Our remit again directed us to have regard to affordability. We were told that financial provision for the public sector would be set on the basis that pay increases should be offset, or more than offset, by efficiency gains and increased productivity. Higher pay costs, we were told, could lead to reduced service levels or reductions in employment if they could not be covered by efficiency savings and other economies.
With respect to local authority funding in England, we were told that the 1995-96 proposed total for Education Standard Spending would be Pounds 17,204 million, representing an increase of 1.1 per cent.
The Secretary of State reiterated in her letter that the Review Body's recommendations should, in our judgment, be affordable given the ESS figure for 1995-96, having regard both to new pressures on resources - pupil numbers are due to increase - and to the scope that local education authorities might have for making efficiency gains.
In their evidence to us for this review, the national employers said - on the basis of a survey in February 1994 - that 34 of the 77 authorities which responded were able to provide schools with resources to meet the cost of the 2.9 per cent increase in pay in 1994-95. Most were able to do this only by drawing on reserves. Detailed information is not available about how individual schools funded the increase in pay.
The National Association of Schoolmasters Union of Women Teachers estimates that the unspent balances at March 1994 would aggregate to more than Pounds 800m in schools in England and Wales as a whole. Balances varied from school to school (averaging Pounds 22,000 in primary and Pounds 73,000 in secondary schools).
The increase in standard spending assessments, and in the revenue support grant to which they correspond, implies that after allowing for an increase in non-pay costs there could be scope for teachers' pay to rise by just under 1 per cent, on the assumption that there was no increase in teacher numbers, even though rolls will continue to grow, by a further 1.5 per cent, between January 1995 and January 1996.
The national employers viewed the prospects with considerable concern. They emphasised that actual budgeted expenditure in 1994-95 was above the aggregate SSA figure for that year, and said that every time the Government ignored actual spending levels as the starting position for the next year, a further financial squeeze was placed on LEAs which, in a staff-intensive service with teachers' pay accounting for more than 60 per cent of total expenditure, led to fewer teachers and larger classes.
They said they understood the importance of whatever pay increase might be recommended for teacher recruitment, retention and morale. They added, however, that this had to be considered alongside the effects of increases in class size and workload.
Following successive increases since the late 1980s, the overall number of pupils per teacher showed a further increase in January 1994. The figure in nursery, primary and secondary schools in England stood at 18.1, compared with 17.8 at January 1993 and 17.0 at January 1989. Class sizes and the pupil to teacher ratio have for many years been seen as key indicators, although there are different views as to their significance.
There is, nevertheless, concern among those responsible for maintained schools and in the teaching profession about the continuing pressure on staffing resources. The DFE was not prepared to express any specific views to us about appropriate staffing levels or deployment, although it was made clear that the Government looked to LEAs and schools to continue to secure savings in staff costs in 1995-96. Concern about resource levels for schools continues to be compounded by the opacity of the funding system.
Over the 12 months to November 1994, the increase in the retail prices index was 2.6 per cent. Pay settlements were broadly in the range 2.5 to 4 per cent in 1994. Recent comparative increases in teachers' pay have taken the earnings of male teachers well above the average for male non-manual workers. Female teachers' earnings have stayed consistently well above average female non-manual earnings.