Agenda item

Report of the Director of Children’s and Education Services

Cabinet considered a report of the Director of Children’s and Education Services that set out the results of the 2026/27 Fair Funding Consultation and sought approval for recommended changes to the Fair Funding Scheme of Delegation and recommended operation of the 2026/27 Fair Funding Formula.

The Fair Funding Consultation 2026/27: Summary of Responses; De-delegation levels approved for 2025/26; and Fair Funding Consultation 2026/27, were attached as Appendices to the report.

The report indicated that under Section 48 of the School Standards and Framework Act 1998, Local Authorities (LAs) were required to have schemes of delegation which set out the financial controls and arrangements that would operate between maintained schools and the LA. Any proposed revisions to these schemes and/or the Fair Funding Formula (which impacts all mainstream schools) must be the subject of consultation and required approval by the Schools Forum.

The Department for Education (DfE) introduced its National Funding Formula (NFF) for LAs in 2018/19, whereby mainstream school allocations for LAs were determined under the NFF approach, but LAs retained a level of flexibility over how they chose to distribute that funding amongst their schools. In Coventry the decision since 2018/19 had been to mirror the NFF allocation for schools as far as possible (subject to overall affordability). In the future it was expected that local flexibility would be removed from LAs, and the Council’s approach would minimise funding volatility when this occurred.

In a standard funding cycle indicative NFF allocations and operational guides were published in July. Final NFF allocations were issued in December. This year LAs were informed that 2026/27 indicative NFF allocations would not be published in July 2025 and instead would be delayed until November 2025. In recognition of this delay, to support schools and LAs with financial planning the DfE published a policy note in June 2025. In this they confirmed there would not be any significant changes to the operation of the mainstream school NFF in 2026/27 compared to 2025/26.

The Coventry Fair Funding Consultation document was circulated on 7th November 2025 to Head Teachers including Academy Head Teachers/Principals, Chairs of Governing Bodies, relevant Councillors, Trade Unions, Diocesan authorities, the Coventry Governors Association and members of the Schools Forum. The consultation period ended after 2 weeks on 21st November 2025. Stakeholder groups were briefed throughout the consultation period, these included Primary Finance representative Head Teachers and the Schools Forum. The consultation document also sought to act as an information document to school stakeholders regarding anticipated cost pressures.

The National Funding Formula continued to be in a ‘soft’ phase. This meant that the DFE would run the NFF for each individual school and the total of Coventry schools’ allocations would become the total budget available for schools in Coventry. The LA was still required to go through the usual budget setting process and run the local schools funding formula for maintained schools and academies to distribute the resource. The Council’s expectation was that the DFE would eventually operate a direct NFF, through which it would allocate funding directly to mainstream schools without LA involvement. Timescales for this were unclear. In a recent letter sent to the Secretary of State for Education by the Leader, Cabinet Member for Education and Skills and Chair of the Coventry Schools Forum regarding the financial challenges facing schools, it was highlighted that local decision-making flexibility added value and should be maintained. 

Mainstream schools were receiving two additional or supplementary grants in 2025/26 over and above their NFF allocations: Schools Budget Support Grant (SBSG) - to support the cost of officers and teachers pay awards in 2025/26, and National Insurance Contributions (NICs) grant - to fund the increase in employer national insurance contributions from April 2025. The DfE had confirmed that from 2026/27 these would be rolled into the NFF meaning they would no longer be received as separate grants. The SBSG would be annualised to reflect the fact that there was only a part year impact of the September 2025 teachers pay award in 2025/26. The annualisation of SBSG would result in additional funding in 2026/27 compared to 2025/26, however it was important to note that schools would have to fund the full year effect of the September 2025 pay award from this. Excluding the rolling in of existing supplementary grants and the annualisation of SBSG, the indicative 2026/27 NFF factor values would increase by ca. 2.1% on average compared to 2025/26. The equivalent figure in 2025/26 was an increase of 0.5%. 

The pure NFF (without any protection) delivered less resource for Coventry schools as there were still some schools in Coventry who were on the funding floor and were receiving protection funding. The DFE’s policy note confirmed that for 2026/27 the Minimum Funding Guarantee (MFG) which protected schools against significant year-on-year change in pupil led funding, must be set between -0.5% & 0%. This was the same level as was prescribed in 2025/26. Alongside the MFG, LAs must also include a Minimum per Pupil Levels (MPPLs) protection mechanism in their formula which guaranteed a minimum amount of funding for every pupil. It was not clear what protection arrangements would be in place after 2026/27 although it was not anticipated that the full protection would be immediately removed from 2027/28 as any significant reductions would be likely to have a detrimental impact on school financial sustainability. Any changes would be subject to further DFE announcements.

RESOLVED that Cabinet:

1)  Approves the recommended operation of the 2026/27 Fair Funding Formula and changes to the Fair Funding Scheme of Delegation, which are summarised in section 2 of the report.

2)  Delegates authority to the Director of Children’s and Education Services, following consultation with the Cabinet Member for Education and Skills, to:

a)  make (subject to prior consultation with the Schools Forum) such minor and technical variations to the Fair Funding Scheme of Delegation as is deemed necessary; and

b) make any necessary amendments to the final detail of these recommended changes, in order to comply with the School Finance (England) Regulations once full detail of the schools funding settlement has been published by the Department for Education for 2026/27. Any such changes will be made following discussion with the Schools Forum as appropriate.