Spending Review - what it really means
20 Oct 2010
The sighs of relief that many have been making over the relative protection of the schools’ budget may prove premature.
For while it is certainly true that schools have fared much better than almost all other parts of the public sector (and much better than universities and FE), not all schools will find their budgets rising in line with inflation.
The reason for that is that the calculation which means that schools will get a ‘real terms’ increase of 0.1% a year includes the Pupil Premium. And since the Pupil Premium will not be divided equally amongst all schools, there will be clear losers overall.
Let’s start by looking at the headline figures (in ‘real terms’ i.e. after adjustment for inflation from 2010-11 to 2014-15):
- Total Department for Education Budget = 3% cut
- Schools Budget = 0.1% increase
- Sure Start = approximately 3% cut (0% in cash terms)
- Capital Spending for Schools = 60% cut.
This means that, in order to protect schools, other parts of the education budget (like capital for school buildings) are being cut heavily. These cuts will be deep because, by 2014-15, the schools budget will represent about 68% of the total education budget. In other words, the 3% savings must be found in just 32% of the budget.
We are not yet being told exactly what these other cuts are. But clearly they will affect spending areas such as: safeguarding, Education Maintenance Allowances (which are to end), Connexions, youth programmes, educational quangos, and central departmental spending.
So, returning to the schools budget, does this mean all schools will see their budgets rise in line with (or fractionally above) inflation? The answer has to be ‘no’.
There will be an extra £3.6 billion in the ‘schools budget’. But that includes the additional £2.5 billion for the Pupil Premium. We do not know yet exactly how that premium will be allocated but – clearly – it will be targeted at schools educating children from the poorest homes.
That means that some schools will get more than a 0.1% real terms increase but many schools – particularly those outside inner-city areas – will get a real terms cut to their budgets.
Indeed, these figures raise questions over whether the government can really claim (as the Lib Dem manifesto promised) that the £2.5 billion would be additional money to the schools budget.
A 0.1% real terms increase on the schools budget of £35 billion does not amount to anything remotely near to £2.5 billion.
So the only way the Department for Education can argue that there will be additional injection of this sort is by pointing to the fact that the pay freeze on teachers’ salaries will save schools about £1 billion, with a further £1 billion coming from efficiency savings in schools.
Schools' pay bills, though, will continue to rise even with a pay 'freeze' because of the effect of incremental drift, as teachers move up their pay scale with annual experience increments.
What is clear, however, is that the government is moving to a very different method of funding schools – one which should give schools greater freedom over how they spend their budgets but which will also mean more winners and losers.
That‘s because a whole range of other spending streams are about to be included in the Dedicated Schools Grant. This is the money that goes to schools via local authorities.
Until now there have been several other funding streams for schools, including: one-to-one tuition, the ‘Every Child A Reader’ and similar programmes, extended schools grants, school standards grant, school development grant, specialist schools grant, ethnic minority achievement grant, and National Strategies budgets that were allocated to schools.
In future, it’s likely that many of these will be absorbed into the Dedicated Schools Grant. That will mean the money comes without strings attached and it will help make the basic per pupil funding figure look better, but there will be an element of ‘robbing Peter to pay Paul’.
However, as I said at the start, schools can nevertheless be relieved that they are not taking the hit meted out to universities and FE Colleges.
Teaching in Higher education is effectively being privatised with student fees set to replace government grant. Hence the 40% (£2.9 billion) cut in the higher education budget by 2014-15.
Only subjects deemed of national importance – like science, technology, engineering and maths – are likely to continue to receive government grant for teaching.
Further Education is being cut by 25% (£1.1 billion) by 2014-15. Train To Gain is being axed but there will be a boost to adult apprenticeships of £250 million a year.
<Note: other commentators seem now to have caught up with the inevitability of many schools facing a 'real terms' funding cut. This is partly thanks to the Institute of Fiscal Studies which calculated that the great majority of schools will be losers, although the government disputes their calculations. And, more recently, the Education Secretary, Michael Gove, admitted that some schools will be losers and that the Pupil Premium had come partially from the education budget. >