2Funding pressures
Overview
4.Education has the second-largest public service expenditure in the UK, after health. Spending on school grants for 2018–19 accounted for around £50 billion,3 whilst 16–19 expenditure across sixth form colleges, general further education colleges, and schools with sixth forms accounted for £5.79 billion in 2016–17.4 We examined how this funding related to the requirements of the school and college system, and what improvements were needed.
5.Throughout our inquiry, we heard overwhelming evidence that schools and colleges were under considerable financial pressure,5 and that a long-term plan was needed to address the wide-ranging issues facing schools and colleges.6 Costs have increased across a range of areas, including annual pay award and salary raises,7 National Insurance, inflation, pensions, and SEND provision, amongst others.8 School funding has not kept pace. Total school spending per pupil fell by 8% in real terms between 2009–10 and 2017–18. This figure took account of the 5% increase in post 2009–10 school spending, the 55% reduction in local authority spending on schools (for example SEN and education-related services), and the 24% reduction in school sixth form funding.9 Research from the Institute for Fiscal Studies (IFS) indicated that funding was projected to be frozen in real terms between 2017–18 and 2019–20, with 2019–20 per pupil funding expected to be broadly equivalent to 2011–12 levels.10
6.Further education (FE) has been hardest hit. In 1990–91 per student funding for an FE or sixth form college was 50% greater than in secondary schools. It is now around 8% lower. By 2019–20 spending per student in FE will be similar to 2006–7 levels, while school sixth form spending will be lower than at any point since at least 2002.11 Overall, the total size of the 16–19 education budget fell by 27% in real terms between 2010–11 and 2018–19, from £7.8 billion to £5.7 billion, excluding 16–18 apprenticeships. When apprenticeship funding is included, the reduction amounts to a 24% decline between 2010–11 and 2017–18, from £8.7 billion to £6.6 billion.12
7.Since 2010–11 an increasing number of schools have been struggling financially or going into deficit. Data on local authority maintained schools—which make up around 60% of state-funded schools13—show that secondary schools in particular have struggled: from 2013–14 to 2016–17, the proportion of local authority maintained secondary schools in deficit rose from 8.8% to 26.1% and the average deficit increased from £292,822 in 2010–11 to £373,990 in 2016–17.14 A number of surveys have indicated that parents have been asked to make regular financial contributions to support school budgets.15
8.Primary schools were in a comparatively better position, with the proportion of local authority maintained primary schools in deficit increasing from 5.2% in 2010–11 to 7.1% in 2016–17, and the average deficit rising from £72,042 in 2010–11 to £107,962 in 2016–17. Regional disparities have also persisted. The North East had the highest number of local authority maintained primary schools in deficit in 2016–17 at 10.1%, against 3.4% in the East of England.16 Comparable data on academy finances are not readily available. The Education Policy Institute’s analysis of National Audit Office (NAO) assessments noted that the proportion of academies in deficit remained comparatively low, though there was an “increase in the propensity [of academies] to have expenditure that exceeded income”, with 44.1% and 60.6% of primary and secondary academies respectively spending more than their income in 2014–15.17
Fig 1: Local authority maintained schools in deficit
Fig 2: Local authority maintained schools spending more than their income
Source: Education Committee analysis based on Education Policy Institute data18
9.In 2016 the National Audit Office warned that schools were being expected to make efficiency savings of £3 billion by 2019–20 through better procurement (£1.3 billion) and by using staff more efficiently (£1.7 billion).19 Both aims were seen as problematic,20 given that the Department’s previous aspiration to reduce procurement spending by £1 billion in the previous Parliament was not met,21 and staff efficiencies risked cuts to staff numbers.22 The NAO observed that the Department’s statistical calculations indicated only that schools “should be able to make the required savings [ … ] but [it] cannot be assured that these savings will be achieved in practice”.23 The NAO also highlighted the difficult capital funding landscape, stating that it would cost £6.7 billion to return all school buildings to satisfactory or better condition, and a further £7.1 billion to bring parts of school buildings from satisfactory to good condition.24 A thorough assessment of the cost of removing asbestos from school buildings would also need to be taken into consideration.
Achieving education spending efficiencies and the use of consultants
10.During our inquiry we heard reports regarding the Department’s approach to achieving efficiencies in education spending. In 2018, the Department began piloting the use of contracted ‘school resource management advisers’ (SMRAs) who were sent to schools to identify resource efficiencies. In a speech to the Institute of School Business Leadership, the Parliamentary Under-Secretary of State for the School System, Lord Agnew, announced that the advisers had identified £35 million of wasted money or “essentially misdirected resources” across the 70 schools they had visited, averaging at £500,000 per school.25 Lord Agnew described himself as “a pig hunting for truffles when it comes to finding waste in schools”, wagering a “bottle of champagne and a letter of commendation” that his team could find “some waste in your school”.26 The Department earmarked a further £2.3 million to increase the number of SMRAs.27
11.In March 2019, reports seen by Schools Week revealed that the Department’s resource management advisers had suggested cost-cutting options including limiting pupils’ lunch portions, keeping half of the money raised at charity events, replacing senior staff with less qualified staff on poorer contracts, and using spare staff to teach three classes at a time in the dining room.28 In response, Lord Agnew said the resource management advisers should not be “framed as a cost-cutting initiative”, and rejected the notion that “the work of SRMAs does not have the interests of pupils at heart”.29 When we raised the issue with Ministers during our evidence session, the Minister for School Standards, Rt Hon Nick Gibb MP, maintained the recommendations had been taken “out of context” and that it was
important that schools are using taxpayers’ money as effectively as possible. [School resource management advisers] are very skilled and can show schools how to use their money effectively to find efficiencies.30
Government position on school and college funding levels
12.The Government has maintained that “there is more money going into our schools than ever before”.31 We heard real frustration regarding this position.32 Witnesses to our inquiry highlighted that, whilst the Government’s contention was factually accurate, it failed to capture the full picture. Funding had not kept pace with large increases in the pupil population size—which has been rising since 2010 and is expected to reach 7.698 million by 2024, up from 7.6 million in 2018—or the complexity of support requirements.33 The Government’s contention also included targeted funding such as Pupil Premium which would not have benefited all schools in the same way.34 More widely, we heard that schools had increasingly been asked to cover additional services—including pupil mental health, radicalisation checks, monitoring health and social issues, mentoring new teachers and so forth—without commensurate funding increases to cover the additional resources required.35
13.A multi-billion pound funding uplift would be needed to address the myriad issues facing schools and colleges, though the precise figure remains unclear. Simply reversing the 8% school funding gap would require a £3.8 billion uplift, based on a 2019–20 schools funding budget of circa £44 billion, though this would not reflect more subjective judgements of what schools require.36 We discuss such funding requirements in greater detail in Chapter 7.
Fig 3: The population boom: total school spending in England, pupil numbers, teachers, and spending per pupil relative to 2009 levels
Source: IFS analysis commissioned by BBC37
14.We asked the Minister for School Standards why the Department had maintained the ‘more money than ever’ line for so long when the evidence showed schools were suffering from real-terms reductions in per pupil funding.38 He noted the difficult state of public finances going back to the 2008 financial crash,39 but said the Department had
always acknowledged that schools are facing cost pressures, but [ … ] the facts are that between 2010 and 2015 there was a real-terms protection per pupil, and that from 2017 onwards we are increasing the amount of funding for every pupil in every school.40
15.We noted the evolution of the Government’s rhetoric in this regard. In response to a critical 2017 report by the Committee of Public Accounts on school funding, for example, the Department stressed that school funding was at the “highest level on record”41 and believed that its funding commitments meant “the future challenge for the system as a whole [will be] more about maximising the impact of resources [ … ] rather than managing cost pressures”.42
16.In 2018, the Secretary of State continued to herald the “record investment we are making in schools”,43 whilst noting that “[o]f course, I recognise that pupil numbers are rising, we are asking schools to do more and schools are facing cost pressures”.44 In a 2019 speech at the Association of School and College Leaders annual conference, the Secretary of State said he had “heard the message on funding loud and clear”.45
17.We therefore pressed the Ministers for details on how the Department was actually going to tackle the school and college funding crisis. The Minister for School Standards noted the opportunities presented by the upcoming spending review, acknowledging that the Treasury had to “balance competing demands” but insisting that the Department would “present [its] case in the most effective way possible”.46
18.We are pleased that the Department is beginning to acknowledge the significant financial strain that schools and colleges are under. There is simply not enough core funding, and the capital funding landscape is becoming increasingly concerning. The Department’s recognition of this problem now needs to be translated into significant funding increases.
19.The Department must make the strongest possible case to the Treasury for a multi-billion pound funding increase in the next spending review, and ensure this is aligned with the requirements for a ten-year plan as set out in Chapter 7 of this Report.
20.We heard disturbing reports that the Department was spending millions on ‘school resource management advisers’ whose cost-saving suggestions included keeping money raised at charity events, cutting children’s food portions, and using spare staff to cover three simultaneous classes in a school dining hall. The Minister said these recommendations had been taken “out of context”. We call on the Department to release the full reports to us, to show the context in which the recommendations were made.
21.In response to this Report, the Department should provide us with the full documents described by Schools Week, a breakdown by category of the measures suggested by school resource management advisers across the country, how much the resource advisers cost, and an evaluation of the long-term value for money provided by their cost-saving recommendations.
The Department’s use of data
22.The accuracy of education spending data, and the Department’s interpretation of it in particular, has been the subject of controversy.47 For example, the Department has repeatedly cited the Institute for Fiscal Studies when stating that “real-terms per-pupil funding for five- to 16-year-olds in 2020 will be more than 50% higher than it was in 2000”.48 Whilst this was not untrue, the wider context in the IFS data provided a more representative breakdown. The IFS report stated that “primary and secondary school spending per pupil rose by over 50% in real terms between 2000–01 and 2010–11”. The very next paragraph stated that “[t]otal school spending per pupil fell by 8% in real terms between 2009–10 and 2017–18, and will only be about 14% higher in real terms in 2017–18 than in 2003–04”.49 We noted that such context did not appear have featured particularly prominently in the Department’s communications.50
23.In October 2018 the UK Statistics Authority (UK SA) wrote to the Department outlining concerns over its use of various school funding statistics in public communications and the lack of context, stating that
figures were presented in such a way as to misrepresent changes in school funding [ … ] school spending figures were exaggerated [ … ] The result was to give a more favourable picture.51
24.The UK SA urged the Department to develop an official statistics publication for school funding to make it “easier for the Department to refer to a respected and consistent source. It would enable people to be confident that figures used had been subject to quality assurance and would enable them to explore any known quality issue”.52
25.Publicly available data on school funding is extremely varied and subject to different calculations from a variety of sources. We are concerned this confusion can be exploited to portray a misleading picture. Having a single, reliable resource provided via an easily accessible official statistics publication would help resolve ongoing disputes over funding levels and how they are calculated. We are confident that the Department would welcome the additional transparency and public confidence that such a resource would bring.
26.The Department should develop an official statistics publication for school and college funding.
3 House of Commons Library, Spending of the Department for Education, 25 February 2019, p2
4 House of Commons Library, Spending of the Department for Education, 25 February 2019, p13
5 Qq2, 99, 158, 260. See also written evidence, for example London Councils (FUN0094) paras 5–26; Education Policy Institute (FUN0064) paras 2.1–2.3; Institute for Fiscal Studies (FUN0082) paras 2–11.
6 Q246
7 In April 2019 the Government confirmed it would fund the estimated £830 million cost of rising teachers’ pensions contributions for 2019–20.
8 National Audit Office, Financial sustainability of schools, HC 850, 14 December 2016, p7
9 Institute for Fiscal Studies, 2018 Annual Report on Education Spending in England, September 2018, pp 32–33. Note that this Report also makes use of data from sources published at different times, for example Education Policy Institute, 16–19 education: trends and implications, May 2019. Throughout this Report, the purpose has been to provide a balanced and representative picture of school and college funding, rather than generate like-for-like comparisons between different data sets.
11 Institute for Fiscal Studies, 2018 annual report on education spending in England, Summary, 17 September 2018, p2; Institute for Fiscal Studies, 2018 annual report on education spending in England, 17 September 2018, p48
12 Education Policy Institute, 16–19 education: trends and implications, May 2019, p18
13 National Audit Office, Converting maintained schools to academies, HC 720, 22 February 2018, p8
14 Education Policy Institute, School funding pressures in England, March 2018, p5
16 Education Policy Institute, School funding pressures in England, March 2018, p5
17 Education Policy Institute, School funding pressures in England, March 2018, p24
18 Education Policy Institute, School funding pressures in England, March 2018
19 National Audit Office, Financial sustainability of schools, HC 850, 14 December 2016, paras 1.11–1.12
20 Committee of Public Accounts, Financial sustainability of schools, Forty-ninth Report of Session 2016–17, HC 890, pp5–7
21 National Audit Office, Financial sustainability of schools, HC 850, 14 December 2016, paras 1.11–1.12
23 National Audit Office, Financial sustainability of schools, HC 850, 14 December 2016, p8
24 National Audit Office, Capital funding for schools, HC1014, 22 February 2017, p10
25 Tes, Exclusive: ‘Colossal’ £500,000 wasted per school claims minister, 21 November 2018
26 Schools Week, Minister bets heads a bottle of champagne he can find savings in their schools, 21 November 2018
27 Schools Week, DfE to spend 2.3 million on new army of cost cutting consultants, 30 August 2018
28 Schools Week, Limit pupils’ lunch portions to save money, say Agnew’s cost-cutting advisers, 28 March 2019
29 Schools Week, If schools want more money from government, they must use funds efficiently, 15 April 2019
30 Q476
31 GOV.UK, Education in the media: funding, 28 September 2018
33 Department for Education, National pupil projections - future trends in pupil numbers, 12 July 2018, p4; Q1
34 Q2
35 Qq1–3
36 Institute for Fiscal Studies, Extra spending on education in England – the numbers explained, 18 June 2019
37 BBC, Seven charts on the £73,000 cost of educating a child, 19 November 2018
38 Qq349–50
39 Q352
40 Q349
41 GOV.UK, Blog, Education in the media, 29 March 2017
42 HM Treasury, Government response to the Forty Ninth Report of Session 2016–17, Department for Education: Financial sustainability of schools, Cm0595, para 1.2
44 Rt Hon Damian Hinds MP, correspondence with the Chair of the UK Statistics Authority, 8 October 2018
45 GOV.UK, Damian Hinds speech at the Association of School and College Leaders’ annual conference 2019, 15 March 2019
46 Q345
47 See for example Independent, Education Secretary forced to admit that he wrongly claimed school spending is going up, 14 March 2018
48 Quotation from HC Deb, 13 November 2018, vol 649 col 246. See also Education Committee, Oral evidence: school and college funding, HC 969, 3 April 2019, Q333; HC Deb, 25 April 2019, vol 658, col 970.
49 Institute for Fiscal Studies, 2018 Annual Report on Education Spending in England, September 2018, p7
50 HC Deb, 13 November 2018, vol 649 col 246; Education Committee, Oral evidence: school and college funding, HC 969, 3 April 2019, Q333
51 UK Statistics Authority, correspondence with the Rt Hon Damian Hinds MP, 8 October 2018
52 UK Statistics Authority, correspondence with Jonathan Slater, Annex A, 30 May 2019
Published: 19 July 2019