Schools ‘may face spending squeeze’

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Published: Thursday 26th March 2015 by The News Editor

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Schools could face a squeeze on spending, with cuts of up to 12% over the next parliament, according to a respected economic think tank.

There are likely to be “significant cost pressures” in the future as schools deal with increasing pupil numbers, rising costs and a growth in public sector earnings, a new report by the Institute for Fiscal Studies (IFS) suggests.

It says that day-to-day spending on schools in England has been relatively well-protected in the last few years compared with other public service areas, as well as other parts of education, such as colleges.

Between 2010-11 and 2014-15 spending on schools has risen by 3% in real terms, while the budget for 16 to 19-year-olds has seen a 13.6% cut.

At the same time, a squeeze on pay for public sector workers – which includes teachers – has probably eased pressure on school budgets, the IFS report says.

But it goes on to say: “There are likely to be some significant cost pressures on schools’ spending over the next parliament.”

Pupil numbers are likely to grow by 7% between 2016 and 2020 and schools will have to find more money for pension and national insurance contributions.

More cash will also have to be found for staff wages, the IFS suggests, as public sector earnings are expected to grow faster in the future.

In recent weeks, the three main political parties have set out their stalls on school funding.

The Conservatives have said they will protect cash school spending per pupil, while Labour and the Liberal Democrats have committed to protecting the education budget for three to 19-year-olds – covering early years, schools and 16-19 education – in real terms.

The IFS concludes that these pledges could mean similar overall settlements for schools if Labour or the Lib Dems increase all elements of the education budget by equal amounts.

It says: “Pupil numbers are expected to grow by 7% between January 2016 and January 2020, whilst economy-wide inflation between 2015-16 and 2019-20 is currently forecast to be 7.7%.

“As a result, the overall level of school spending could grow by similar amounts under the different proposals. However, if only just met, all these proposals imply real-terms cuts in spending per pupil.”

When this is combined with spending plans for 2015-16, these proposals “imply a real-terms cut in school spending per pupil of about 7% between 2014-15 and 2019-20”, the report calculates.

It adds: “This increases to nine percent if we account for increases in national insurance and pension contributions and to 12% if we also account for the OBR’s (Office for Budget Responsibility) assumption for likely growth in public sector earnings. The plans from all three main parties are therefore much less generous than the small real-terms increase in spending per pupil experienced over the current parliament.”

The report comes just a week after a headteachers’ union raised concerns, saying schools and colleges are being forced to cut courses and increase class sizes as a result of a growing funding “crisis”.

Almost nine in 10 heads and principals (88%) believe that financial pressures will have a detrimental impact on the education they are able to offer pupils over the next year, according to a survey by the Association of School and College Leaders (ASCL).

ASCL deputy general secretary Malcolm Trobe said that the IFS study “presents a bleak picture for education funding over the next parliament, identifying significant additional cost pressures which add up to between seven and 12% on budgets”.

He added: “It is imperative that the government elected in May addresses this issue quickly and ensures that education funding is sufficient, sustainable and equitable. We recognise that there is considerable pressure on the national budget but the country must invest in education both for its long-term prosperity and, most importantly, the future of our children.”

The IFS later said that to protect school spending and see no cut, then funding would need to increase in line with inflation and in line with pupil numbers.

At the moment, each political party has only committed to one or the other.

Shadow education secretary Tristram Hunt said: “This report is clear that under the Tories, education spending will face big cuts as a result of David Cameron’s extreme spending plans that will threaten standards for young people.

“Their plans will see spending on education cut in real terms and they are offering no protection to early years education, to Sure Start and to post-16 education and skills.

“Labour has a better plan for the future of education and a sensible approach to balancing the books. We will protect the entire education budget, from the early years to 19, in real terms.”

A Conservative spokesman said: “We’re pleased this report acknowledges the work we have done to protect the schools budget in this Parliament. That’s only been possible because of the tough decisions we have taken to get the economy back on track.

“We have committed to delivering a good deal for schools in the next Parliament too, pledging to spend at least half a billion more on schools than the plans that Labour have set out.

“We know that schools and school leaders face challenges, but with our approach they have the certainty of knowing what they’ll get and the knowledge that they’ll receive significantly more funding than under Labour. That’s the choice we have made because providing the best schools and skills is such a critical part of our long-term economic plan for Britain”.

Published: Thursday 26th March 2015 by The News Editor

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