6,831 for KS4 students.
Most councils use the same minimum funding level - apart from three, which were allowed to set a lower minimum value because of them having safety valve agreements in place, intended to ease high-needs deficits.
North Tyneside set a minimum of £4,932 for primary, £6,192 for KS3 and £6,800 for KS4. Bracknell Forest set a minimum of £4,930 for primary, £6,196 for KS3 and £6,806 for KS4.
Finally, Kent set a minimum of £4,910 for primary, £6,184 for KS3 and £6,742 for KS4.
North Tyneside was also allowed to set a minimum funding guarantee below the usual limit of -0.5 per cent, at -0.67 per cent. This means schools in the area were only guaranteed they would not see a decrease in per-pupil funding of more than 0.67 per cent compared with the previous year.
Most councils (123) set a minimum funding guarantee of 0 per cent, meaning schools will not see per-pupil funding decrease from the year before.
4. Increase in falling rolls funds
The number of councils operating a falling rolls fund for next year will be 29, compared with 22 in 2024-25. The total value of the falling rolls fund is £10.7 million, up from £9.3 million.
This money is to support schools experiencing falling pupil rolls. Pupil numbers are continuing to drop, and are set to fall by 3 per cent between 2025 and 2029.
There was also a slight fall in the number of local authorities operating a growth fund, from 136 to 132 for 2025-26. Growth funds, which are designed to support growth in pupil numbers, total £105.7 million in 2025-26, down from £146 million.
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