Financing Schools

The article tracks the evolution of the English school finance system from 1988 to 2007. Three main periods are distinguished: Establishing Local Management of Schools (1988—1997); New Labour and Consolidation (1997—2002); and Centralizing Labour (2002—2007). Three key criteria are applied in assessing the system—efficiency, equity and transparency. Until 2002, the degree of financial delegation to schools was steadily extended, thus enabling schools to manage their resources more efficiently. The entire period was marked by tensions between central government and local authorities over methods for determining the amount of central government funding allocated to education at local level. This culminated in the loss of local authority discretion with the introduction of a centrally determined Dedicated Schools Grant. Formula funding of schools is horizontally equitable within each local authority, but the degree of compensatory funding for socially disadvantaged schools remains variable across local authorities. The historical journey through which the school finance system has travelled has produced an a-rational and non-transparent method of funding from central to local government. As this method is at present historical rather than based on a national funding formula for education, it will become increasingly inequitable and will require further amendment.