Increased expenditure since 1997
4. Public expenditure on education in the United
Kingdom was equivalent to 5.5% of GDP in 2003-04,
a rise from 4.7% in 1997-98.
Table 1 shows education spending as a proportion of GDP for each
year since 1997-98.
Spending has increased as a share of the economy during a period
of economic expansion, so the resources made available have increased
significantly in real terms. It is worth adding that public expenditure
on education and skills as a proportion of GDP was also well over
5% in the early 1990s.
Source: Public Expenditure Statistical Analyses
2004, Cm
6201, Table 3.4, TSO, London
5. Another way of analysing spending is to compare
changes adjusted to take account of inflation (ie in real terms).
Table 2 shows real terms spending on each phase of education
in each year since 1997-98.
Sources: Departmental Report 2004, Department
for Education and Skills, Cm 6202,
Table 2.3, TSO, London; Departmental Report 2003, Department
for Education and Skills, Cm 5902, Table 3.3, TSO, London.
6. Spending on each phase of education (apart from
student support) has increased in real terms in the years since
1997-98. The final column of the table shows overall spending
changes over the full period. Overall, schools' current spending
increased by 45%, compared with 54% in further education and only
10% in higher education. Table 3 summarises spending per pupil/student
data for the schools, FE and HE sectors in each year since 1997-98.
Spending per pupil/student has increased fastest in schools,
followed by further education. By contrast, real terms higher
education spending per student has remained little changed, suggesting
a continuing major relative shift of public resources away from
universities towards other phases of education. Other university
resources, of course, may have increased.
Sources: Departmental Report 2004, Department
for Education and Skills, Cm 6202, TSO, London, Tables 2.5 (derived
from figures given), 2.6 and 2.7; Departmental Report 2003, Department
for Education and Skills, Cm 5902, TSO, London, Tables 3.5 and
3.8 (derived from figures given); Departmental Report 2002, Department
for Education and Skills, Cm 5402, TSO, London, Table 4.7 (derived
from figures given).
7. The Chancellor's 2004 Budget book included the
following assertion:
"The sustained high investment in education
since 1997 has resulted in a measurable improvement in standards.
In particular, the proportion of 11 year olds achieving expected
levels in reading and maths have risen by 12% and 11% respectively,
and almost 53% of 16 year olds achieved five or more A* to C grade
GCSEs in 2003, compared to 45% in 1997…"[2].
This section is immediately followed by a chart (Chart
6.3) which shows "Improving GCSE performance", with
the percentage of pupils achieving 5 or more grades A* to C rising
from about 48% in 1998-99 to 53% in 2002-03.
8. It is indeed true that performance has improved
in the way shown. However, the direct link between higher expenditure
and the improvement in examination performance is simply asserted.
No evidence is offered to support the assertion. Table 4 below
puts the relevant figures in historical context.
Sources: 1990-91 to 1994-95: DfEE Departmental
Report 1997, Cm 3610, Table 4.1 and Annexe Bii; 1994-95 to 1998-99:
DfEE Departmental Report 2000, Cm 4602, Table 5.3 and Annex Bii;
1998-99 to 2002-03: DfES Departmental Report 2004, Cm 6202, Table
8.1 and Table 2.3
9. Table 4 looks at the change in GCSE performance
and in real terms spending for the four year period immediately
prior to 1998-99 to 2002-03 and then for the four year period
before that. The improvement in GCSE performance was fractionally
smaller in the years from 1994-95 to 1998-99 than in 1998-99 to
2002-03, though rather greater between 1990-91 and 1994-95 than
in either of the later periods. However, the increase in current
expenditure between 1998-99 and 2002-03 was radically greater
than in either of the earlier four-year periods.
10. We asked David Normington to comment on the link
between increased expenditure and increased achievement. He told
us:
"I cannot prove that a given level of investment
produces a given level of output…I can show what we are getting
out for what we are putting in. I think one has to be given time
to see the benefits of the investment; I do not think you will
see it immediately. All I can demonstrate to you is, really,
two things: one is how much money we have spent over time and
what the improvements are, and, secondly, my economists can show
you the huge returns to the economy that we get for quite small
increases in performance. For instance…there is a big economic
return for [improved] performance at GCSE, at A level and, of
course, at university. Therefore, I am confident that this money
is worth investing, but I cannot prove to you…that a given
level of investment produces a given level of output. I would
like to be able to do that, of course, but I cannot."[3]
11. We put the same question to the Secretary of
State, who responded in a similar way:
"My view is that higher spending and higher
investment is a necessary but not a sufficient condition for education
improvement and performance. It is a necessary condition because
the number of teachers, non-teaching staff working in a particular
school or college is a significant factor. Training of teachers,
continued professional development, which costs money, is significant
factor, so that teachers improve, and basics like the facilities
that are in a school, the ICT that is available and so on, can
reinforce performance, but it is not a sufficient condition because
it is entirely possible to have all that but for it not to be
focused properly on improving educational standards in the way
that we all want to see, and any survey of different schools throughout
the country will show that there are schools with similar social
issues-free school meals, for example, or resources being broadly
similar - which are achieving dramatically different results for
their children, and that is why we have to focus on a reform agenda
which tries to raise that performance and carry it through. I
am not one of those who believes you simply pump in more money
and that solves the problem-I do not think it does-but I do think
you need more money for many of the things which obviously we
see around."[4]
12. The analysis of expenditure we have undertaken
here does not disprove a link between increases in public expenditure
and increases in GCSE performance. We were interested to note,
however, that the Secretary of State and the Permanent Secretary
were both far more circumspect about the direct link between investment
in education and improvement in achievement than the Budget document.
The Government needs to take great care in making claims about
the effectiveness of increased investment in education in increasing
levels of achievement which the evidence cannot be proved to support.
More generally, the value-added justification for higher expenditure
on education is one that has wider implications: if large rises
in expenditure are needed to produce improvements in education,
this could be taken to imply that services that did not enjoy
such increases would not see improvements. This issue is of significant
concern in the context of public sector productivity review currently
being undertaken by Sir Tony Atkinson. Links between expenditure
and outcome remain difficult to establish.
Future levels of expenditure
13. The issue of how far increased expenditure leads
to improved levels of achievement is likely to be brought into
sharper focus over the coming Comprehensive Spending Review period,
as the period of sharp spending growth on education in England
comes to an end. The next three years will see much more modest
growth in spending:
"In England, education expenditure will grow
by an average of 4.4% across the Spending Review period [2004-05
to 2007-08], that is by 6.0% in 2005-06, 3.8% in 2006-07 and 3.5%
in 2007-08".[5]
Such increases compare with an average real terms
increase of 7.7% per annum in the period from 2000-01 to 2003-04.
14. The consequence of this slowdown in the increases
in funding could be to create an impression amongst school headteachers
and other budget holders that resources are being cut. One problems
with schools' funding in 2003-04 was that Ministers heralded the
settlement as one of the best ever for education and many recipients
thought that they were going to be given budgets in which there
was considerable room for flexible extra expenditure. For a variety
of reasons, which we explored last year,[6]
most of the extra money was accounted for by increased costs in
the system and the extra flexibility and added spending power
that had been anticipated did not materialise. This impression
that resources are reducing rather than increasing could be exacerbated
once schools begin to experience falling rolls, in the coming
years, as forecast by the DfES and others, because an individual
school's funding depends on numbers of pupils. It will be important
for ministers to try to manage the expectations of budget holders
more effectively than was the case in 2003-04.
15. Something which may help is the move to three
year budgets from 2006. In June, David Normington told us:
"What you really want, you are trying to run
your school and you have a longer time horizon than a one-year
horizon. So I think we must all try to provide that stability
even though I think it would be very difficult…the Prime
Minister has said publicly that he would like to see a move to
three-year budgets…and I am saying that will be very difficult
to achieve but that is what we are working towards".[7]
16. The Secretary of State told us that the aim was:
"…to try and give schools the certainty,
first, that…money intended for education does come through
to education, and, secondly, to ensure that each school has its
own budget on a three-years basis where it can plan and develop
and see where it is going…"[8]
17. This proposal was turned into a firm commitment
in the DfES' Five Year Strategy for Children and Learners,
published in July 2004:
"From 2006 we will provide guaranteed three-year
budgets for every school, geared to pupil numbers, with every
school also guaranteed a minimum per pupil increase every year.
This will give unprecedented practical financial security and
freedom to schools in their forward planning. It will be made
possible by a radical reform of education finance to end the long
standing confused responsibility between central and local government
for setting the level of school funding".[9]
We will look at the possible consequences of this
change in more detail in the next section of this report.
2 Budget 2004 Prudence for a purpose:: A Britain
of stability and strength, HC301, HM Treasury, paragraph 6.47.
Back
3
Q 151 Back
4
Q 178 Back
5
Departmental Report 2004, page 29. Back
6
Education and Skills Committee, First Report of Session 2003-04,
Public Expenditure: Schools' Funding, HC 112. Back
7
Qq 44, 45 Back
8
Q 193 Back
9
DfES: Five Year Strategy for Children and Learners, Cm 6272, July
2004, p. 46, paragraph 11. Back
