No you don't need a functional skills qualification, in my school people do english, i.t and a maths functional skills exam and all of them together equals 1 GCSE (its for people who do college and are missing out on a GCSE). In sixth form if you fail to pass your maths and english because you can't do it, they will put you in for functional skills. I don't know if its the same for everyone, but thats what it is like in my school
EDIT: Also, it is either a fail or a pass, so you don't actually get a grade.. like I said though, i'm not sure if it's the same in every school