Disadvantaged pupils risk losing out as their funding increasingly used to plug budget gaps - New PAC report

Government lacks knowledge of how funding for disadvantaged children is being spent by schools. In a report published today, the Public Accounts Committee (PAC) warns that disadvantaged children may not be benefitting from funding intended for them, with the Department for Education (DfE) possessing only a limited picture of how schools are spending billions in funding associated with disadvantage.

The PAC's inquiry heard that pupil premium funding, which is intended to improve educational outcomes for disadvantaged children, is being used for whole school interventions. Around 2m children in England from disadvantaged backgrounds are behind their peers academically, impacting their future life chances. Schools have autonomy to support disadvantaged children by using funding according to local context, with over 90% of c.£9.2bn in this funding is not ringfenced.

The report highlights that 47% of senior school leaders were using pupil premium to plug budget gaps in 2024, up from 23% in 2019, according to Sutton Trust research. The DfE believes that an accountability system, in which schools are required to report how funding will be used to support disadvantaged children's attainment, helps schools to make good choices. But the report finds that in 2023, a fifth of schools had not published such a report. The PAC recommends DfE introduce stronger and clearer mechanisms to understand how schools spend funding, whilst retaining the principle of local decision-making.

In 2022/23, a quarter of disadvantaged pupils achieved grade 5 or above in English and Maths GCSE, compared with a little of over for those not known to be disadvantaged. The slight narrowing of the attainment gap between disadvantaged children and their peers in the last two years is welcomed. The PAC warns that this progress is too slow, with some way to go to return to pre-pandemic levels. The DfE acknowledged this as part of the inquiry, and has not set out the specific progress it wants to make on closing the gap and by when.

DfE uses the disadvantage attainment gap index to measure progress, which compares attainment at key stage 2 and key stage 4 of disadvantaged pupils against their peers. The index does not provide a breakdown of variation by local area, or by ethnicity or gender. The DfE agreed during the inquiry that wider outcomes such as progression into work and wellbeing should be considered alongside academic attainment, and the PAC recommends Government lay out how the attainment gap is considered alongside other factors.

The PAC's report also questions the rationale for certain funding decisions. Pupil premium rates have failed to keep up with inflation with a 3% real-terms reduction since 2018-19, while disadvantage and deprivation-related interventions through core funding (for which there is weaker evidence of impact) has risen by 10% in real terms over the same period.

Separately, while the value of intervening as early as possible in a child's life is well recognised, DfE has not reflected this in its funding. While the Early Years Pupil Premium has been increased by 45% to up to £570 per child per year, this is as against £1,480 for a primary school child in 24-25. The PAC's report is calling on DfE to re-assess its evidence base for funding decisions, and align these decisions with developed evidence.

Sir Geoffrey Clifton-Brown MP, Chair of the Committee, said: “Schools are best-placed to make decisions on how to support their pupils within their local context. Autonomy for schools in this area is an important principle. However, with autonomy must come accountability. Our report finds that, for too many schools, the Government is not sighted on how money that ought to be spent on helping disadvantaged children overcome their circumstances is actually being used. In a constrained funding environment, it becomes all the more important that schools are supported to make the right choices.

“It is welcome to see the DfE focused as it is on closing the attainment gap. The pandemic was a massive blow to the life chances of pupils from disadvantaged backgrounds, and any progress towards a pre-COVID position must be celebrated. The DfE now must make sure it is able to target funding appropriately, underpinned by the best available evidence, and taking a holistic approach in measuring success. No-one should be satisfied until not one of the two million children without the same advantages as their peers risk being left behind.”

 PAC report conclusions and recommendations 

The Department has made some progress improving educational outcomes for disadvantaged children, but does not fully capture outcomes or breakdown performance. Disadvantaged children continue to perform less well academically than their peers - in 2022/23, 25% of disadvantaged pupils achieved grade 5 or above in English and Maths compared with 53% for non-disadvantaged children. The disadvantage attainment gap index, the main measure of progress, has narrowed in the last two years for children leaving primary school (KS2), and very slightly in the last year for those leaving secondary school (KS4). The Department is pleased by recent improvements in overall academic attainment and committed to further improving performance. It has not, however, set out the progress it wants to make in closing the gap, and by when. The attainment gap index only considers academic performance nationally and there is not a breakdown in how this varies by local areas or different groups of children, for example, by ethnicity or gender. The Department says it considers the attainment gap alongside other measures, such as wider outcomes where it has more limited analysis, but it does not routinely bring measures together to understand and monitor the impacts of interventions and tailor its approach.

Recommendation 1. Within the next six months, DfE should set out and publish:

1. its desired progress in narrowing the disadvantaged gap over the next three, five and ten years; and
2. how it considers the attainment gap alongside other measures and data, including on educational attainment and wider outcomes, to fully assess progress for all and selected groups of disadvantaged children.

DfE continues to improve its evidence base for what works, but the rationale for certain funding decisions, in particular increasing core funding, does not always follow the evidence. The Department has assessed its evidence base for pupil premium effectively supporting the attainment of disadvantaged children as relatively strong compared to other interventions. However, over the period 2018-19 to 2023-24 this funding has not risen in line with inflation, decreasing by 3% in real terms with a 9% real-terms reduction in per-pupil funding. By contrast, evidence is less strong on the impact of the disadvantage and deprivation related funding provided through the National Funding Formula (the core funding) - but the Department has increased it by 10% in real terms over the same period. The Department 's rationale for these decisions is not clear. The Department accepts it needs to develop its evidence base for interventions beyond pupil premium, to help support its decisions on where to target funding to best effect.

Recommendation 2. Whilst continuing to build an understanding of what works, DfE should re-assess the evidence base for funding decisions and, as part of this, set out its funding priorities for 2025-26, including where pupil premium falls within this.

Early Years funding and support remains critical for disadvantaged children to have the best start in life; it will be essential that DfE builds its evidence of what works. The value of intervening as early as possible in a child's life is well recognised, but the Department has not reflected this in its funding even after increasing Early Years Pupil Premium by 45% for 2025-26. Previously, in 2024-25 the maximum early years pupil premium for a 3- or 4-year-old was £388, compared to £1,480 for primary school child, with the Department unable to provide a clear rationale for these differences. The Department recognises it needs to continue revisiting funding and stressed the value of evidence in doing so. However, it can take a long time to generate evidence of the longer-term impact of early years interventions. For example, the best evidence for the impact of Sure Start Centres, on later academic attainment has only recently been published. The Department will need to think about how it will collect evidence on the impact of Family Hubs support for families in disadvantaged areas, including in the early years, although they have not been in place long.

Recommendation 3. The Department should prioritise expanding its evidence base on the effectiveness of early years interventions, including the role of Family Hubs, and in 12 months update the Committee on the impact of its decisions to increase Early Years Pupil Premium in 2025-26. In doing so, it should set out how its approach to developing evidence and then making funding decisions will align going forwards.

The Department relies on schools to spend funding in line with its intended purposes but has limited understanding of whether they do so. The Department's policy is to allow schools and early years providers flexibility to use funding according to their local context. As such, more than 90% of the estimated £9.2 billion funding associated with disadvantage is not "ringfenced", meaning schools can choose how they spend it. However, this also means the Department does not have a good understanding of how schools spend funding and therefore how effectively it supports the attainment of disadvantaged pupils. There is a risk that disadvantaged children may not be benefitting, with 47% of school leaders surveyed by Sutton Trust in 2024 using pupil premium to plug wider budget gaps, up from 23% in 2019. The Department does not have a systematic way to understand how pupil premium is spent, with only 80% of schools sampled in 2023 meeting the requirement to publish 2022-23 strategies setting out how they plan to use funding to improve disadvantaged children's attainment. Also, the Department is not collecting information on whether schools are providing tutoring, now the National Tutoring Programme has ended.

Recommendation 4. Whilst retaining the principle of local decision-making, the Department should introduce stronger and clearer mechanisms to understand how schools spend funding. This should include:

1. collecting data on where schools use disadvantaged-focused funding, including for certain interventions such as tutoring; and
2. reiterating the need for schools to publish up-to-date strategies for how they plan to spend pupil premium and following up non-compliance.

The Department supports schools in making effective local decisions, but there remains variability in practice, performance and how schools use evidence. The Department provides support to schools and other providers to help them effectively target their funding for disadvantaged children. This support includes a menu of evidence-based approaches for Pupil Premium, and guidance signposting the work of the Education Endowment Foundation. The Department recognises there are differences in how schools consider available evidence, and then the approaches they take to improve outcomes for disadvantaged children. It feels that schools make good use of this but also accepts it must develop the evidence base for interventions beyond pupil premium. With only 70% of school leaders saying they use Education Endowment Foundation evidence to develop plans for spending pupil premium, there is clearly huge scope for improvement, and the Department acknowledges that this figure should be closer to 100%.

Recommendation 5. The Department should provide greater clarity on how it supports schools, early years providers, local authorities and academy trusts to make effective evidence-based decisions. This should include setting out how it will capture and share good practice and monitor differences.

The Department is relying on the 'Opportunities Mission' to bring together its own, and wider government's, work to support disadvantaged children but it remains unclear how this will work in practice. The Department must work with other areas of government to support disadvantaged children, such as with the Department for Work and Pensions as part of the Child Poverty Task Force. However, cross-government working has previously been challenging, in part because other parts of government may not place as high a priority on disadvantage as the Department. The Department is developing its strategy for narrowing the gap between disadvantaged children and their peers around the government's mission "Breaking down the barriers to opportunity", which also provides a chance to revisit how it works with others across government, particularly though shared data which is where the Department sees most scope for improvement. The Government's Plan for Change, setting out details of its missions, was published in December 2024, meaning it is still too early to see any changes to ways of working.

Recommendation 6. The Department should set out how it will use the opportunities mission to further join-up data and performance information, and embed the cultural changes needed for effective cross-government working.