The Chancellor’s proverbial axe is starting to chop through Whitehall. As I write, four departments have already agreed to a settlement that reduces their spending by around 30 per cent by 2020, and the Department for Education will shortly settle its budget ahead of the final announcement of the spending review on 25 November.
The DfE is in what I would call the “moderate difficulty” box in terms of agreeing a deal. By far the biggest cost in its budget – schools spending for five- to 16-year-olds – is “protected”. In technical terms, the per-pupil spending will remain the same throughout this Parliament, but it won’t rise with inflation.
So, the negotiations between the DfE and the Treasury over what is available to be cut therefore relate only to the £14 billion or so left over once the ring-fenced funding for five- to 16-year-olds – £43 billion – has been set to one side.
The major elements of this spending are early years, 16-18 funding and miscellaneous items including school food, sport, music, teacher training and the like. The Treasury has asked for a 25-40 per cent cut in these areas. The schools budget was also protected in 2010, so these areas took the biggest hit last time, and unfortunately the same thing will happen again.
In fact, in practice, even elements of this “unprotected” £14 billion are difficult to cut. For example, the continuation of universal free school meals for infants was a Conservative Party manifesto commitment, as was the increase in free childcare from 15 to 30 hours and the £150 million to protect school sport. These pledges make the overall settlement even harder to achieve.
Schools are unarguably in a privileged financial position, but it won’t feel that way. Firstly, the money stays the same only in cash terms, so inflation will eat away at it. Secondly, in all schools with nurseries or sixth forms that funding will decline quite sharply. Thirdly, there are additional costs for schools, including increases to national insurance and teacher pensions and possible pressure on pay in a time of recruitment challenges. Overall, the Institute for Fiscal Studies estimates that schools’ per-pupil spending is likely to fall by around 8 per cent in real terms by the end of this Parliament.
But although that sounds large, it is actually small compared with cuts in other areas of education. For example, adult skills funding fell by 24 per cent in the last Parliament, while local government spending dropped by 20 per cent – both will decline further in the next few years. There is an advantage to being politically popular.
The big unknown – and some headteachers’ knight in shining armour – is school funding reform. There is a manifesto commitment from the government to equalise the manifestly unfair system in which Tower Hamlets schools receive £7,014 per pupil while Bromley students get just £4,082.
But in a world where there is no extra funding, the only way the underfunded schools can be equalised is by the overfunded schools taking a hit. Hands up who fancies a possible 2 per cent year-on-year cut on top of their tighter finances?