A guide to new mainstream free school revenue funding: 2024 to 2025

Q: Risk protection arrangement

Risk protection arrangement ( RPA ) is an alternative to commercial insurance, whereby government funds cover any losses that arise. The RPA will cover losses that are in scope of the RPA membership rules. The RPA membership year runs from 1 September to the following 31 August. You can join at any time. Free schools can join the RPA scheme and receive cover before opening. There is no cost or premium to join the RPA in pre-opening. Free schools in the pre-opening stage, should discuss joining the RPA scheme with their delivery officer. Once a school is open, ESFA will deduct the per-pupil cost at source from the free school’s general annual grant. The cost of RPA for the academic year (1 September 2024 to 31 August 2025) will be £25 per pupil. Free schools do not have to join the RPA scheme and can make alternative insurance arrangements.

Question 1

School resource management

Accepted Answer

Effective schools make the best use of resources to have the maximum impact for their pupils. Schools that do this well tend to:

plan their curriculum and finances together (known as integrated curriculum and financial planning)
have a strategic approach towards financial planning for the longer term (3 to 5 years)
deploy their staff effectively and efficiently, linked to their long-term plan
have robust challenge from financially skilled governors and head teachers
have skilled staff responsible for managing finances and procurement
have transparent financial systems and processes

The school resource management offer is a suite of free tools, guidance and support, developed in partnership with the sector. It helps schools and academy trusts build their resource management capability and obtain best value from all their resources.

A self-assessment checklist is also available to helps academy trusts check they are managing resources effectively and identify any adjustments they need to make.

You can access free and impartial procurement support, advice and guidance through Get help buying for schools. This service also provides access to approved Department for Education (DfE)-frameworks which can help you save time and money on regular purchases such as furniture, cleaning services, and ICT.

School resource management advisers provide free, independent and tailored advice and support on using your schools resources to maximise outcomes for pupils.

To receive regular updates about school resource management tools, support and guidance, sign up for the school business professional newsletter.

Question 2

Financial planning

Accepted Answer

Free schools should plan their expenditure using the most up to date financial template. This will make sure your school is affordable within the funding we provide.

Contact your Regions Group delivery officer for the latest version of the template which contains the 2024 to 2025 funding rates.

If you do not have a delivery officer, contact the regional office for your area.

You should update your financial plan as you:

develop your plan for the school
appoint staff
develop site plans
establish your costs
get confirmation of your funding arrangements

You should review your financial plans regularly to make sure they reflect the:

likely number of pupils based on the number of applications received
funding arrangements for each new academic year

We need assurance that free schools are on-course to be financially viable on opening. To provide a sustainable, broad and balanced curriculum:

primary provision should have a minimum of 2 forms of entry of 30 pupils (total of 60)
secondary provision (years 7 to 11) should have a minimum of 4 forms of entry of 30 pupils (total of 120)

Do not base your financial plans on fewer pupil numbers unless we have agreed this.

For presumption free schools, your local authority and trust will determine the minimum number of pupils you need to be financially viable. We expect local authorities to provide sustainable underwriting arrangements to support the pupil forecasts they have agreed.

Submitting your financial plans

We ask free schools in the pre-opening stage to submit their current financial plans before entering into a funding agreement. This should include a version modelled around the minimum number of pupils you need to be financially viable.

You’ll need to resubmit your financial plans before your readiness to opening meeting. This should be based on the latest available number of accepted offers.

Submit your plans with evidence to underpin your pupil number assumptions which must be realistic and achievable. Your plans should reflect:

your income which you base on your estimates of available grants
your outgoings
the likely number of pupils

Plans should show that you will not go into deficit at any point. We expect to see in-year surpluses of no more than between 3 and 5%, including any contingency.

You need to provide a final finance plan ahead of opening. This will be used to determine your initial funding. Your delivery officer will give you the date that you need to do this by.

The financial benchmarking service allows you to compare your spending patterns to schools in similar circumstances.

Question 3

Funding

Accepted Answer

In 2024 to 2025, the following funding will be available once open:

local pre-16 formula funding
national 16 to 19 formula funding
pupil premium
business rates grant
special educational needs top-up funding (high needs)
teachers’ pay additional grant
teacher’s pension employer contribution grant
teachers’ pay and pension employer contribution funding
universal infant free school meals
PE and sport premium
post-opening grant (free schools set up through the local authority presumption route are not eligible for this grant)

Payments

The Education and Skills Funding Agency (ESFA) usually calculate and pay the funding for each free school. ESFA pays schools their funding monthly in equal instalments. This is usually on the first working day of the month. The only exception will be in your first month of opening, when ESFA will pay you on the sixth working day of the month.

Local formula funding (pre-16)

We provide funding for schools, high needs and early years through the dedicated schools grant. The national funding formula (NFF) distributes school funding to local authorities. We base the formula on the individual needs and characteristics of every school in the country.

Further details on the 2024 to 2025 national funding formula can be found at;

We’ll fund any new free schools consistently with other schools. This includes free school that:

are not yet open but are in the pipeline
will enter the pipeline during 2024 to 2025

In 2024 to 2025, local authorities will remain responsible for setting local funding formulae which determine individual schools’ budget allocations. However, we require local authorities to move their local formulae closer towards the national funding formula in 2024 to 2025.

It is these local formulae that underpin how much core funding each academy and free school receives through the General Annual Grant (GAG).

Further information on the factors that make up the local formulae, as well as the minimum per pupil funding levels that local authorities must comply with in their formulae are available in the Schools operational guide: 2024 to 2025.

Funding protection for local formula funding (pre-16)

The free schools protection means that new free schools will not get less funding than they would have received, had their first year of opening been the previous year. It allows free school projects to plan the school’s finances during the year before opening.

We use local authority averages for pupil characteristics to calculate the current year and previous year funding. This is the case even where a school is planning its finances using alternative characteristics.

From the second year, a minimum funding guarantee protects open free schools. This protects all mainstream schools from decreases, or guarantees a minimum increase, in their pupil-led per pupil funding.

The value of the minimum funding guarantee is set by local authorities. In 2024 to 2025, local authorities can choose to set it at any value between +0.0% and +0.5%.

National 16 to 19 formula funding

We use a national funding formula to calculate allocations for 16 to 19 institutions each academic year. You can find more information on the funding rates and formula from:

New free schools planning to offer 16 to 19 provision in their first 2 years of opening will be able to submit a business case before they open. Your delivery officer will contact you if you’re in scope to check if you want to submit a business case.

If we approve your business case, we’ll use the approved factors instead of using averages. We’ll use your data to calculate institution specific factors from year 3.

2024 to 2025 national funding rates

For new free schools, we’ll assume that all students are full-time and under 18 unless you tell us otherwise. Students will attract the Band 5 national funding rate of £4,843 per student.

Retention

For new free schools, we’ll use the national retention average of 0.98301 for the 2024 to 2025 academic year.

English and maths funding

For new free schools, we’ll use the national average instances per student of 0.0744 for English and maths funding.

This is a new funding element for the 2024 to 2025 academic year. Find out more information about 16 to 19 funding: maths and English condition of funding.

Disadvantage funding

For new free schools, we’ll use the local authority average for disadvantage block 1 and the national average of 0.13323 for disadvantage block 2.

Area cost uplift

You can find more information about the area cost uplift from the guidance on 16 to 19 funding: how it works.

High value course premium

For new free schools, we’ll use the national average of 0.32028 for the 2024 to 2025 academic year.

Find more information about high value courses premium.

Discretionary bursary funding

You can find more information about discretionary bursary funding from the 16 to 19 Bursary Fund guide 2024 to 2025.

High needs funding

You’ll receive £6,000 per student for each high needs place identified by local authority commissioning plans and decisions.

More information about high needs funding is available.

16 to 19 formula funding

Other elements of the funding formula are not applicable to new free schools. This includes:

the large programme uplift
advanced maths premium
T levels
core maths premium

Find out more from funding for 16 to 19 year olds in schools.

Pupil number adjustment

We need robust and realistic estimates of pupil numbers to ensure that we fund the school accurately. In the first year of opening, an early pupil number adjustments exercise will happen. If the October census shows that the school has not admitted the predicted number of pupils, we’ll recover any excess funding in the following academic year.

If a school has recruited more pupils than they got funding for, ESFA will carry out an in-year reconciliation. They will pay any additional funding in February of the current academic year. ESFA will initially base allocations on an estimated number of pupils and local authority average pupil characteristic data.

Any positive or negative adjustment will use the actual pupil characteristics returned in the October census. They will replace the averages initially used if it produces a more favourable outcome for the school.

From the second year of opening, ESFA carries out the in-year reconciliation for the number of pupils. They will pay any additional funding in July of the current academic year. Any recoveries will start in the following academic year.

If academies have a positive pupil number adjustment and an outstanding pupil number adjustment, ESFA will:

reduce the pupil number adjustment by the amount of the outstanding debt
if there is a net negative adjustment, use the positive amount to offset the debt and confirm any agreed deferrals or repayment plans against the lower amount

More information is available in the guidance for academies funded on estimated pupil numbers.

Where local authorities have already funded for growth in pre-16 pupil numbers to meet basic need, ESFA will deduct the amount they have paid from any positive pupil number adjustments. This will ensure that academies are only funded for the growth once.

Pupil premium

The pupil premium provides schools with extra funding to improve education outcomes for disadvantaged pupils. It is not a personal budget for pupils and carries no individual entitlements.

In 2024 to 2025 schools will receive the funding for each pupil registered as eligible for free school meals at any point in the last 6 years.

Schools will also receive funding for each pupil who has left local authority care through:

adoption
a special guardianship order
a child arrangements order
a residence order

ESFA makes pupil premium payments in quarterly instalments. We calculate a school’s pupil premium allocation from the information it submits in the October school census. We apply allocations from the start of the next financial year (April), paid in arrears so first payments are made in June.

Local authorities will also receive funding for each looked-after child in their care. They should spend this on their personal education plan in consultation with the child’s school. They can pass all the funding on to schools or retain some to fund activities that will benefit a group, or all, of the local authority’s looked-after children.

Teachers’ pay and pension employer contribution funding

Teachers’ pay

In 2023 to 2024, teachers and headteachers in maintained schools received a pay award of 6.5%. 

DfE  provided £525 million to schools in 2023 to 2024, and £900 million in 2024 to 2025, alongside this award. 

Of the £900m of additional funding, £825m of this is going to mainstream schools and high needs in 2024 to 2025 through the teachers’ pay additional grant (TPAG).

TPAG funds the following mainstream school providers, for the 5 to 16-year-old age range:

primary and secondary maintained schools
primary and secondary academies and free schools
all-through maintained schools
all-through academies and free schools
city technology colleges

The funding rates for the TPAG in 2024 to 2025 are published at the following link: TPAG methodology 2024 to 2025 page.

Teachers’ pensions

The teacher pension employer contribution grant (TPECG) is providing £1.1 billion in 2024 to 2025 to support with the increase to the Teachers’ Pension employer contribution rate.

The additional funding will be distributed via the new teachers’ pension employer contribution grant (TPECG) 2024. Over £920 million will be distributed to mainstream schools via this grant.

TPECG 24 will fund the following mainstream school providers, for the 5 to 16-year-old age range:

primary and secondary maintained schools
primary and secondary academies and free schools
all-through maintained schools
all-through academies and free schools
city technology colleges

Business rates grant

Mainstream free schools pay business rates at the 80% discounted charitable rate. They get a grant to cover the actual costs paid.

You can claim for national non-domestic rates. Your billing authority may submit a claim on your behalf.

Special educational needs top-up funding (high needs)

Mainstream free schools get extra funding for pupils aged 5 to 19 with high needs from the local authority which commissioned the place. These pupils usually have an education, health and care plan.

We expect schools to fund the first £6,000 of additional educational costs (over and above standard teaching and learning) for each high needs pupil from their own budget.

More information about high needs funding is available.

Universal infant free school meals

State-funded schools in England must provide free lunches to infant pupils who are not otherwise entitled to benefits-related free school meals.

Schools will receive an initial provisional payment in October based on:

the pupil numbers estimate we use to issue your indicative funding letter
the average universal infant free school meals take up rate in your local authority.

We’ll adjust it to reflect actual pupil numbers in July. We’ll base this on meal take-up to date from the October and January school census. The July payment will also include an additional allocation for the first 2 terms of the next academic year.

Find out more about Universal infant free school meals.

PE and sport premium

Free schools with primary age pupils receive PE and sport premium funding from ESFA. ESFA base this on the number of pupils in years 1 to 6. This grant is to make improvements to the quality of physical education (PE), physical activity and sport schools offer. ESFA pay this separately to general annual grant funding.

We base school allocations on the January school census. For example, January 2023 census for the 2023 to 2024 academic year. For free schools that open in September 2024, we’ll base the funding on the data from the October 2024 census. ESFA will make payments in the following March.

The free school will receive PE and sport premium funding for a new academic year from the ESFA in 2 separate payments. These are:

7/12 of the funding allocation in November 2024 (or in March 2024 for new schools)
5/12 of the funding allocation in May 2025

Post-opening grant - central route projects only

We provide free schools with a post-opening grant. Free schools set up through the local authority presumption route are not eligible for the post-opening grant.

The post-opening grant covers additional costs in establishing a new publicly funded school which are not covered by the general annual grant. It provides funding in 2 elements as the free school grows:

non-staffing resources, paid on a per-pupil basis
a leadership grant

We pay the resources element each year that the school builds up to capacity for each new pupil expected to be on roll. We do not revise it after opening to reflect actual pupil numbers. We take these numbers from the final finance plan you submit before opening. We pay it at the following rates:

£250 for each new mainstream pupil in the primary phase (reception to year 6)
£500 for each new mainstream pupil in the secondary and 16 to 19 phases (years 7 to 13)

We pay it over the first 3 months of the academic year. 50% paid in month 1, 25% in month 2 and 25% in month 3.

We pay the leadership element each year based on the number of year groups that the school will ultimately have that do not yet have pupils. The amount we pay depends on how many year groups (cohorts) are empty. We pay it in equal monthly instalments.

Primary

Number of year groups empty	Funding amounts
6+	£80,500
5	£67,500
4	£54,000
3	£40,500
2	£27,000
1	£13,500
Maximum	£283,000

Secondary (regardless of whether the school plans to have a sixth form)

Number of year groups empty	Funding amounts
4	£125,000
3	£93,500
2	£62,500
1	£31,000
Maximum	£312,000

All-through (regardless of whether the school plans to have a sixth form)

Number of year groups empty	Funding amounts
6+	£125,000
5	£93,500
4	£62,500
3	£54,000
2	£40,500
1	£27,000
Maximum	£402,500

Nurseries

Free schools do not receive funding under the free school programme for nursery places. To receive funding for nursery places, free schools should register with their local authority. They will provide funding for the government entitlements where appropriate.

From 2024 to 2025, the entitlements are:

the 15 hours entitlement for eligible working parents of children from 9 months to 2 years old (new entitlement from 1 September 2024)
the 15 hours entitlement for eligible working parents of 2-year-old children (new entitlement from 1 April 2024)
the 15 hours entitlement for disadvantaged 2-year-olds
the universal 15 hours entitlement for all 3 and 4-year-olds
the additional 15 hours entitlement for eligible working parents of 3 and 4-year-olds

Check with your local authority to find out how much funding you can get.

Childcare providers can charge parents for:

meals
consumables (such as nappies and sun cream)
additional activities (such as trips)
extra hours taken up beyond entitlements

Childcare providers cannot make these extras a condition of receiving the free entitlement. They also cannot charge parents ‘top-up’ fees. This is the difference between their normal charge and the funding they receive from the local authority to provide free places.

Free schools are also able to offer nursery provision which exceeds any local authority funded entitlement. This includes for under 3-year-olds. Subject to your funding agreement, you can charge parents for these places. You can so this through a subsidiary company, or by contracting an independent provider who levies charges.

Question 4

Risk protection arrangement

Accepted Answer

Risk protection arrangement (RPA) is an alternative to commercial insurance, whereby government funds cover any losses that arise. The RPA will cover losses that are in scope of the RPA membership rules.

The RPA membership year runs from 1 September to the following 31 August. You can join at any time. Free schools can join the RPA scheme and receive cover before opening. There is no cost or premium to join the RPA in pre-opening. Free schools in the pre-opening stage, should discuss joining the RPA scheme with their delivery officer.

Once a school is open, ESFA will deduct the per-pupil cost at source from the free school’s general annual grant. The cost of RPA for the academic year (1 September 2024 to 31 August 2025) will be £25 per pupil.

Free schools do not have to join the RPA scheme and can make alternative insurance arrangements.

Question 5

Financial governance and accountability

Accepted Answer

Trusts will need to ensure that spending decisions are transparent, and in the school’s best interests. Free schools will need:

sound financial procedures
the capacity to handle public money
good governance arrangements

On opening, you will need to:

have a robust framework to manage your funding
make sure you maintain proper accountability and procedures

Academy Trust Handbook

You must comply with the Academy Trust Handbook throughout the pre-opening period and once open. It sets out the financial management and governance requirements for academy trusts.

Non-compliance with the handbook is a breach of contract.

The handbook includes requirements on:

financial oversight
financial planning
internal control
financial monitoring and management
the proper and regular use of public funds
auditing

The handbook sets out that the accounting officer is personally responsible to Parliament, and to the accounting officer of ESFA, for the resources under their control. This personal responsibility extends to ensuring regularity, propriety and value for money. The accounting officer also has responsibilities for:

keeping proper financial records and accounts
the management of opportunities and risks

Financial statements

All academy trusts with a funding agreement must submit an audited annual report and financial statements to ESFA by 31 December. This includes trusts with free schools.

The academies accounts direction explains the requirements for preparing and auditing academy trusts’ annual financial statements. Before signing your funding agreement, prepare your financial statements following company law.

Trusts must set their accounting reference date to 31 August at Companies House. This is the date you will use to produce your financial statements.

Trusts must file their accounts by 31 May with Companies House.

Other financial returns

Once open, trusts must also submit the following financial returns to ESFA:

You are responsible for keeping up to date with the latest deadlines and requirements. More information about academies financial returns is available.

Document exchange

Document exchange is a secure, online service accessible via DfE sign-in. It enables academies to receive and exchange documents with ESFA.

As soon as you open it, it will add you to the document exchange. It will use your information from get information about schools.

Use the Customer Help Portal if you have any queries.

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