Funding  

This article covers public funding for education for 2/3- to 18/19-year-olds, except for work-based learning (such as apprenticeships) for 16- to 18/19-year-olds, which is covered in the article on ‘Adult Education and Training Funding’.

Early childhood education and care 

Funding of early years provision aims to be supportive of a diverse range of providers to suit parents’ and children’s needs. It also seeks to support the most disadvantaged young children with a view to improving life chances and social mobility.

There is a universal entitlement to 10 hours per week of funded early childhood education and care (ECEC) for 38 weeks of the year for all 3- and 4-year-olds, and 30 hours of early education and childcare per week for up to 48 weeks of the year for 3- and 4-year-olds whose parents are in work. The 30 hours entitlement, which was available across Wales from September 2020, is made up of a minimum of 10 hours of early education a week and a maximum of 20 hours a week of childcare. Parents may extend this provision by paying for additional hours of care for their child.

In addition, funded part-time ECEC places are available for 39 weeks of the year for eligible 2-year-olds in disadvantaged areas under the Flying Start programme.

The Welsh Government provides local authorities (LAs) with funding to support their statutory duty to offer these places. They are provided in a range of settings, including publicly funded primary and nursery schools; integrated children’s centres offering education, care, family support and health services; and private and voluntary settings. Parents can choose to pay for additional provision on top of the free part-time provision they receive.

Schools 

Maintained schools receive funding for both recurrent (revenue) expenditure and capital expenditure.

Recurrent expenditure is mostly expenditure on salaries of headteachers, teachers and other staff. It also includes books and equipment. Repairs and maintenance are also normally paid for from recurrent expenditure.

Capital expenditure is expenditure that produces or protects an asset that will last a long time, such as a building, machinery or large items of equipment.

This funding comes from the Welsh Government via local authorities (LAs).

In addition to receiving public funds, schools are free to raise extra funds through voluntary contributions from parents and others (see the subheading ‘Fees within public education’), or through a variety of activities such as renting out school premises or running additional activities that generate income.

For information on funding for 16- to 18/19-year-olds in school sixth forms and further education colleges, see the subheading '16-19 funding' below.

Recurrent / revenue funding 

Maintained schools and early childhood education and care providers receive their revenue funding via the local authority (LA). This is funding for recurrent expenditure such as staff salaries, books and equipment, and repairs and maintenance.

The Welsh Government provides each LA with its Revenue Support Grant (RSG); the LA uses this to fund the majority of the services it provides, including education. Additional funding is provided by each LA, e.g. in the form of locally raised ‘council tax’, which LAs determine as part of their annual budget setting process.

When LAs receive their RSG allocation, they begin their budget setting process, determining how much of the RSG will go to schools and providers of early childhood education and care. They do this using a local funding formula. The Welsh Government does not set targets for LA expenditure on schools.

The legal framework within which LAs allocate their education expenditure to schools was established by the School Standards and Framework Act 1998 and is set out in the School Funding (Wales) Regulations 2010. These regulations require all LAs to have a scheme for financing schools, which defines the financial relationship between the LA and the schools in its area. They also include a requirement for LAs to provide schools with information about funding over a three-year period – setting an annual budget for each school and providing a forecast over the following two years.

The 2010 regulations require LAs to allocate expenditure to three budgets.

• The 'local authority education budget' is for the LA’s central functions relating to education. This includes expenditure on, for example, the costs of school improvement, school transport, further education and training for young people and adults, and strategic management. 
• The 'Schools Budget' covers expenditure directly aimed at supporting schools. It comprises expenditure on services for which the LA may retain funding centrally, such as additional learning needs (ALN) services, and the provision of schools meals and milk.   
• The Individual Schools Budget (ISB) is the annual funding given directly to schools. Schools decide how to spend their ISB.

The Individual Schools Budget (ISB) amount for each school is allocated by the LA using a locally determined funding formula. The regulations require 70% of the funding to be distributed on the basis of pupil numbers. LAs may, in their formula, weight pupil numbers according to any or all of the following factors:

• age, including weighting according to key stage or year group  
• whether a pupil is provided with nursery education by a school   
• in the case of pupils under five, their exact age when admitted to school   
• in the case of pupils aged under five, hours of attendance
• additional learning needs (ALN)
• whether a pupil at a school is also attending an institution within the further education sector  
• whether a pupil is being educated through the medium of Welsh.

Local authorities have discretion to distribute the remaining 30% of the ISB on the basis of a range of factors in the regulations, e.g. the size and condition of school buildings and grounds, utility costs, cleaning, and salaries etc.

The power to spend the ISB is usually delegated to the school's governing body, which is free to spend its budget share as it sees fit, as long as it is for the purposes of the school.

Local authorities are also required to consult local ‘school forums’ annually on matters relating to their schools budget, and on changes to their scheme for financing schools and their local school funding formula. They can also consult their forums on other matters concerning school funding, such as the financial implications of arrangements for free school meals, arrangements for insurance, or the financial implications of arrangements for the education of children otherwise than at school (EOTAS).

The Welsh Government has produced a best practice guide to assist schools forums in carrying out their role.

This February 2019 National Assembly research briefing provides further information on school funding in Wales.

Targeted funding for disadvantaged pupils

Schools also receive funding through the Pupil Development Grant (PDG) and the Early Years Pupil Development Grant (EYPDG). These are additional funding allocations designed to tackle educational inequality by providing extra funds to raise the attainment of pupils from disadvantaged backgrounds and close the gap between them and their peers. The PDG and EYPDG (which were introduced in 2012 and 2015/16 respectively) specifically aim to improve outcomes for learners eligible for free school meals and for looked after children.

In 2020/21, primary and secondary schools receive £1150 (€1039.11*) PDG for each child (aged 5-15) registered as eligible for free school meals, and regional education consortia receive the same amount for each looked after learner aged 5 - 15. The PDG supports the needs of all children who are or have been eligible for free school meals in the previous two years; or are or have been looked after. For learners in the Foundation Phase, providers receive £700 (€632.50*) EYPDG for each eligible pupil aged 3 and 4.

Although the PDG and the EYPDG are not ring-fenced, i.e. specifically allocated for spending on the pupils for which they are provided, they must only be used for interventions that support those pupils. As an accountability measure, schools must publish their PDG allocation, and an outline of their plans to use the funding to improve outcomes for disadvantaged children, on their website and as part of their school development plan. Estyn (the inspectorate) and the Wales Audit Office monitor use of the grants.

The Welsh Government provides guidance for schools, local authorities and regional education consortia on how to use both the PDG and the EYPDG to reduce the impact of deprivation on attainment. In addition, the Education Endowment Foundation (EEF) in England provides a teaching and learning toolkit to help schools to identify initiatives that support disadvantaged pupils. Welsh schools and early years providers are recommended to make use of the guidance and toolkit in determining how best to spend these allocations. They are also expected to monitor interventions to ensure they are having the intended impact.

Further information and guidance is available from the Welsh Government.

* Exchange rate used: €1 = £0.90, 16 December 2020.

Capital funding 

Capital funding is funding to protect the school estate (building and grounds). The Welsh Government makes this funding available to local authorities (LAs) and governing bodies of voluntary aided schools. It includes the following.

• The General Capital Fund, which is the annual capital allocation provided to LAs by the Welsh Government. This contains a notional amount for education. It is a matter for each LA to decide what level of funding to allocate to individual service sectors and capital projects in light of their determination of local priorities and needs.
• The Voluntary Aided (VA) Schools Capital Grant Programme, which provides financial assistance for the establishment and capital maintenance of voluntary aided (VA) schools. Responsibility for the provision, repair and maintenance of VA schools is shared between the school governing body and the LA. The Welsh Government has the power to grant aid 85% of the costs of the governors' approved expenditure, with the governing body required to meet the remaining 15%.
• The 21st Century Schools and Education Capital Programme is a long-term, strategic capital investment programme. It aims to deliver efficient, economic and sustainable learning environments that meet national building standards; reduce the recurrent costs and carbon footprint of education buildings; and enable the successful implementation of strategies for improvement and better educational outcomes. The programme is a collaboration between the Welsh Government, the Welsh Local Government Association (WLGA), local authorities, the voluntary aided sector, further education colleges and CollegesWales. It is characterised by a move away from a formula-based process to the deployment of capital funding based on a strategic investment plan that is targeted to need. The programme is 50% funded by Welsh Government using a combination of capital and revenue funding, with the remaining 50% of funding provided by other partners.

16-19 funding

As part of a unified approach to funding for 16- to 18/19-year-olds, the Welsh Government provides funds to local authorities (LAs) for sixth form provision in maintained schools on a financial year basis, and to individual further education institutions on an academic year cycle.

Funding is provided in the form of grant agreements, which set out the funds that the Welsh Government has agreed to pay for post-16 learning, how the funds will be paid, and the terms and conditions for the use of the funding in the delivery year. All grant agreements include the expectation that provision will take account of Welsh Government priorities for school sixth forms and the further education sector. Grant agreements also include monitoring and audit requirements for the use of the funds.

Only eligible programmes - a package of learning and qualifications / outcomes which link clearly to the programme and will ensure progression to employment or higher education - are funded. These include full-time programmes in approved sector subject areas, full-time general education programmes, and part-time programmes. A programme directory lists the programmes that are eligible for funding and sets out the requirements for each eligible programme.

The ‘Post-16 Planning and Funding Framework’ attaches a single funding value to a programme. Embedded into this funding value are factors for student retention and attainment based on historical patterns of delivery. Programme funding values also include subject area weights (SAWs) which reflect the relative costs of delivery in different sector subject areas. In addition, local authorities and further education institutions receive a block allocation which includes ‘uplifts’ (additional amounts of funding) for deprivation, rurality and Welsh-medium provision.

This April 2018 guide to post-16 education funding from the National Assembly provides further information.

Note: Funding for post-16 special schools and for support for learners with additional learning needs (ALN) in mainstream sixth form provision is included in the Revenue Support Grant (RSG) for local authorities (see the subheading ‘Schools’ above).

Information on the funding of apprenticeships for 16- to 18/19-year-olds is provided in the article on ‘Adult Education and Training Funding’.

Financial autonomy and control 

Schools 

All maintained schools in Wales have a high level of autonomy. Most school financial administration and management functions are delegated to school governing bodies and headteachers. This has been the case since the introduction of local management of schools (LMS) under the Education Reform Act 1988.

Each school's Individual Schools Budget (ISB) share is allocated as a block grant to cover all revenue costs including the salaries of headteachers, teachers and other staff; books and other equipment; and repairs and maintenance. The governing body is responsible for spending the ISB for the purposes of the school as it sees fit.

There are different arrangements for the acquisition and management of resources (e.g. staff, operational resources and infrastructure etc.) for different legal categories of school. These are summarised below. 

• Community schools are run by local authorities (LAs). The school premises (land and buildings) are owned by the LA and the schools are fully funded by LAs for both revenue and capital expenditure. The LA employs the staff and is the admission authority. 
• Foundation schools are owned either by the school governing body or by trustees of the school, but are funded by LAs in a similar way to community schools. The governing body is the admission authority and employs the staff.
• Voluntary controlled schools and voluntary aided schools are owned either by school trustees or by the founding body of the school (such as the Church in Wales or the Catholic Church). Both types of school receive full funding for revenue expenditure, but voluntary aided schools are generally expected to contribute a small proportion of capital costs. In voluntary controlled schools, the LA employs the staff and is the admission authority, while in voluntary aided schools it is the governing body which performs these functions.

School governing bodies have a key role in ensuring that schools are publicly accountable to parents, the LA and the local community for what they do; for the results they achieve; and for the way in which resources are allocated and the budget is managed. The School Governors Guide to the Law includes guidance for governing bodies on their financial responsibilities and accountability. 

Efficiency and value for money in schools 

All schools are expected to use their resources in the best way possible to provide a high quality teaching and learning environment for all pupils and to secure best value for money. In addition, the Welsh Government has a focus on getting better value for the resources it provides to schools. This is in line with public procurement policy in Wales, which requires schools and other publicly funded institutions to focus on ‘smarter procurement’ by:

• increasing savings through collaboration
• improving process efficiency, especially through the use of technology
• protecting the local economy by encouraging smaller suppliers and seeking re-investment in local communities
• building procurement capability.

16-19 provision in colleges 

Further education colleges in Wales are autonomous, not-for-profit institutions that exist to serve the public. They are responsible for financial administration and management functions, and college governing bodies and principals must, in managing a college’s financial affairs in relation to the provision of education and training for 16- to 18/19-year-olds, adhere to the conditions of their funding from the Welsh Government. 

The 2016 Code of Good Governance for Colleges in Wales produced by CollegesWales, sets out the shared values and expectations of good college governance and provides guidance for governing bodies. Element 3 of the 7 elements of good governance focuses on financial strategy and audit.

Fees within public education 

Early childhood education and care 

The Welsh Government provides funding for a limited number of hours of early childhood education and care (ECEC) provision. Parents may extend this by paying for additional hours of care for their child. 

Government-funded ECEC is provided for all 3- and 4-year-olds whose parents want it for 10 hours each week. An additional 20 hours per week was introduced across Wales in September 2020, for 3- and 4-year-olds whose parents are in work. These places are available in private, voluntary and independent settings and in nursery schools and nursery classes in maintained schools.

Government-funded part-time places are also available for eligible 2-year-olds in deprived areas as part of the ‘Flying Start’ programme.

Schools 

Education is free of charge for all pupils in maintained schools from age 4 to age 16. Admission authorities must provide for the admission to the reception class of primary school of all children in the September following their fourth birthday.

Education is also free of charge for students aged 16 to 19 in maintained schools and further education institutions following eligible programmes (excluding those on higher education programmes). For further information on eligible funded programmes for 16- to 19-year-olds, see the Post-16 Planning and Funding Framework programme directory.

In maintained schools in Wales, no charge may be made for:

• education provided wholly or mainly within school hours (excluding midday breaks)
• admission applications or admission to school for children of compulsory school age 
• the supply of materials, books, instruments or other equipment (all text and exercise books belong to the school)
• education which is part of the national curriculum (Curriculum for Wales), or part of the school’s duty to provide statutory religious education 
• education which is part of the syllabus for a prescribed public examination that the pupil is being prepared for at the school  
• entry for a prescribed public examination (e.g. GCSEs at age 16).

Charges may be made for activities which fall outside the above categories. Schools may, for example, charge for music tuition, where this is individual or small group instrumental tuition provided during the school day. This tuition must, though, not be an essential part of either the national curriculum or a public examination syllabus being followed by the pupil. Schools are also able to charge for some activities that are known as ‘optional extras’, including extended day services such as before-school or after-school clubs.

Schools may ask parents for a voluntary contribution towards the cost of an activity that takes place during school hours, or towards school funds generally. The contribution must be genuinely voluntary, and the pupils of parents who are unable or unwilling to contribute may not be discriminated against. This means, for example, that if there are not enough voluntary contributions to make an activity possible, and there is no way to make up the shortfall, then it must be cancelled.

The Welsh Government provides non-statutory guidance for school governing bodies and headteachers on charging for school activities.   

Financial support for learners’ families

The Welsh Government provides the Pupil Development Grant (PDG) - Access. This focuses, in particular, on supporting parents with the additional costs associated with their children starting education, and progressing into secondary education. Funding is distributed to parents via local authorities (LAs) and is available for learners eligible for free school meals or looked after children in the following year groups:

• children entering reception class (ages 4-5) or Year 3 (ages 7-8) in primary school
• learners entering Year 7 (ages 11-12) or Year 10 (ages 14-15) in secondary school.

The funding amounts to £125 (€112.95*) for those entering reception class, Year 3 and Year 10; for learners entering Year 7, the grant is £200 (€180.71*).

The PDG Access Grant replaced the previous School Uniform Grant and is wider in scope covering:

• school uniform
• school sports kit
• uniform for wider activities, for example, sports, scouts and guides
• school equipment where new curriculum activities begin, such as design and technology
• equipment for out-of-school hours trips such as waterproofs for outdoor learning.

The system of welfare benefits in Wales for families with children is a non-devolved policy area and a matter for the UK Government.

Child Benefit is a tax-free payment from the UK Government which can be claimed for a child. It is available for children aged 0 to 16 (or 19 if the child is still in qualifying full-time education and training). It is not otherwise linked to attendance at school. There is a higher rate for the first child than for subsequent children. In January 2013, Child Benefit, which had historically been a universal payment, was reformed. Since that date, when one person in the household has an income of more than £50,000 (€45178.50*), the Benefit falls by 1% for every £100 (€90.36*) earned over £50,000. In households where one parent earns more than £60,000 (€54214.20*), no Child Benefit payment is received.

Parents or carers who are responsible for children under the age of 16 (or under the age of 20 and in eligible education and training) may also receive Child Tax Credits or other benefits, depending on their circumstances.

Further information is available in the Child Benefit section of the UK Government’s Benefits website.

* Exchange rate used: €1 = £0.90, 16 December 2020.

Financial support for families of pupils with special educational needs 

Government support is available for families with a disabled child. This includes the Disability Living Allowance (DLA) for children under the age of 16. This weekly payment, which varies depending on the level of help a child needs, is payable to children who have difficulty walking and / or who need more looking after than a child of the same age who doesn’t have a disability.

For young people over the age of 16 who have long-term ill-health or disability, Personal Independence Payments (PIPs) may be available. 

Further information on help for disabled children is available from the Carers and Disability Benefits section of the UK Government website.

Children and young people with additional learning needs (ALN) who have an Individual Development Plan that includes transport requirements are provided with school transport by their local authority.

Financial support for learners 

Schools cannot charge for learning materials. These are free for all pupils (see the subheading ‘Fees within public education’ above).

All primary school children in maintained schools, regardless of their socio-economic background, are entitled to a free school breakfast.

In addition, children and young people whose parents, carers or guardians receive certain state benefits are entitled to free school lunches. They must be attending school full-time, and the entitlement includes children who are attending full days in a publicly funded nursery school or class (age 3+) and sixth form students (age 16-18/19). In January 2020, the percentage of pupils aged 5-15 known to be eligible for free school meals in Wales was 19.9.

Individual primary schools can also participate in the school milk scheme. Participating schools provide free milk to children in the Foundation Phase (aged 3-7) and subsidised milk to learners in Key Stage 2 (ages 7-11).

Details of school transport arrangements are provided under the subheading ‘Geographical accessibility’ in the articles on the organisation of ‘Primary Education’ and of ‘Secondary Education’.

No cash benefits are available to learners during compulsory education. However, eligible students aged 16-18 in post-compulsory education may receive the Education Maintenance Allowance (EMA). This is an income-assessed weekly allowance of £30 (€27.11*) to help students with the cost of education, and encourage those from disadvantaged backgrounds, in particular, to continue in education beyond the compulsory phase. In 2019/20, the Welsh Government approved just under 20,300 applications for EMA.

* Exchange rate used: €1 = £0.90, 16 December 2020.

Private education 

Independent schools, sometimes known as private schools, public schools or fee-paying or fee-charging schools, do not receive national or local government funding to finance their operation. They are funded by tuition charges (parental fees), gifts and, sometimes, the investment yield of an endowment.

Independent schools are autonomous institutions and, in managing their financial affairs, they are accountable, in particular, to the parents who pay their fees.

Some independent schools have charitable status and, as such, must abide by charities legislation. The 2020 Annual School Census from the Independent Schools Council (ISC) (which represents the majority of independent schools in the United Kingdom) found that 73% of member schools had charitable status.

Most private providers of early childhood education and care (ECEC) receive some government funding for the part-time provision that they offer free of charge to parents of children aged three and over. To receive this funding, they must meet the statutory requirements of the Foundation Phase framework. Parents can choose to pay for additional provision on top of the free, part-time early years services they receive.

Article last reviewed December 2020.