Local education authority spending

Standard Note: Last updated: Author: Section SN/SG/5640 14 July 2010 Paul Bolton Social & General Statistics

Local education authorities (LEAs) distribute or spend the large majority of resources for school education in England. Most of this is passed on to their maintained schools or paid in fees to other providers. They retain the remainder to spend on services at a school level and to carry out their statutory duties which include supporting pupils with special educational needs, home-to-school transport and Educational Psychology Services. The role of LEAs and the funds that they retain has been a subject of public and political interest for some time. The focus on their role has sharpened recently due to the growth in academies, which are independent of LEAs, and particularly the expansion in academies and so-called Free Schools by the new Coalition Government. Academies receive funding directly rather than through LEAs. Part of their funding is meant to support services that would have been previously been provided by the LEA. Some of this is reclaimed from LEA funding. Large numbers of academies could have a major impact on the role of LEAs, especially if costs are fully clawed back from the LEA. Local authorities still retain a range of functions which they would still provide regardless of the number of academies and they may provide further services to academies who decide to buy back them from their former LEA. This note breaks down the latest budget figures for 2009-10 to illustrate the scale and types of education expenditure that local authorities are responsible for. It also looks at what areas of funding can be reclaimed from LEAs to support academies and some trends in planned spending by type. All the underlying data is taken from LEA budgets statements that are required under section 251 of the Apprenticeships, Skills, Children and Learning Act 2009. These were formerly known as Section 52 budget statements. All these figures are available on the data archive section of the Department for Educations website. This can be viewed at national, LEA or school level. Local authority spending on education is now included with childrens services. This note uses LEA as shorthand for education responsibilities and associated spending of local authorities.

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2009-10 budget

In 2009-10 local authority gross planned expenditure on education was 41.2 billion. The large majority of this was devolved to schools through either their Individual Schools Budget (28.0 billion) or devolved grants (4.0 billion). The remaining 9.2 billion referred to here as LEA spending- is either spent by the local authority or delegated to schools/other providers for specific purposes Local authority education spending is split between the Schools Budget and LEA budget 1 . The former includes spending which is generally carried out at a school level, whether devolved to the school or retained by the LEA. It includes funding for early years provision, support and provision for pupils with Special Educational Needs (SEN), Pupil Referral Units and school-specific contingencies. The LEA budget covers what can be viewed as central services not carried within schools and not normally specific to a school level. This includes home to school transport, the Educational Psychology Service, support for school improvement and the overall management of the LEAs education responsibilities. In 2009-10 local authority education expenditure within the Schools Budget was 4.7 billion gross (3.4 billion net) or 11% of the Schools Budget. Spending on the LEA budget was 4.1 billion gross, or 3.2 billion net in 2009-10. Local authorities fund education spending from a range of sources. The large majority comes in the form of Dedicated Schools Grant from central government. This was worth 29.6 billion in 2009-10 and represents core funding for all ages (including early years) up to the end of compulsory education. Other important sources of income are specific grants from central government which are either devolved directly to schools, or spent by the local authority, funding for school sixth forms from the Learning and Skills Council, fees/charges, Council Tax revenue and a share of funding paid as Formula Grant for general local authority services. The allocation specific funding is not under the control of for the local authority so is netted off gross budgets. In other words general funding sources are are used to fund net spending. Most Income that is netted off is from specific grants (4.8 billion in 2009-10). This explains some of the large differences in gross and net budgets.

Between 2003-04 and 2008-09 this was known as Total LEA Central Functions within the LEA budget. Since then it is the Other education and community budget and the Local authority education functions sections of their budget. The coverage remains consistent and excludes the Youth and Community sections in all years.

A breakdown of the LEA spending by broad category is given below.

LEA budgeted spending in 2009-10, billion
Gross
0.0 SEN Home to school transport Early years PRUs, exclusions and behavioural support Statutory/regulatory duties School improvement Contingencies Retirement and pension costs Capital (charged as revenue) Asset management Non-devolved grants Other
s

Net
1.0 1.5
0.0 0.5 1.0 1.5

0.5

LEA budget Schools budget

t

LEA budget Schools budget

Special educational needs (SEN) makes up the largest amount of LEA spending that is not devolved to schools. This includes provision for pupils with statements, support for pupils with identified SEN, but no statement and fees for pupils at non-maintained and independent special schools. Most of this spending is support for individual pupils with SEN and is therefore within the Schools Budget. The total should not be seen as all spending on SEN as it is specific funding only. It excludes all spending by schools, including special schools, supported by general funding through their Individual Schools Budget. Home-to-school/college transport was the largest single element of LEA spending outside the Schools Budget. It includes specific services for pupils with SEN. Special schools are likely to be much further away from a pupils home than other schools and the SEN element made up nearly 600 million of the 900 million total on transport. Early years spending includes fees paid to private, voluntary and independent providers and central spending on children aged under five. It does not include spending on under fives in maintained schools. LEA planned gross spending on PRUs, exclusions and behavioural support was 740 million in 2009-10. The large majority of this was within the Schools Budget. Non-devolved grants cover a wide range of specific grants that the LEA makes only a small contribution to and hence the large difference between gross and net spending. These data are summarised in the table at the end of this note.

How much funding can be recouped for academies?

The principle of revenue funding for academies is that they receive the same value of funding and support they would have received if they were still maintained. The bulk of this comes from the devolved funding they would have been allocated from their local authority (Individual Schools Budget) and in devolved grants. The amount of Individual Schools Budget funding that can be recouped depends on the type, size and pupil intake and number of schools that convert to academies. An element of academy funding is also included to

cover the additional costs they face for services previously provided by LEAs. A detailed lineby-line breakdown of the education budget that indicates what aspects should be included in their funding has been published at:
www.education.gov.uk/academies/~/media/Files/lacuna/academies/AY1011Fundingv14.ashx

Using these categories in 2009-10 the areas of LEA spending that could potentially go to academies totalled 3.3 billion in total or 36% of gross expenditure. The majority was in the LEA rather than the Schools Budget. The major spending areas included/excluded are listed below:
Included Centrally retained specialist support for pupils with SEN Behaviour support services Supply cover Non-devolved grants Education Welfare Service School improvement Asset management Music services Statutory/regulatory duties Premature retirement costs Excluded Cost of provision for pupils with statements of SEN and high cost SEN without a statement. This can be paid directly to academies for relevant pupils Early years Fees for pupils at independent special schools and abroad Pupil Referral Units Educational Psychology Service Home-to School transport Existing early retirement costs

In some cases, such as the Education Welfare Service, the document explicitly states that the academy can use the funding to buy back the service from its former local authority. This funding is recouped from Dedicated Schools Grant or, in the case of devolved grants and funding for sixth forms, diverted directly to the new academy. However, as indicated earlier, these are not the only sources of LEA income. At present there are costs which are paid to academies which are not recouped from the local authority, so the impacts of the loss of funding have been limited. 2 These non-recouped elements have been estimated at around 275,000 per academy per year. 3 At present there are just over 200 academies in England. The last Government had planned a further 100 for September 2010, but provisions in the Coalition Governments Academies Bill would mean a larger sustained increase in their numbers. The Bills Impact Assessment said that the Department for Education plans to talk to the Department for Communities and Local Government about recouping these local authority central service costs. It also adds that local authorities are unlikely to see any cut in their administration costs from smaller numbers of maintained schools as the marginal benefit of providing support to one less school is said to be zero. 4 To give an indication of the scale of transfers involved a total of 568 million has been recouped from Dedicated Schools Grant in 2010-11 for academies opening in 2008-09 to

2 3 4

This does not include the elements of grant intended to cover costs of VAT and insurance which are separate. Academies Bill Impact Assessment, DFE May 2010 ibid.

2010-11. 5 This only takes account of new academies planned and agreed under the last Government.

Trends in spending

The table below gives the main elements of the education budget since the current reporting arrangements began in 2003-04. It does not give a precise like-for-like comparison over time as some of the detailed spending lines have changed, specific grant levels can vary a great deal depending on Central Government policy and an increasing amount of money has been recouped for academies.
Local authority gross education expenditure, by type
2003-04 billion cash Individual Schools Budget a Devolved grants LEA spending within the Schools Budget Total Schools Budget LEA budget Total Percentage of total Individual Schools Budget a Devolved grants LEA spending within the Schools Budget Total Schools Budget LEA budget 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

20.8 2.2 3.8 26.8 3.0 29.8

22.1 2.8 4.1 28.9 3.1 32.1

23.5 4.0 3.8 31.3 3.2 34.5

25.1 3.8 3.9 32.8 3.4 36.1

26.5 4.3 4.2 35.0 3.5 38.5

27.4 4.3 4.4 36.1 3.9 39.9

28.0 4.4 4.7 37.1 4.1 41.2

69.6% 7.4% 12.9% 89.9% 10.1%

68.9% 8.7% 12.7% 90.3% 9.7%

67.9% 11.6% 11.1% 90.6% 9.4%

69.6% 10.4% 10.7% 90.7% 9.3%

68.8% 11.2% 10.9% 90.9% 9.1%

68.7% 10.7% 11.0% 90.4% 9.6%

67.9% 10.8% 11.4% 90.0% 10.0%

(a) Includes support for schools in financial difficulties and school-specific contingencies Source: Section 52 data archive, DFE

The fastest growing element over these years has been devolved grants to schools. LEAs have no direct control over these. LEA spending within the Schools Budget fell as a proportion of the total. Some of the main changes over these years in this element were cash cuts to non-devolved grants and specific SEN funding and a large increase in spending on early years which was almost double the rise seen in total spending. The LEA budget as a share of the total was very similar in 2003-04 and 2009-10. The main spending area within this budget to increase at an above average rate was statutory/regulatory duties the cost of the authorities overall management of its responsibilities in relation to education. Spending on school improvement fell slightly in cash terms between 2003-04 and 2009-10, but its increase since 2007-08 from 372 million to 606 million was one of the main causes for increases in the LEA budget over the past two years.

Dedicated Schools Grant: Final allocations 2010-11, DFE

Summary of education elements of section 251 budget statement 2009-10, England

million

Gross Schools Budget Individual Schools Budget Devolved grants Contingencies Early years Special Educational Needs PRUs, excluded pupils and behavioural support Capital (charged as revenue) Non-devolved grants Other LEA budget Special Educational Needs Home-to-school transport PRUs, excluded pupils and behavioural support Statutory/regulatoryduties School improvement Retirement and pension costs Capital (charged as revenue) Asset management Non-devolved grants Other Total
Note: LEA spending excludes 'youth and community' Source: 2009-10 section 251 budget statement, DCSF

Net 31,947 27,986 117 395 896 1,245 677 170 34 427 3,218 292 1,023 17 595 485 306 21 156 74 248 35,165

37,118 27,986 4,031 403 1,230 1,456 723 199 591 499 4,105 313 1,058 19 700 606 329 30 242 440 366 41,222