In this article we provide an overview of a recent report into recent capital funding awards for the education sector, including information on available financing streams

In the financial year 2022-23 capital spending by the Department for Education (DfE) was around £5.3bn in cash terms and £5.5bn in real terms (2023-24 prices), according to a recently-published House of Commons Library (HCL) report.

This includes capital spending on schools as well as other establishments such as early years or further education providers.

Overall, between 2009-10 and 2022-23, DfE capital spending declined by 28% in cash terms and 46% in real terms.

And planned capital spending for 2023-24 is around £7bn, which is a 28% real-terms increase compared to 2022-23, the HCL report, entitled School Buildings and Capital Funding (England), states.

But what does this mean for the estate, and what are the main challenges it faces moving forward?

The report, by Shadi Danechi and Robert Long, provides some insight.

A 10-year plan

On 29 June 2020 the Government announced what the then Education Secretary described as ‘a 10-year, multi-wave rebuilding programme for schools’ to replace ‘poor-condition and ageing school buildings, with modern, energy-efficient designs’.

This was underpinned by £1bn in capital funding to be spent

on 50 initial projects, with work due to begin in autumn 2021.

The Secretary of State also announced £560m of additional condition funding for the school system to help support essential maintenance projects, on top of the £1.4bn already provided for school maintenance in financial year 2020-21.

The first 100 projects for the School Rebuilding Programme (SRP) were announced in two stages in February 2021 and July 2021.

And there was a consultation between July and October 2021 on prioritising schools for further phases of the programme.

The Government published its response on how schools would be funded in February 2022, stating that up to 300 further schools would be prioritised in 2022-23, with a delivery rate of 50 per year.

In July 2022 another 61 school refurbishments were announced, with the Government stating this would ‘include updating and modernising buildings, and creating state-of-the-art facilities such as new sports halls, music rooms, science labs, and dining areas’.

Then, in December 2022, 239 schools were added to the list, bringing the total number of schools in the programme to 400.

But, in response to a parliamentary question in May last year, the DfE confirmed that at that time four projects had been completed, and work had started at 170 schools since the programme began in 2021. 

Capital funding

For schools, there are currently three main sources of capital funding, according to the HCL report: 

1. Basic need capital allocations: These are made to local authorities to provide new mainstream pupil places by expanding existing schools or by establishing new schools. This is in addition to places provided by centrally-delivered programmes, such as the free school programme.

Basic need capital allocations are calculated by comparing school capacity with forecasted pupil numbers. This means that changes in allocations are driven by the difference between existing capacity and changes in demand for places.

In the financial year 2022-23 the Government paid around £0.5bn to local authorities to create new school places needed for September 2023. This was the third-lowest amount since 2011-12 (2023-24 prices).

One reason for this decrease in spending in recent years is due to less demand for new primary school places.

The Government has allocated around £0.7bn of planned basic need spending for 2023-24

2. School condition funding: School condition funding is the money allocated by the Government each year to improve and maintain the school estate (buildings and grounds. It is distributed through three separate allocations:

– Devolved formula capital (DFC) allocations: Direct funding for

individual schools rather than via local authorities. Allocations are based on a formula which takes school type and pupil numbers into account. From 2015-16 to 2023-24 the DFC allocations very gradually declined in real terms. They were worth around £2.1bn for the whole period in real terms, which equates to around £200m per year. In 2023-24 the DFC allocation for England was around £200m, 7% higher in cash terms than in 2015-16, but 14% lower in real terms.

– School condition allocations (SCA): This is funding for organisations responsible for large numbers of schools and is based on a formula which takes school type and pupil numbers into account. In 2023-24 the SCA allocation was around £1.6bn, 32% higher in cash terms than in 2015-16, and 6% higher in real terms.

– Condition improvement fund (CIF) allocations: Smaller schools that are not eligible for SCA can apply for CIF funding for individual projects ‘to address significant condition needs’. The CIF replaced the Academies Capital Maintenance Fund (ACMF) and the Building Condition Improvement Fund (BCIF). In 2023-24 the CIF allocated £456m to 859 successful schools and sixth-form colleges (an average of around £500,000 per school).  This total allocation is an 8% decline in cash terms compared to the previous year and an 11% decline in real terms. However, the allocation per successful school increased by 20% in cash terms and 17% in real terms.

 

 

3. High needs provision capital allocations: Local authorities also receive separate funding to provide new school places for children with special educational needs and to improve existing provision.

The DfE has published the allocations for 2022-23 (£1.2bn), and 2023-24 (£354m). These were both higher than the 2021-22

allocation (£300m).

And £2.6bn was announced for high needs capital funding over the spending review period (financial years 2022-23 to 2024-25).

Taking into account the amounts that the DfE has allocated for 2022-23 and 2023-24, this suggests that £1.05bn is expected to be allocated for 2024-25.