Unpicking the impact of the spending review

11th December 2015 at 00:00

Ever since the general election, the spending review has been hanging over the education world like a rusty anvil. But when it finally fell, it wasn’t quite as painful as first feared.

The DfE had been threatened with cuts of 25-40 per cent to its “unprotected” budgets, which covered post-16 education, early years and teacher training, among other things. In the end, it got away with a mere 6 per cent cut.

While that reflects well on Nicky Morgan’s team and its ability to negotiate, it still leaves schools, colleges and nurseries facing a challenging five years. The headteacher of a notional 3-19 school has a headache-inducing in tray to deal with. At the younger end, they’ll have to work out how to offer 30 hours a week childcare at the government rate to three- and four-year-olds with working parents. Anyone reliant on parents topping up their current 15 hours to make ends meet will have to rethink.

For the sixth form, our notional head will have been relieved to find that the base rate for students has been protected in cash terms (although it is still a relative cut, as it won’t increase in line with inflation). After the cuts the post-16 sector has faced over the past five years, many expected worse.

However, there are still questions over other elements of the funding – such as the extra 10 per cent that institutions receive for disadvantaged students. If this were to go, the viability of many institutions would be questioned.

Funding for the bulk of students aged 5-16 has also been protected – this time in real terms. This is better than what was promised during the general election campaign, but the protection doesn’t take into account the additional half-a-million pupils that will be in the system by 2020, or the additional pension and National Insurance costs that will fall on schools next year. They’re still an effective cut, then, totalling 8-10 per cent per pupil for this age range by 2020. For academies, the loss will be greater as the extra £87 per pupil they get to cover costs, previously met by local authorities, will be scrapped.

Our notional head, and their business manager, will also have to start thinking through the consequences of the national funding formula that was, finally, announced at the spending review. This is something that the DfE has been trying to get approved for the past six years and it is entirely necessary. There is currently no logic to the differential funding schools receive beyond historical precedent. However, it will mean the schools that lose, which will be clustered in larger urban areas and particularly in London, will have to face bigger cuts. Schools in struggling coastal and isolated areas are likely to benefit from more equitable funding.

We’re told that a consultation will be coming early in the new year setting out more details. In thinking through their response, senior leaders will want to consider some key factors. For example, how long is the transition to the new system? Losers won’t be expected to take the hit all at once, but is it better to get it out the way over a few years rather than have the pain drawn out for a decade?

What’s the right trade-off between simplicity and accuracy? Should there be, for example, just one way to measure disadvantage, such as free school meals, or should it be weighted for different income levels? Should there be one, simple extra payment for those who speak English as an additional language or do you weigh against how long they’ve been at school, instead?

Once we have a better idea of what the formula will look like, it should be possible to figure out how individual schools will be hit. At that point, leaders will want to start planning – implementation will start in 2017.

It probably won’t feel much of a consolation during the difficult and complex times ahead, but it really could’ve been worse.

Sam Freedman is executive director of programmes at Teach First and a former government policy adviser

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