understands that the regulators' already stretched budgets are in line to be slashed further, leading to fears for the schools sector.
Chancellor George Osborne has announced that the Department for Education and the Department for Business, Innovation and Skills (BIS) have agreed to make extra savings of nearly pound;1 billion. The Treasury said last week that the BIS cuts of pound;450 million would come partly from further education, while "savings in the administration of arm's length bodies" would contribute to the DfE's pound;450 million share of the cuts.
Many of the DfE's arm's-length bodies, such as the General Teaching Council for England, were abolished in 2010. Sources say the cuts are likely to hit Ofsted and Ofqual, whose budgets for 2015-16 have been set at approximately pound;150 million and pound;22.5 million, respectively.
Professor Alan Smithers, from the University of Buckingham, said: "It seems to be wishful thinking on the part of the government, [which] could be causing unnecessary pain by demanding cuts without a clear indication of where it will be possible."
An Ofsted spokeswoman said the watchdog was "liaising with the DfE" and working to "determine how we best support the department in meeting its savings requirements".
Trigger for reform
The inspectorate's funding has already been cut by 39 per cent in a decade, from pound;266 million in 2004-05 to pound;163 million in 2014-15, despite a huge expansion in its responsibilities. Ofsted's critics hope further cuts could spark the major reforms to school inspection that they claim are needed, but they also fear the squeeze will cause further concerns over reliability.
The ATL teaching union said there was scope for Ofsted to make savings, but only "if it radically changes its model".
Brian Lightman, general secretary of the Association of School and College Leaders, said he hoped the cuts would trigger reforms leading to a peer review-based inspection system.
Ofqual is also under pressure as it supervises the introduction of reformed GCSEs and A-levels. In 2014-15, ministers agreed to give the watchdog an extra pound;4 million because its pound;15.7 million budget was not sufficient to cope with the changes.
Last month it emerged that practice maths GCSE papers approved by Ofqual were pitched at the wrong level. The watchdog said it would now have to embark on much more extensive research into standards in several other new qualifications.
An Ofqual spokeswoman declined to comment until further details of the DfE's savings were known.
Professor Smithers said: "Ofqual has a tremendous amount on its plate. It will be very hard for it to absorb cuts."
Arm's-length bodies that are still linked to the DfE also include the Standards and Testing Agency, the National College for Teaching and Leadership, the Education Funding Agency and the School Teachers' Review Body.