Where has all the money gone?

2nd February 2018 at 00:00
The government insists that schools have never had it so good in terms of funding, yet headteachers up and down the country are being forced to cut jobs and subjects. Charlotte Santry investigates why, despite a real influx of cash, schools are now struggling to balance the books

Imagine working in a schools system that had seen its annual budget grow by nearly £10 billion over 12 years.

And in which per-pupil spending had more than doubled in primaries and nearly doubled in secondaries – in real terms, after inflation – in just 20 years.

This might sound fanciful in England, where schools are becoming used to rounds of redundancies and curriculum cuts.

But this is, in fact, the reality here today. The same schools that are frantically tightening their belts and laying off staff have also experienced a prolonged continuous funding boom, lasting nearly two decades.

Granted, school spending per pupil was cut in real terms by 4 per cent from 2015 to 2017, and is being frozen between 2017 and 2019. 

But an analysis of national statistics by the respected Institute for Fiscal Studies clearly shows that, today, schools are still much better off than they were in 1997. Between then and now, per-pupil budgets have risen by 82 per cent on average in secondaries and by 106 per cent in primaries – in real terms.

This week, the new education secretary, Damian Hinds, prompted howls of outrage from teachers in the grip of the current funding squeeze when he said schools have “more money than ever before in the history of the country”. But he was not far from the truth.

And yet, today schools are being completely honest when they say they have nothing left in their budgets and are at “breaking point”. John Tomsett, headteacher of Huntington School in York, sums up the anger felt by many of his peers: “In this fifth or sixth biggest economy in the world, you’ve still got schools that have rain coming through the ceiling.”


So where has all the money gone?

“This is the most important question in education policy today,” says a former Treasury official who worked for the government in the 2000s, a period during which schools benefited from year-on-year 5 per cent funding increases.

In 2001, the average secondary pupil attracted £4,095 a year in 2015-16 prices. By 2016, this had grown to £6,127.

And while the 2001 funding may look paltry by today’s standards, back then schools thought they were in a time of plenty. “At the turn of the century, everyone [in schools] was doing cartwheels about how much money they had,” the former official says. It was so much more than schools were used to after years of stagnant funding.

But the ex-Treasury mandarin argues that a lot of this extra money was wasted on short-term political whims that have failed the test of time. “Stupid amounts of money were thrown out of the door very quickly, on a very sketchy evidence base, to placate political and policy wheezes that in retrospect were nonsense,” he says. He reels off a list of expensive “gimmicks”, including schemes encouraging personalised learning and others targeting children’s social and emotional skills. 

While such initiatives originated in Whitehall, the funding for them formed a growing component of individual schools’ budgets.

Somewhat controversially, teaching assistants are included on the former official’s list of investments offering poor value for money. 

Staffing costs clearly made up the biggest chunk of extra school spending in the 1990s and 2000s. According to the IFS, a “small, but notable” portion – around 20 to 30 per cent – of the increased per-pupil expenditure between 1999-2000 and 2012-13 translated into more teachers, paid higher salaries.

An unspecified “substantial proportion” of the cash went on non-staffing such as ICT, energy, professional services and learning resources, according to the IFS. But the largest proportion went on more teaching assistants and other non-teaching staff, which accounted for up to 44 per cent of the increase in primary schools, and up to 38 per cent in secondary schools. Far more was spent on teaching assistants than the government had predicted, and the extent to which this has helped pupils is widely contested.


Of course, the amount of extra funding overall has varied enormously across the country: primary schools in the most deprived areas enjoyed funding boosts between 1999-00 and 2012-13 of 83 per cent on average, compared with 56 per cent in the least deprived areas. The pattern is even more pronounced for secondary schools, with those in the most deprived areas receiving a 93 per cent increase, against 59 per cent for the least deprived.

But, across the board, the answer to why schools cannot survive on the same funds they had in 2000 is because, according to the former official: “They have a lot, lot, lot more staff on their payroll.”

And that makes trimming budgets when times are leaner a much trickier proposition. Redundancy pay-offs create short-term costs, and many would argue that it is the freezing of teacher salaries in more recent years that has led directly to today’s recruitment crisis.

Even if it were easy to shed some staff in response to a tougher funding settlement, it would not be that simple. Heads and unions point out that behind the increase in staffing is a huge shift in the role that schools are being asked to play, as they are required to take on more and more of society’s responsibilities. 

Parents, having grown accustomed to schools offering a range of services, are left aghast when these services are earmarked for cuts. But maintaining them leaves schools vulnerable to the increased costs that come with extra staff, such as pensions, national insurance contributions and unfunded pay rises. 

Taken together, these factors can quickly turn a funding increase into a real-terms cut. So, as with the NHS, the actual inflationary costs facing schools are higher than the economic measure of inflation used by the government. This could partly explain why schools are so unimpressed by the government’s pledge to freeze schools’ funding in real terms until 2019-20.


Meanwhile, the demands from ministers and the accountability pressures on schools are constantly increasing, at a time when many local authorities no longer provide the same level of support to schools that they once did. And it is widely acknowledged that the costs of educating children with special educational needs and disabilities are increasingly out of kilter with the available funds.

Valentine Mulholland, head of policy at the NAHT heads’ union, says: “Parental expectations for children with SEND or behaviour issues are much, much higher than they were. And that’s not necessarily always a bad thing because actually parents should have high expectations for their children, but it puts a lot of pressure on schools.”

Pressures on SEND budgets are expected to grow, and few would argue that this is an area where cuts could be made. Meanwhile, other support services, like child and adolescent mental health services (Camhs), are being cut, forcing schools to pick up the pieces. 

And, in line with the growth of academies, many local authorities can no longer carry out the range of education services they used to for maintained schools. 

“We need to be clear that some of the funding being retained by local authorities to deliver human resources, health and safety, premises management…have shifted over to schools – there are really no central services now,” says Mulholland. “Education welfare was a local authority service. There’s now very little support – no support – from local authorities on attendance, and pastoral care.”

Others make the point that schools, rather than wallowing around in excess cash for years, had only just reached a sustainable level of funding before the current pressures kicked in. As Andrew Morris, assistant general secretary of the NEU teaching union, puts it: “The Labour years weren’t the fat years; they were the first time in years when schools were properly resourced.”

Mulholland agrees. “We’re not in a situation where ‘we’ve had it good for a while, now we’re going to have to go back to basics’ – it’s sub-basics for many schools,” she says. “It isn’t cutting off fat, it’s now cutting off flesh.” 


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