What would Conservative, Labour and Lib Dem promises on education funding actually mean for schools?

17th February 2015 at 16:00

Jon Coles, former director general of schools, now group chief executive of United Learning, writes:

David Cameron has said that per-pupil funding will be protected in cash terms. Ed Miliband and Nick Clegg have attacked each other’s announcements on school funding but both appear to have said that Department for Education participation budgets will be protected in real terms.

What do these positions mean in practice for schools?

Understanding the Conservative pledge of flat cash per pupil is fairly straightforward: with pupil numbers growing at primary and at secondary, an increase in cash of 7.8 per cent is required over 2015-2020.

What protecting the schools budget in real terms means depends on what is assumed about inflation. With Bank of England governor Mark Carney projecting negative inflation, this may be slightly slippery – but I suggest that the person in the street might have grounds for complaining about being misled if it didn’t mean that planned funding would increase at least in line with the Bank of England’s target rate for CPI of 2 per cent per annum. This amounts to a 10.4 per cent increase in cash over 2015-2020.

So the difference in the three main parties' promises for schools amounts to around £1 billion in cash in 2020.

Protecting real-terms funding per pupil – which nobody is proposing, but would be a genuine protection of the unit of funding – would require an increase of 19 per cent, bearing in mind inflationary pressures and pupil number growth.

The cost pressures on schools in total are probably higher still. They are analysed here. The analysis is sensitive to what assumption is made about teachers’ pay: depending on what is assumed, pressures range from 18.1 to 22.6 per cent.

To put it simply, if pay costs rise by 2 per cent per annum, schools would feel on average as though they were experiencing a 12 per cent cut under Conservative plans, or a 10 per cent cut under Labour and Lib Dem plans. If pay costs rise by just 1 per cent per year, schools will feel as though they are experiencing a 6.5 per cent funding cut under Labour or Lib Dem plans, or an 8.7 per cent cut under Conservative plans.

Under any of these scenarios, 2016-17 looks a very difficult year. An Association of Colleges analysis of the impact of pension changes on schools works backwards from the government’s total expected savings across all pension schemes to reach a total of some £850 million. Working "bottom up", I think that may be an underestimate and that the actual cost to schools may be more than £1 billion. Either way, this is a major single year hit on top of inflation and pupil numbers: 2.5 per cent of budget.

The political parties’ positions on the rest of the education budget look markedly different. David Cameron has talked of protecting the schools budget; Labour and the Lib Dems have included the other participation budgets – the early years and post-16 budgets as well. This brings into scope a further £10 billion of expenditure.

Real-terms protection of these budgets will have a cost of just over £1 billion by 2020. Of course, the Conservative Party has not said anything about these budgets and may yet do so, but as things stand this is a significant difference and appears to suggest that the Conservatives would cut these budgets more deeply.

Finally, protecting the remaining £2 billion of DfE revenue expenditure (which includes, for example, money for teacher training), as Labour has promised, has a cost of just over £200 million. Labour has also not said whether or not schools would be protected within the wider DfE expenditure so, as things stand, could look to move money from schools to other areas of DfE responsibility (or, less likely, vice versa).

In any case, in total, the differences between the major parties on the DfE revenue budget amount to £2.2 billion by 2020.

This piece was first published here.


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