'There is a misconception that the schools' budget being ringfenced includes all the money that schools currently receive. It doesn’t.'

David Laws, executive chair of thinktank CentreForum and a former Liberal Democrat schools minister under the coalition government, considers Wednesday’s spending review

David Laws

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The continued protection of the schools’ budget in the week’s spending review was welcomed by those of us who are interested in education. But presenting it as "protected" risks leading the public to believe that schools will not face pressures to their budgets and will be immune from having to make cuts. That is not the case and, although this is a relatively positive settlement for schools, it is important that there is a wider understanding of what it actually means.

The protection of the schools' budget has a number of loopholes in it. The first is that, while the overall dedicated schools grant will rise in line with inflation, the growing number of pupils means that the per-pupil amount will remain frozen. In addition, schools have to meet additional costs caused by the increases to both public sector pay and employer National Insurance contributions. According to Institute for Fiscal Studies forecasts, this will create a 7.5 per cent pressure on schools by 2020. The decision to hold the pupil premium rate flat is also disappointing. I’ve seen first-hand the difference it is making to disadvantaged pupils up and down the country and a real terms cut (while protecting other departments in real terms, such as the Foreign Office) seems regressive.

There is also a misconception that the schools' budget being ringfenced includes all the money that schools currently receive. It doesn’t. The education services grant is one of a number of other grants that are paid to schools outside of the protected dedicated schools grant. It is currently worth £820 million and is intended to pay for services including education welfare officers, school improvement and wider curriculum support for pupils.

The chancellor’s plan to save £600 million by "phasing out" the education services grant is deeply worrying. As reported by my thinktank, CentreForum, hours after the announcement, this will result in more than 700 academies losing over £100,000 by the end of the Parliament – although I am hopeful that this loss will be transitioned over time.

My time as schools minister taught me that headteachers and governors do not perceive parts of their funding as being "protected" or "unprotected". They consider their budget in the round and generally make the best decisions they can about how to spend it. Those headteachers will now need to consider how to plug the gaps caused by inflation and a loss of the education services grant.

The promise of a new national funding formula might help to alleviate the pressure for some of the lowest funded schools across the country. But as CentreForum warned, there are still a lot of important decisions that need to be made and consulted upon before a new formula can be implemented. While it doesn’t mean implementation in 2017 is impossible, it is certainly tight and the Department for Education will face one of its biggest challenges under Nicky Morgan.

Finally, it is equally important that the "protection" of the 16-19 funding rate is properly understood. It is only the base rate that is protected, meaning that the DfE has given itself room to cut the supplements for disadvantaged students and those with learning disabilities, as well as funding for programmes which are genuinely more expensive such as engineering and agriculture. 

So it is vital that, over the coming months, the DfE publishes and consults on its detailed plans for both schools and 16-19 provision. Without those details it is too soon to assess the full impact of the education settlement and it is certainly too soon to become complacent.

David Laws is executive chair of CentreForum, an independent thinktank

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David Laws

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