Schools should prepare for cuts of up to 8 per cent over the next Parliament, a highly influential thinktank has said.

The funding outlook appears slightly rosier than before - cuts of up to 12 per cent were forecast earlier this year - but the Institute for Fiscal Studies (IFS) has warned that schools still face the first real-terms cuts since the 1990s.

The thinktank, which has predicted an overall cut of 8 per cent per pupil in real terms over the next five years, has concluded that this will exacerbate teacher recruitment problems. 

In a publication released today on the outlook for schools spending, the IFS writes: “Schools in England experienced a relatively benign scenario under the last parliament at least relative to many other public services. But this is now set to change.”

The IFS adds that it would be a “new experience for many in the school sector”, as it will be the first time since the mid-1990s that school spending has fallen in real terms. Spending per pupil fell by 3.6 per cent in real terms between 1993 and 1997.

Before the general election in May, the IFS predicted a bleaker picture of 12 per cent cuts. But according to the thinktank, the pressure has eased slightly since chancellor George Osborne’s announcement that public sector pay would be capped at a maximum 1 per cent rise each year.

“This is actually a less severe squeeze than looked likely at the time of the election,” the IFS writes, “but that only reflects the tighter 1 per cent pay increase announced in the Budget. That will ease the pressure on schools costs, but might make recruitment and retention of teachers and other staff more difficult.”

Schools are still “relatively protected” compared with other areas of education spending, the IFS concludes. Further education and sixth-form spending fell by 14 per cent in real terms during the last Parliament and the thinktank believes the sectors could experience even larger cuts this Parliament. 

Kevin Courtney, deputy general secretary of teaching union the NUT, said: “Many schools and colleges are already struggling and now face the significant cost of increased employer pension and national insurance contributions alongside the real-terms cuts resulting from inflation. 

“At a time when we face major problems with teacher supply, IFS notes that the government’s pay cap of 1 per cent could make recruitment and retention more difficult. 

“With pupil numbers rocketing, we need to recruit more teachers just to stand still, and we need to invest in capital funding to provide the new places needed. The outrageous cuts in post-16 and adult education funding which are threatening our sixth-form colleges must be reversed. We need to invest in our children and young people, not sell them short by cutting education funding.”