Why heads will have to get used to shrinking budgets

20th November 2015 at 00:00
As George Osborne’s spending review looms, we investigate threats to funding now and in the future

On Wednesday, chancellor George Osborne will set out his spending plans for the next four and a half years. School funding is protected, but only to a very limited extent. In reality, the financial forecast for schools up and down the country looks bleak.

Education ministers preparing for the comprehensive spending review have left themselves with little room for manoeuvre. They have pledged to maintain per-pupil school funding for ages 5-16 at current “cash” levels (although that will not take into account rising costs).

But somehow the Department for Education must still find savings of at least 20 per cent. Schools are likely to be hit in a variety of other ways.

Sixth forms could close

The budget for ages 16-19 is, once again, expected to bear the brunt, which is bad news for any secondary with a sixth form. Headteachers’ leaders have warned that smaller sixth forms – with 200 students or fewer – will not be financially viable and could face closure.

Early years pressures

Another area thought to be facing hefty cuts is the early years sector. The Conservatives’ promise to double childcare to 30 hours is believed to be sacrosanct but other areas can still be trimmed, such as funding for children’s centres and grants. It could be that any school running a nursery will again have to dip into its 5-16 budget to cover the cuts. All-through schools will feel the strain if they are to prop up sixth forms as well as meeting their childcare obligations.

As the TES reveals this week, academies could be hit particularly hard by cuts to the education services grant.

Training cash at risk

The near £500 million the DfE spends on initial teacher training may also be under threat, even as the country faces its worst teacher shortages for a decade.

Schools participating in School Direct training could suffer, and schemes like Troops to Teachers have an uncertain future. Heads may also feel the effects of cuts to miscellaneous grants supporting schemes such as the £80 million national music hubs programme.

‘Fair funding’ uncertainty

And the upheaval won’t end there. In their election manifesto, the Tories pledged to “make schools funding fairer”, and the DfE is currently talking to heads and local authorities about what that will mean in practice. A new funding formula could be a lifeline – or a headache. With no new money expected to be available, the likelihood is that any reallocation of funding will mean losers as well as winners.

Inner London schools could be hit the hardest. The F40 group, which campaigns on behalf of schools in low-funded areas, has drawn up a proposed new formula that would cause schools in Hackney to lose an average of £1,002 per pupil from annual budgets. More details are expected “early in the new year”.

Heads face rising costs

In the meantime, teacher pay rises could be higher than headteachers are expecting. Ministers have said that salary increases for most teachers should be set at a maximum of 1 per cent each year until 2020. But schools could end up having to offer some staff much more in certain subjects, as shortages bite.

In total, according to the Association for School and College Leaders’ calculations, extra costs of 5 per cent will be placed on school budgets by a combination of teacher pay rises, support staff pay rises, inflation, the rising costs of employer pensions – which increased by 2.4 per cent in September – and national insurance, which will rise by 3.4 per cent for most staff in April 2016.

Headteachers should also watch out for the living wage. Few oppose, in principle, the chancellor’s decision to replace the £6.50 national minimum wage with a “national living wage”, starting at £7.20 in April 2016 and rising to £9 an hour by 2020. But the costs of catering and maintenance are likely to rise as a result.

Lastly, small schools should keep an eye on free school meals funding. There is a pledge to protect cash for universal infant free school meals, but it is not yet clear whether “transitional funding” for schools with fewer than 150 pupils, given last year, will be repeated.

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