First job for the next education minister: avoid a teacher strike over school budgets

The next government may have a teachers' strike on its hands within months if it fails to address what unions have called a schools funding crisis. The National Union of Teachers has backed a motion to ballot members over strike action if no progress is made through talks on the issue with the new government by the autumn statement.

The fate of the schools budget has become a line dividing the major political parties. However, analysis by the Institute of Fiscal studies, based on analysis of political parties’ spending pledges, indicates estimated cuts of 7% or more are likely within the next parliament.

The next government will face four key education challenges, all requiring money: a growing population set to place enormous pressure on school places; firm action to close the achievement gap between rich and poor; an evolving education system with few effective mechanisms for accountability; and last, but not least, protection of the amount of funding attached to each pupil in the state system.

Spending and promises

Spending on education as a proportion of GDP rose steadily in the period 1997-2009, reaching its highest point of 6.2% of GDP in the period 2009-10 during Gordon Brown’s New Labour government, according to the IFS. Since then it dropped back to 5.5% of GDP in 2013-14.

A recent report by the Centre for Analysis of Social Exclusion looked back at education promises under the coalition government, examining to what extent they had remained true to their proposals in terms of both spending and results.

Their conclusion was that the coalition has kept its promises to protect school spending. On the plus side, total expenditure rose 1% from £46.1 billion in 2009-10 to £46.6 billion in 2013-14 (in real terms at 2009-10 prices). This allowed pupil-teacher and pupil-adult ratios to be maintained. On the negative side, capital spending fell by 57% on 2009-10. This effectively meant that the remainder was redirected away from projects to refurbish all schools, and used to repair those schools with the most dilapidated premises.

Not a penny less?

Although it is still early days, Labour and the Liberal Democrats have committed to protecting the education budget for three to 19 year-olds, covering early years, schools and education for 16 to 19 year-olds.

The Lib Dems have set out their plan to extend the free early years entitlement to all two year-olds – rather than just for those children whose parents receive income support and other benefits – and to introduce a fair national funding formula to ensure areas that are currently underfunded get their fair share.

Labour intends to increase free childcare for three and four-year-olds from 15 to 25 hours a week and has announced plans to get independent schools to work more in collaboration with the state sector – although what this will offer in financial terms is far from clear.

Although the Conservatives have stated that school cash per pupil would remain unchanged, David Cameron, speaking at Kingsmead school in Enfield in February, admitted that in real terms, English schools face budget cuts. Some calculations have put the cost of this as high as 10%.

Do you know what ‘real terms’ means?Yui Mok/PA Wire

In real terms, this means that schools would have to pay 5% more to fund rising teachers’ pension and national insurance contributions, according to the IFS.

This is worrying as pupil numbers are expected to grow by 7% between January 2016 and January 2020, while economy-wide inflation between 2015-16 and 2019-20 is currently forecast at 7.7%. Neither Labour nor the Conservatives have announced whether they would protect schools spending into 2016–17 and beyond. But the growth in pupil numbers alone will no doubt place significant pressure on the schools budget under any future government.

The fate of the pupil premium – extra money from outside the schools budget aimed at improving the life chances of disadvantaged children – is far from clear. The overall spend on pupil premium rose to £1.25 billion by the end of the coalition. This was a rise of 72% since the period 2011-12 and allowed for increases of 4.3% to the most deprived schools, while leaving those in the least deprived areas with real terms losses of 2.5%.

Although it is too soon to say whether the fund is reducing the achievement gap for the disadvantaged, early indications are that some progress has been made. Only by retaining this funding in some form will it be possible to monitor not only how it is spent but more importantly what impact it has on pupil attainment.

Costs of more school choice

Plans to expand the academies programme are not without cost – and the coalition’s drive towards academies has cost more than anticipated. The National Audit Office reported in March 2013 that between 2010-12 the academies programme cost the DfE £1 billion more than planned and in 2012-13, mistakes in budget payments by the DfE to academies led to a further £174m overspend.

The free schools programme is also not without its financial issues. The DfE seriously underestimated the total capital funding needed to establish them: it initially bid for £900m in the 2010 Spending Review for free schools’ premises, but was only able to earmark £450m following a particularly tough capital settlement. It subsequently increased this to £1.5 billion, just over 8% of its total capital budget, through additional funds from the Treasury and savings in other capital budgets. So at £6.6m per free school, the average unit cost of premises is more than double its original planning assumption.

Since 2011, the DfE used a number of different approaches in efforts to cut these costs but capital costs per school place still rose by 35% by the time the third round of free schools was announced in January 2015. This was due to schools in areas with high property prices and the inclusion of free schools with special and alternative provision that bring higher costs per place. The reduction of capital costs for any ongoing programme will be a major challenge, whoever takes power in May.

There will be no honeymoon period for the new government on education spending – particularly if the unions do vote to strike over the issue. Turning rhetoric into reality will be a tough call – public spending cuts show no sign of letting up and the combination of rising demand for school places, lack of accountability and cuts to education budgets in real terms will need careful consideration if we are to improve standards and equity in education within the next administration.