Basic Need funding streams

Basic Need

The DfE allocates Basic Need funding each year to local authorities to ensure there are sufficient school places in areas of need. Local authorities are able to use this funding to expand existing schools, including maintained and non-maintained, and fund the establishment of new Free Schools in areas of need.

To support local authorities plan ahead and provide surety of funding, in December 2013, the DfE introduced three-year Basic Need allocations. Local authorities currently know their Basic Need allocations up to 2018/19.

London has seen its share of Basic Need funding decrease, both as a percentage of the overall quantum, and also in cash terms, despite having the greatest shortfall of places and increasingly expensive school expansion projects. The graph below shows that London’s share of Basic Need funding has fallen from a high of £589 million in 2012/13 to just £155 million in 2018/19, a 74 per cent reduction.  In fact, as part of the 2018/19 Basic Need allocations, 13 London boroughs received no Basic Need funding at all despite evidence of a shortfall of places.

The Basic Need shortfall methodology appears to underestimate London’s shortfall. Basic Need allocations for the 2018/19 financial year are based on the calculated shortfall in academic year 2019/20, the critical year when the secondary shortfall rapidly intensifies and overtakes primary.  Even when the pipeline of new Free Schools is factored in, it is not clear why London’s Basic Need funding should have halved in such a short time period.

While London received a 42 per cent share of national funding in 2011/12, it will receive just 14 per cent of the national total in 2018/19 (see below).

Without increasing overall funding, an insufficient Basic Need funding pot will redistribute funding between different regions without fully meeting the need in any region.

Our analysis, combining shortfall analysis with cost per place analysis, suggests that £517 million would be needed to meet the shortfall in the academic year that 2018/19 allocations notionally fund, over three times the £155 million allocated. Basic Need allocations from 2019/20 onwards would therefore need to be multiple times higher than 2018/19 allocations to meet the cost of providing sufficient school places in London and address the under-funding that has already been built into the system.