The School Finance (England) Regulations 2011

Made: 11th February 2011

Laid before Parliament: 18th February 2011

Coming into force: 15th March 2011

The Secretary of State for Education makes the following Regulations in exercise of powers conferred by sections 45A[^f00001], 45AA[^f00002], 47[^f00003], 47ZA[^f00004], 47A(4)[^f00005], 48(1) and (2)[^f00006], 49(2) and (2A)[^f00007] and 138(7) of, and paragraph 2B[^f00008] of Schedule 14 to, the School Standards and Framework Act 1998[^f00009] and section 24(3) of the Education Act 2002[^f00010].

PART 1 — Introduction

Citation, commencement, application and interpretation

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• (1) These Regulations may be cited as the School Finance (England) Regulations 2011 and come into force on 15th March 2011.

• (2) These Regulations apply in relation to the financial year beginning on 1st April 2011.

• (3) These Regulations apply only in relation to England.

• (4) In these Regulations—

• “the 1996 Act” means the Education Act 1996[^f00011];

• “the 1998 Act” means the School Standards and Framework Act 1998;

• “the 2000 Act” means the Learning and Skills Act 2000[^f00012];

• “the 2002 Act” means the Education Act 2002;

• “the 2005 Act” means the Education Act 2005[^f00013];

• “the 2006 Act” means the Education and Inspections Act 2006[^f00014];

• “the 2009 Act” means the Apprenticeships, Skills, Children and Learning Act 2009[^f00015];

• “the 2008 Regulations” means the School Finance (England) Regulations 2008[^f00016];

• “admission number” means the number of pupils in any relevant age group intended to be admitted in any school year as determined or, where the context requires, proposed to be determined by an admission authority in accordance with section 88D of the 1998 Act;

• “advanced skills teacher” is defined in section 2 of the School Teachers’ Pay and Conditions Document 2010 and Guidance on School Teachers’ Pay and Conditions (referred to in S.I. 2010/1979), which document can be found at www.education.gov.uk;

• “capital expenditure” means expenditure of a local authority which falls to be capitalised in accordance with proper practices, or expenditure treated as capital expenditure by virtue of any regulations or directions made under section 16 of the Local Government Act 2003[^f00017];

• “CRC” means the CRC Energy Efficiency Scheme operated by the Environment Agency;

• “central expenditure” means the total amount deducted by a local authority from their schools budget;

• “CERA” means capital expenditure which an authority expect to charge to a revenue account of the authority within the meaning of section 22 of the Local Government Act 2003;

• “children in need” means children in respect of whom the local authority in whose area they reside must provide a range and level of services appropriate to their needs under section 17 of the Children Act 1989[^f00018]; a “combined service” is a service funded partly from central expenditure, and partly from other budgets of the authority or contributions from other bodies;

• “Dedicated Schools Grant” is a grant of that name paid to a local authority by the Secretary of State under section 14 of the 2002 Act; a reference to a determination or redetermination of a budget share or amount to be allocated is for the funding period, unless otherwise stated;

• “early years provision” has the meaning assigned to it in section 20 of the Childcare Act 2006[^f00019];

• “expenditure on the schools specific contingency” is central expenditure deducted for the purpose of ensuring that monies are available to enable increases in a school’s budget share after it has been allocated where it subsequently becomes apparent that— a governing body have incurred expenditure which it would be unreasonable to expect them to meet from the school’s budget share, an increase in the school’s budget share is due in accordance with the local authority’s formula, a determination or redetermination of the school’s budget share authorised by the schools forum or the Secretary of State has led to such an increase, or such an increase is necessary to correct errors, and where such circumstances were unforeseen when initially determining the school’s budget share;

• “funding period” means the financial year beginning on 1st April 2011;

• “gifted and talented pupils” means pupils in primary or secondary schools identified as such by a local authority by virtue of the fact that they are demonstrating, or have the potential to develop, ability in one or more subjects, leadership skills or organisational skills at a level significantly ahead of other children in their year group;

• “institution within the further education sector” has the meaning given in section 91(3) of the Further and Higher Education Act 1992[^f00020];

• “key stage 4” means the fourth key stage of the National Curriculum for England comprising the requirements and entitlements described in sections 85 and 85A of the 2002 Act[^f00021]; a “local authority’s formula” has the meaning in regulation 9; a reference (however framed) to a maintained nursery school, a community, foundation or voluntary school or a community or foundation special school includes a proposed school which, on implementation of proposals for the establishment of the school, will be such a school, and which has a temporary governing body; a reference to a particular class or description of expenditure in relation to maintained schools and to pupils registered at such schools includes such expenditure of that class or description as the authority may incur in relation to Academies, and to pupils registered at Academies;

• “non-domestic rate” has the meaning given in section 54 of the Local Government Finance Act 1988[^f00022];

• “Performance Reward Grant” is a grant of that name paid to a local authority under section 31 of the Local Government Act 2003 to reward the authority for improvements in local services;

• “PFI scheme unitary payment” means a charge payable by a local authority under a private finance transaction, as defined in regulation 16 of the Local Authorities (Capital Finance) Regulations 1997[^f00023];

• “practical and applied learning” means education provided to pupils at key stage 4 in a secondary school or elsewhere which prepares them for employment or for a qualification related to a particular employment sector;

• “prescribed early years provision” means early years provision prescribed for the purposes of section 7(1) of the Childcare Act 2006;

• “previous funding period” means the financial year beginning on 1st April 2010;

• “primary or secondary school” means a primary or secondary school which is a community, foundation, voluntary or maintained nursery school;

• “proper practices” means those accounting practices which a local authority are required to follow by virtue of any enactment, or which, so far as they are consistent with any such enactment are generally regarded, whether by reference to any generally recognised published code or otherwise, as proper accounting practices to be followed in the keeping of the accounts of local authorities, either generally or of the description concerned[^f00024];

• “provider”, in relation to prescribed early years provision, may be a governing body of a school or a relevant early years provider;

• “prudential borrowing” means borrowing money for the purpose of facilitating the modernisation and rationalisation of the school estate, where the revenue savings that will be achieved are equal to or more than the expenditure that will be incurred in borrowing the money;

• “relevant early years provider” means a provider of prescribed early years provision, other than the governing body of a maintained school;

• “relevant early years provision” means prescribed early years provision provided by a relevant early years provider;

• “school year” has the meaning given in section 579(1) of the 1996 Act[^f00025]; a reference to “special educational needs transport costs”, for the purposes of paragraph 37(e) of Schedule 2, is a reference to the costs of home to school transport for pupils with special educational needs in schools maintained by a local authority where the authority are meeting such costs because the revenue savings that will be achieved by placing such children in a school maintained by them are equal to, or greater than, the cost of such transport;

• “specific grant” means any grant (other than the Dedicated Schools Grant or any grant made by the YPLA under section 61 of the 2009 Act) paid to a local authority under conditions which impose restrictions on the particular purposes for which the grant may be used;

• “summer term” means the third term of the school year where a school has three terms, or the fifth and sixth terms where a school has six terms; a reference to “termination of employment costs”, for the purposes of paragraph 37(b) of Schedule 2, is a reference to expenditure relating to the dismissal or premature retirement of, or for the purpose of securing the resignation of, any person employed in a maintained school;

• “unavoidable costs” means costs which must be incurred by virtue of a statutory requirement;

• “YPLA” is the Young People’s Learning Agency for England.

• (5) In these Regulations, a reference to “a mainstreamed grant” means a specific grant which has been merged into the Dedicated Schools Grant for the financial year commencing 1st April 2011 but was paid to local authorities by the Secretary of State as a separate grant under section 14 of the 2002 Act, in addition to the Dedicated Schools Grant, for the financial year commencing 1st April 2010 and includes any of the following grants—

• (a) School Standards Grant,

• (b) School Standards Grant (Personalisation),

• (c) School Development Grant (Standards Fund only),

• (d) School Lunch Grant,

• (e) Ethnic Minority Achievement Grant (EMAG),

• (f) 1-2-1 Tuition Grant,

• (g) Extended Schools – Sustainability Grant,

• (h) Extended Schools – Subsidy Grant,

• (i) Targeted Support for the Primary National Strategy allocated to schools (consisting of Universal and Targeted elements, Every Child elements, Leading Teachers element, Early Years Foundation Stage element and Modern Foreign Languages element),

• (j) Targeted Support for the Secondary National Strategy allocated to schools (consisting of Universal and Targeted elements and Leading Teachers element),

• (k) Diploma Formula Grant,

• (l) London Pay Addition Grant.

Revocation of previous Regulations

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The School Finance (England) Regulations 2006[^f00026] and the School Finance (Amendment) (England) Regulations 2007[^f00027] are revoked on 1st April 2011.

PART 2 — Action to be Taken by a Local Authority

CHAPTER 1 — Appropriation of the Non-Schools Education Budget

The Non-Schools Education Budget

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The following classes or descriptions of local authority expenditure are prescribed for the purposes of section 45A(1) of the 1998 Act and the determination of a local authority’s non-schools education budget, subject to the exceptions in regulation 6—

• (a) those specified in Schedule 1; and

• (b) any expenditure which falls outside the classes or descriptions of expenditure specified in regulation 5 and Schedule 2 (the schools budget).

CHAPTER 2 — Determination of Schools Budgets, Individual Schools Budgets, and Budget Shares

Initial determination of a local authority’s schools budget

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A local authority must not later than 31st March 2011—

• (a) make an initial determination of their schools budget; and

• (b) give notice of that determination to the governing bodies of the schools they maintain.

The schools budget

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• (1) The classes or descriptions of local authority expenditure specified in sub-paragraphs (a) to (d) and Schedule 2 are prescribed for the purposes of section 45A(2) of the 1998 Act and the determination of a local authority’s schools budget, subject to paragraph (2) and the exceptions in regulation 6—

• (a) expenditure on the provision and maintenance of maintained schools and on the education of pupils registered at maintained schools;

• (b) expenditure on the education of pupils at independent schools, non-maintained special schools, pupil referral units, at home or in hospital, and on any other arrangements for the provision of primary and secondary education for pupils otherwise than at schools maintained by a local authority;

• (c) all other expenditure incurred in connection with the authority’s functions in relation to the provision of primary and secondary education, in so far as that expenditure does not fall within sub-paragraph (a) or (b); and

• (d) expenditure on early years provision, in so far as that expenditure does not fall within sub-paragraph (a), (b) or (c).

• (2) Where a local authority operates a combined service for the benefit of pupils referred to in paragraph (1), expenditure referred to in paragraph 37(c) of Schedule 2 is only expenditure prescribed for the purposes of section 45A(2) of the 1998 Act and the determination of a local authority’s schools budget where that expenditure is incurred in providing an educational benefit to those pupils.

Exceptions

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A local authority’s non-schools education budget or schools budget must not include the following classes or descriptions of expenditure—

• (a) capital expenditure, other than—

• (i) CERA,

• (ii) capital expenditure appropriated to the schools budget for the purpose of funding pay arrears due to staff whose salaries are met from the schools budget;

• (b) expenditure on capital financing, other than expenditure incurred—

• (i) on prudential borrowing,

• (ii) for the purpose of meeting the costs of financing the payment of pay arrears referred to in paragraph (a)(ii); and

• (c) expenditure for the purposes of section 26 of the Road Traffic Regulation Act 1984[^f00028] (arrangements for patrolling school crossings).

Determination of the individual schools budget for the funding period and limit on increase in central expenditure

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• (1) Subject to paragraphs (2) to (4), not later than 31st March 2011, a local authority must deduct from their schools budget such of the classes or descriptions of planned expenditure set out in Schedule 2 (“the central expenditure”) as they propose to deduct, in order to determine their individual schools budget.

• (2) In deducting the central expenditure under paragraph (1), a local authority must ensure that—

• (a) where the authority’s schools budget increases from the previous funding period to the funding period, the percentage of any increase in the central expenditure does not exceed the percentage of the increase in the schools budget,

• (b) where the authority’s schools budget decreases from the previous funding period to the funding period, the central expenditure decreases and that the percentage of the decrease is not less than the percentage of the decrease in the schools budget,

unless they obtain authorisation to exceed these limits from their schools forum under regulation 13(1)(a) or the Secretary of State under regulation 13(3).

• (3) In deducting the central expenditure referred to in paragraph 37 of Schedule 2, a local authority must not exceed the limit referred to in that paragraph, unless they obtain authorisation to do so from their schools forum under regulation 13(1)(c) or the Secretary of State under regulation 13(3).

• (4) Where a local authority carries forward a deficit in the central expenditure from the previous funding period to the funding period, which reduces the amount of the schools budget available, the funding of this deficit from the schools budget must be authorised by their schools forum under regulation 13(1)(d) or the Secretary of State under regulation 13(3).

• (5) References to planned expenditure in this regulation are references to that expenditure net of—

• (a) all related specific grants;

• (b) all related fees, charges and income; and

• (c) any funding received from the Secretary of State in respect of PFI scheme unitary payments.

• (6) For the purposes of this regulation, a local authority must adjust the schools budget for the previous funding period to include any mainstreamed grant.

Consultation

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• (1) A local authority may make changes to the formulae they have used in the financial years beginning 1st April 2008, 1st April 2009 and 1st April 2010.

• (2) Subject to paragraph (3), a local authority must consult their schools forum about any proposed changes under paragraph (1), in relation to the factors and criteria taken into account, and the methods, principles and rules adopted.

• (3) Paragraph (2) does not apply to changes made relating to matters referred to in regulation 20 (sixth form funding) or 23 (excluded pupils).

Formulae for determination of budget shares etc

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• (1) A local authority must, before the beginning of the funding period and after consulting their schools forum about the matter, decide upon the formula which they will use to determine and redetermine the budget shares for schools maintained by them (other than nursery schools).

• (2) Subject to paragraph (3), a local authority must use the formula determined under paragraph (1) in all determinations and redeterminations of school budget shares in respect of the funding period.

• (3) A local authority must, before the beginning of the funding period and after consulting their schools forum about the matter, decide upon the formula they will use to determine and redetermine—

• (a) the budget shares for nursery schools maintained by them;

• (b) the amounts to be allocated in respect of nursery classes in schools maintained by them;

• (c) the amounts to be allocated to relevant early years providers in their area.

• (4) A local authority may not make changes to their formulae after the funding period has commenced.

Determination of allocation of budget shares etc for the funding period

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• (1) Not later than 31st March 2011, a local authority must determine—