Source · Select Committees · Public Accounts Committee
Recommendation 4
4
The Ministry of Housing, Communities and Local Government has now set out the detail of...
Conclusion
The Ministry of Housing, Communities and Local Government has now set out the detail of its new funding formula for home to school transport but not yet set out its plans for monitoring whether it proves to be successful in aligning funding with local need. In 2023–24, home to school transport (pre-16) accounted for approximately 3.7% of total local government spending, but is one of the fastest growing areas of local authority spending. In response to the escalating pressure it has been placing on local authority budgets in the past decade, MHCLG has announced a new funding formula for home to school transport from April 2026 to better align funding allocated through the local government finance settlement with local need. MHCLG assures us that the formula reflects rural and urban differences, for example, by basing funding on journey time rather than miles travelled. It published details on the formula after the evidence session. Although it represents a much smaller proportion of the total, spending on ‘SEND transport’ post-16 is growing proportionately faster than for pre-16, but is not covered by the new formula. MHCLG has yet to set out how it intends to monitor the impact the new funding formula has on local authorities. recommendation MHCLG should write to the Committee to set out how it will assess whether the funding formula changes better align with local needs in practice.
Government Response
Response Pending
HM Government
Response Pending
The government agrees with the Committee’s recommendation. Recommendation implemented Through the Local Government Finance Settlement 2026-27 to 2028-29, the government is updating the needs formulas used to calculate local authority funding allocations, following four consultations. Using more up-to-date data will enable a more accurate assessment of relative demand for services. MHCLG has also simplified the approach to the needs assessment, reducing the number of formulas from 15 to 9. Relative Needs Formulas (RNFs) assess how much ‘need’ each local authority has in comparison to others for specific services, reflecting how local characteristics influence demand. One of the nine RNFs is the Home to Schools Transport (HTST) formula which takes account of the distance eligible pupils travel to school. It applies the Upper Tier Foundation Formula Area Cost Adjustment, which considers differences in labour and rental costs, including the labour cost impact of longer journey times. Overall, nine in ten councils will receive funding that broadly matches their assessed need by the end of the multi-year Settlement, up from around a third before government reforms. The Department for Education will appraise the HTST Relative Needs Formula ahead of the next multi-year Local Government Finance Settlement from 2029-30. The department expects to be able to use data from the HTST data collection and section 251 financial data to help it validate how well the formula aligns with need to deliver transport. At that time, it will consider whether the formula could be refined further. MHCLG would be happy to write to the Committee with further updates or information if requested.