The Secretary of State for Education is committed to protecting and promoting autonomy for schools over how they use their funding. Schools know best how their funding is most effectively used to the benefit of their pupils. Whether schools decide to use their funding in a local community budget for families with multiple problems, is a matter for individual schools.

Intervening to support families with multiple problems can have a big impact on behaviour and educational attainment. Research suggests a third of excluded children are from these families. Data on the first 1,788 families to complete a family intervention showed a 54 per cent reduction in school truancy, exclusion and bad behaviour. 

N.B. This note provides factual information on the powers schools and local authorities have to enter into pooled budgets. 

Local authority retained funding

Local authorities delegate approximately 90 per cent of school funding (the Dedicated Schools Grant or DSG) to schools.[1] The funds they retain are largely needed to pay for special educational needs provision and other alternative provision. Local authorities can place any money left in to pooled budgets with other services, subject to the agreement of the local Schools Forum.[2] The money has to be used to bring an educational benefit to pupils. 

Pupil Premium

Local authorities will be required to allocate, directly to schools, Pupil Premium money for pupils in mainstream schools. However, funding for pupils in special schools, or alternative provision, can be retained by the local authority subject to consultation with providers. 

Local authorities could put some of the retained Pupil Premium money into the Community Budget, if they consulted with special schools or alternative provision providers and there was agreement the money would be used in a way beneficial to them. 

Schools’ budgets

Maintained schools have a relatively wide power to enter into pooled budgets with other partners if they wish.[3] They could choose to use DSG, or Pupil Premium money, in a pooled budget - they would need to report to parents how Pupil Premium money is benefiting disadvantaged pupils. 


Academies’ powers are set out in their charitable purposes and their funding agreement with Government. Subject to the terms of their Articles of Association and their funding agreements (insofar as the money relates to the grant paid by the Secretary of State), Academies would be able to pool funds with others, if they thought it was in the best interests of the school and for the purposes of advancing education for the public benefit.

[1] Local authorities cannot retain more funding centrally without the consent of the Schools Forum. The extra amount local authorities could retain is limited by the Minimum Funding Guarantee, which demands schools receive a set level of funding, based on the previous year’s budget, and can only be waived with the agreement of the Secretary of State for Education.

[2] If the Schools Forum does not agree, the local authority can ask the Secretary of State to overrule it. However, the Secretary of State is unlikely to overrule a decision made by schools themselves about the best way to use funding intended for their purposes.

[3] Under section 27 of the Education Act 2002 and the School Budget Shares (Prescribed Purposes) (England) Regulations 2002 (SI 2002/378) as amended, made under s50 of the School Standards and Framework Act 1998.