Capital Funding for Schools

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By Laura Lodge
on 28 April, 2017

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Capital funding for schools must be more coherent

On 26 April, the Public Accounts Committee published their most recent report on ‘Capital Funding for Schools’. The report’s remit was to evaluate the Department for Education’s use of funding for new schools and the creation of additional places in existing educational settings.

Within the report, the committee makes a number of conclusions and recommendations:

The committee is not convinced that the DfE is using funding coherently or in a way that provides best value for money, in order to provide the right amount of school places.

Between 2010 and 2015, 600,000 new places were created at a cost of £7.5 billion. 420,000 further places need to be created by 2021. The location of new school places is of tantamount importance, with some local areas having only 2% spare capacity and others 20%. Schools with large amounts of spare capacity are not financially sustainable, yet free schools are being set up in areas with no shortage of places.

Recommendation: The DfE should demonstrate how it will work with local authorities to understand the demand for school places and define the surplus capacity that needs to be maintained.

It is not clear how the DfE is providing parents with choice, whilst keeping this fair and cost-effective.

Whilst free schools are supposed to provide parents with choice, it is not clear how much spare capacity will be needed to make this effective. Furthermore, due to the purchase of land, the creation of free school places is expensive, with a secondary free school place costing 51% more than a local authority place.

Recommendation: The DfE should quantify how each successful free school application will meet local needs for additional places, parental choice and improved standards. In addition, the DfE should set out how it assesses the costs and benefits of choice in the assessment of applications.

The DfE has spent almost 20% more on average than official valuations for land purchased for free schools.

Due to the location of new schools, the DfE is often forced to pay above market values as landlords know they have few sites to choose from. On average, it has paid 19% over the official valuation, however, at twenty sites it has paid over 60% more. In order to manage land purchases in the future, the DfE has set up a company called LocatED which hopes to attract specialist property expertise.

Recommendation: The DfE should set out how it will assess the effectiveness of LocatED and how it will assess whether LocatED is ensuring value for money.

Housing developers may not be paying their fair share towards the cost of new school places.

In 2015, a restriction was placed on the number of ‘section 106 contributions’ that can be pooled together towards a single project. This has meant that local authorities are receiving reduced contributions from developers.

Recommendation: The DfE should work to crack down on loopholes within the system.

The DfE does not know enough about the state of the school estate which means it cannot make well-informed decisions about how to use its resources.

After completing a survey of the school estate in 2014, the DfE has more of an understanding, however, the survey did not assess the safety of buildings with regards to asbestos. The DfE is undertaking another property survey, which should help to assess how the school estate is changing and how effective funding has been in improving the condition of school buildings.

Recommendation: By December 2017, the DfE should set out a plan to fill in gaps in its knowledge of the school estate, especially concerning asbestos and the suitability of school buildings.

Insufficient focus is being kept on routine maintenance which will prevent more extensive problems in the future.

Capital funding is used by the DfE to address urgent needs, with the cost of preventative maintenance and smaller defects having to be met by schools themselves. Schools are under increasing budgetary pressure, which may mean that preventative maintenance is not undertaken.

Recommendation: The DfE should develop a system for holding local authorities and academy trusts to account for the maintenance of school buildings. It should also assess whether schools are able to afford the maintenance necessary given the decrease in real-terms funding per pupil.

The DfE does not know enough about the quality and suitability of new school buildings.

Many new school buildings are based on standard models and do not necessarily fit schools’ needs, including those for outdoor and communal space. Likewise, where temporary accommodation is used for free schools, it often does not meet schools’ needs.

Recommendation: By December 2017, the DfE should report back to the committee on the suitability of new school buildings. It should also review its criteria for new school facilities.


It is clear from the report that the Public Accounts Committee is critical of the DfE’s current handling of capital funding for schools. However, with the recommendations comes the hope that the DfE will provide a clearer and more sustainable model of funding for the future.

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