Guidance

Growth and falling rolls fund guidance: 2025 to 2026

Updated 28 November 2024

Applies to England

1. Introduction

This document is split into two sections:

• growth funding

• falling rolls funding

In each section, the operational guidance around setting compliant growth and falling rolls funding criteria is outlined.

Each section then provides examples of a range of local authorities’ clear and objective criteria for growth and falling rolls funding. This has been provided in order to support local authorities and their schools forums to set their own compliant criteria.

2. Growth funding

2.1 Growth funding through the national funding formula (NFF)

Growth funding is allocated through the national funding formula (NFF) within each local authority’s school block. Unlike the other factors in the NFF, a provisional growth allocation is not published. This is because growth funding is based on the latest pupil data, recorded in the October 2024 census, which is not available at the publication of the provisional NFF. Instead, each local authority’s growth allocation is included in the dedicated schools grant (DSG).

The methodology to calculate growth funding was introduced for the 2019 to 2020 financial year and has remained the same for the 2025 to 2026 financial year. This means it will be based on the observed differences between the primary and secondary number on roll in each local authority between the October 2023 and October 2024 school censuses. Growth is measured at the level of middle layer super output areas (MSOA) within each local authority – these are areas used by the Office for National Statistics (ONS), based on population data, which allow us to capture growth in small geographical areas within local authorities. The growth allocation for each local authority will be £1,570 per new primary pupil and £2,350 per new secondary pupil, plus a lump sum of £77,225 for each brand new school (these are new schools identified from the latest census data). Allocations are subject to an area cost adjustment (ACA).

As growth funding is within the schools block, a movement of funding from the schools formula into the growth fund would not be treated as a transfer between blocks. However, the schools forum must be consulted on and agree, the total size of the growth fund. In addition, it should be consulted before any expenditure from the growth fund is incurred.  The schools forum should receive regular updates on the use of the funding. Any in-year reduction to the growth fund needs to be agreed with the schools forum.

2.2 Operational guidance on growth funding

This information outlines operational guidance regarding local authorities’ growth funds, also published in the schools operational guide: 2025 to 2026.

The growth fund can only be used to:

• support growth in pre-16 pupil numbers to meet basic need

• support additional classes needed to meet the infant class size regulation

• meet the revenue cost of new schools

• meet revenue costs, for schools, of removing or repurposing surplus places

The growth fund must not be used to support:

• schools in financial difficulty; any such support for maintained schools should be provided from a de-delegated contingency

• general growth due to popularity; this is managed through lagged funding. This includes cases where academies have admitted above pupil admission numbers (PAN) by their own choice

Local authorities are responsible for funding these growth needs for all schools in their area, for new and existing maintained schools and academies. Local authorities should fund all schools on the same criteria. Where growth occurs in academies that are funded by the department on estimates, the department will use the pupil number adjustment process to ensure the academy is only funded for the growth once.

The costs of new schools will include the lead-in costs, for example to fund the appointment of staff and the purchase of any goods or services necessary in order to admit pupils. They will also include post start-up and diseconomy of scale costs. These pre and post start-up costs should be provided for academies where they are created to meet basic need.

The department will continue to fund start-up and diseconomy costs for new free schools where they are not being opened to meet the need for a new school as referred to in section 6A of the Education and Inspections Act 2006.

The growth fund may not be the most appropriate source of funding for growing schools and the department expects local authorities to use varying pupil numbers where there is a more permanent and significant change to numbers, and where it is appropriate for the change to be reflected in the funding formula. The following examples provide the distinction of where the department would expect the growth fund to be used, and where the department would expect pupil numbers to be changed on the authority proforma tool (APT):

Example 1:

Based on the pupil census data a local authority has projected that there will be a need for an extra 30 places in secondary provision in the next school year. They have approached a school which has agreed to increase provision from September 2025. This should be recorded on the APT in January 2025 and would be managed through a variation to pupil numbers.

Example 2:

Based on previous years and anticipated growth the local authority has forecast a possible need for 100 new primary places. This has yet to be confirmed and as such the local authority has not yet agreed any additional placements but know that they will need to do so within the next year. This is an appropriate reason to hold money in the growth fund and to use as and when the basic need occurs.

Local authorities will not need to submit a disapplication request for an increase to numbers where this is due to a change to the admission limit or a local reorganisation. Local authorities are required to produce criteria on which any growth funding is to be allocated, which must be agreed by the schools forum.

In 2025 to 2026, local authorities will continue to set criteria to determine how to allocate growth funding to schools in their local area – subject to the mandatory minimum requirements set out below.

2.3 Setting growth funding criteria

Local authorities’ growth funding criteria should contain clear objective trigger points for qualification and a clear formula for calculating allocations with these criteria applying to all schools on the same basis. This will be checked by the department for compliance with the annually made School and Early Years Finance (England) Regulations, to check that it provides a transparent and consistent basis for the allocation of funding, which may be different for each phase.

All criteria will need to be captured in the APT return.

Local authorities are required to provide growth funding where a school or academy has agreed with the local authority to provide an extra class to meet basic need in the area (either as a bulge class or as an ongoing commitment). When this criterion is met, as a minimum local authorities will have to provide funding to a level which is compliant with the following formula:

primary growth factor value (£1,570) × number of pupils × ACA

If a school or academy that has agreed to provide an additional class receives funding for this through a variation in pupil numbers (rather than through ‘explicit’ growth funding), that can still be compliant with the criteria above, if the additional funding is at least the level as calculated through the above formula. 

The primary growth factor value is used as the factor value for this minimum criterion for all school types - recognising that this funding is a minimum value.

Funding, either through the growth fund, or by adjusting pupil numbers in the APT, will need to be provided regardless of whether the additional class is within or outside of the PAN.

In addition to the compulsory criteria above, compliant criteria would generally contain some of the features set out below:

• additional support where a school has extended its age range (the majority of funding would be paid through the funding formula where the local authority should seek a variation in pupil numbers)

• support where a school has temporarily increased its PAN, by at least  a minimum number of pupils, in agreement with the local authority

• support for key stage 1 classes where overall pupil numbers exceed a multiple of 30, by at least a minimum number of pupils

• pre-opening costs, initial equipping allowance, or diseconomy of scale allowance, for new maintained schools and academies; including new academies where the school is opening in response to basic need

While local authorities have flexibility on how they allocate funding, in cases of funding an additional class (as outlined above) funding must be compliant with the minimum funding requirement. 

Methodologies for distributing growth funding could include the following elements:

• a lump sum payment with clear parameters for calculation (usually based on the estimated cost of making additional provision for a new class or the estimated start-up costs)

• a per-pupil rate (usually based on age weighted pupil unit (AWPU), and reflecting the proportion of the year which is not funded within the school’s budget share)

• a per-pupil rate, with a maximum ceiling

Funding for maintained schools is provided to cover the period from September to March before the lagged funding system ‘catches up’ from the subsequent April through the subsequent year’s NFF. Since academies are funded on an academic year basis, they would receive additional funding (at a rate of an additional five-sevenths of the allocation) to cover a full year’s growth funding before the system ‘catches up’.

Where growth funding is payable to academies, the local authority should fund the increase for the period from the additional September intake through until the following August. Local authorities should enter the cost of growth funding for the April to August period, along with appropriate justification, on the recoupment tab of the APT so that the recoupment calculation can be adjusted accordingly.

The department will not make growth fund recoupment adjustments for diseconomy of scale, or start-up funding; local authorities should not enter these on the recoupment tab of the APT. This funding will continue to be met from the local authority’s growth fund.

Where schools have agreed an expansion in pupil numbers with the local authority, the school should ensure that they understand the methodology for funding the increase and are content that the expansion is deliverable within the funding available.

Local authorities should report any unspent growth funding remaining at the year end to the schools forum. Funding may be carried forward to the following funding period, as with any other centrally retained budget, and local authorities can choose to use it specifically for growth. Any overspent growth funding will form part of the overall DSG surplus or deficit balance.

2.4 Examples of compliant criteria for growth allocations

Some examples of local authorities’ compliant criteria are shown below.

Funding must be topped up to meet the department’s minimum requirements as necessary where local authority criteria fall below the minimum requirement.

Example 1:

The purpose of the growth fund is to support:

• basic need expansions (permanent and bulge) approved by the local authority as these are not captured in the October census until the following year; additional classes must be part of the growth plan agreed and co-ordinated by the admissions and schools investment team

• additional classes needed to meet the infant class size regulation

These will be funded from the centrally retained growth fund. Funding for new classes will be set above the minimum funding expectation set by the department.

Where a school increases its PAN in agreement with the admissions and schools investment team, funding will be provided based on basic entitlement multiplied by the number of additional places until these are reflected in the school funding formula; funding will be adjusted to reflect the proportion of the year which is not funded within the school’s budget share.

Growth funding will be allocated as follows:

• basic entitlement (the primary rate, or the key stage 3  rate as a figure for secondary classes) × 30 (to each school, adjusted to reflect the proportion of the year which is not funded within the school’s budget share until the school receives funding through their funding formula)

For example, new classes opening at any point in September will be funded at 30 × basic entitlement × seven-twelfths.

Example 2:

Growth fund allocations will be made for approved bulge classes in the first year, or for agreed expansion classes as the expansion moves up the school. The amount of funding will be paid as a lump sum of £50,000.

For classes up to 30 pupils, the lump sum must be worth at least £1,570 × 30 × ACA = £47,100 (assuming an ACA of one), to be compliant with the minimum funding requirement.

3. Falling rolls funding

3.1 Operational guidance on falling rolls funding

The department also allocates funding based on falling rolls within local authorities’ schools block DSG allocations, alongside growth funding. 

This information outlines operational guidance regarding local authorities’ falling rolls funds, also published in the schools operational guide: 2025 to 2026 

Falling rolls funding will be distributed on the basis of the reduction in pupil numbers that local authorities experience for each year. It is based on the observed differences between the primary and secondary number on roll in each local authority between the October 2023 and October 2024 school censuses. Falling rolls are measured at the MSOA level within each local authority – these are areas used by the ONS based on population data, which allow us to capture falling rolls in small geographical areas within local authorities. The falling rolls allocation for each local authority will be £ £141,890 per MSOA which sees a 10% or greater reduction in the number of pupils on roll between the two census years. This allocation will be subject to an ACA. This is detailed in the schools NFF technical note.

Local authorities will continue to have discretion over whether to operate a falling rolls fund. Where local authorities operate a fund, they will only be able to provide funding where the most recent school capacity data (SCAP) shows that school places will be required in 2025 to 2026, and/or either of the subsequent 2 years. Local authorities which choose to operate falling rolls funds have flexibility to set additional eligibility criteria, and also have flexibility over funding rates.

The schools forum should agree both the value of the fund and the criteria for allocation, and the local authority should consult schools forum before expenditure is incurred. As with the growth fund, the falling rolls fund is within the NFF schools block.

3.2 Setting falling rolls funding criteria

Criteria for allocating falling rolls funding should contain clear objective trigger points for qualification and a clear formula for calculating allocations. Differences in allocation methodology are permitted between phases. Compliant criteria would generally contain some of the features set out below:

• the most recent SCAP data shows that school places will be required in 2025 to 2026 and/or the subsequent 2 years (this is a mandatory requirement).

• surplus capacity exceeds a minimum number of pupils, or a percentage of the published admission number

• formula funding available to the school will not support provision of an appropriate curriculum for the existing cohort

• the school will need to make redundancies to contain spending within its formula budget

Local authorities, working closely with other responsible bodies, will want to manage the local school estate efficiently and reduce or find alternative uses for high levels of spare capacity, to avoid detriment to the educational offer or financial position of schools in the area. Falling rolls funding should only be used to support schools where the places are forecast to be needed over the short-medium term.

Growth and falling rolls funding can be used to help meet the revenue costs, for mainstream schools, of removing or repurposing surplus places. For example, the growth and falling rolls fund could be used to meet the revenue costs faced by schools for repurposing space to create special educational needs (SEN) provision or early years places. Such use of funding must be for revenue, rather than capital costs. Where growth and falling rolls funding is used specifically to meet revenue costs associated with removing or repurposing surplus places, the department does not require SCAP data to show an increase in pupil numbers in subsequent years. This is because the department recognises that the repurposing or removing of surplus places allows schools to make efficiencies when experiencing falling rolls but does not necessarily relate to future increases in pupil numbers. 

Methodologies for distributing falling rolls funding could include:

• a rate per vacant place, up to a specified maximum place number (place value likely to be based on basic entitlement)

• a lump sum payment with clear parameters for calculation (for example, the estimated cost of providing an appropriate curriculum, or estimated salary costs equivalent to the number of staff who would otherwise be made redundant)

Local authorities should report any falling rolls funds remaining at the end of the financial year to the schools forum. Funding may be carried forward to the following funding period, as with any other centrally retained budget.

3.3 Examples of compliant criteria for falling rolls funding

Some examples of local authorities’ compliant criteria are shown below.

Example 1:

Identification of schools with falling rolls:

• the total number on roll (NOR) has dropped by at least 5% between last October census and the previous year’s October census

• spare capacity of the school is a minimum of 15% of PAN

• school capacity data shows that school places will be required in 2025 to 2026 and/or either of the subsequent 2 years

Where a school meets all the above criteria, funding will be provided using the following calculation:

• the NOR as at the most recent October census will be deducted from the NOR of the previous October’s census. The result will be multiplied by the current basic entitlement rate, appropriate to phase, pro rata April to August (5 months)

Example 2:

Additional funding is allocated based on a proportion of the basic entitlement for vacant places below 85% of the PAN for the normal year of entry (reception or year 7) and also for the next year group after entry (year 1 and year 8). Funding is available for a maximum of 3 years (provided SCAP data shows places are needed in 2025 to 2026 and/or either of the subsequent 2 years) after which a school’s PAN may be adjusted or other action taken.