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Dear Colleague,

Today I am making a series of announcements on education funding with the aim of making the system fairer and less bureaucratic. These announcements cover both capital investment and school revenue funding. The key elements are outlined below.

Capital investment

I am announcing my initial response to Sebastian James’s review of education capital funding. I accept the majority of the review recommendations, subject to consultation.

This consultation will run for twelve weeks and will focus on two key areas. First, the best model for allocating and prioritising capital, recognising the increasing diversity of the schools estate; and secondly the proposals put forward on procurement and project management, calling for a more centralised approach to capture efficiencies and build expertise.

While there are undoubted benefits to implementing these proposals, I would like to hear views from all interested parties.

I am also keen to move forward more quickly on some of the other recommendations. I wish to develop a suite of standardised drawings and specifications for school buildings. I intend to collect condition data so that funding can be better targeted. I will also simplify the school premises regulations. I will consult fully on revised regulations in the autumn.

I am also announcing that an extra £500m of capital funding will be available this financial year for those local authorities where rising pupil numbers is putting severe pressure on school capacity. Details of how allocations will be made will be provided over the summer and finalised in the autumn.

Furthermore, I am pleased to be launching a new privately financed school building programme. This programme will focus on the school buildings in greatest need of repair.

The programme will be available to all publicly funded schools. I am determined that criticisms of the previous model for private financing must be addressed and I will only agree to projects when a series of rigorous value for money tests have been passed.

Local authorities, schools, and organisations with responsibility for schools will be able to submit applications for the programme.

Information and guidance on preparing applications will be available online. Applications can be submitted between 3 and 14 October.

Revenue funding

The Government is also publishing a consultation on school funding reform: Proposals for a fairer system. This follows our earlier consultation in April, on the high level principles of school funding reform. The consultation will run for twelve weeks, closing on Tuesday 11 October.

The proposals in the consultation deal with the historic inequalities which have meant that similar schools in different areas receive very different levels of funding.

The consultation document sets out proposals to reform the system so that it is simpler and more transparent. We propose to introduce a new national formula so that money is allocated more consistently across the country. We also wish to expand the eligibility criteria of the Pupil Premium. The consultation also includes proposals for funding high need pupils and early education.

In order to allow sufficient time for consultation and to ensure that schools and local authorities have sufficient time to plan for possible changes, we are consulting on whether we should implement these reforms from 2013-14 or wait until a later spending period. We will maintain the current funding system for maintained schools for 2012-13. Details of the arrangements for funding academies in 2012/13, following our spring consultation, will be available in due course.

These reforms will bring substantial benefits. However, they will require funding to be moved between schools and areas, and will take time to have effect. We will apply transitional arrangements from the outset to ensure that the reforms are introduced at an appropriate speed that is manageable for schools. These transitional arrangements will limit the year on year change to schools’ budgets so that there is stability in budgets while the reforms are introduced.

Local Authority Central Services Expenditure Grant

We will also be consulting local authorities, the Local Government Association and London councils (in a separate, shorter consultation) on the level and basis for the local authority central services expenditure grant transfer in 2011-12 and 2012-13.

16-19 funding

The department and the YPLA will be carrying out an open consultation on the 16-19 funding formula and methodology in the coming months. ºÚ¶´ÉçÇø on the series of expert panels that schools, colleges, independent providers and their representative bodies have taken part in, we plan to launch the formal part of the consultation in the early autumn, subject to cross government clearance.　

This is slightly later than originally planned but will allow us to align with the consultation on the general principles governing study programmes for 16-18 year olds as set out in Professor Wolf’s review of vocational education. The length of the consultation period will not be affected.

I look forward to receiving your views on today’s announcement. The capital and revenue consultations can be downloaded from the of the website.

The is available to download.

Michael Gove