Wednesday, 26 June 2013

What the spending review means for schools

The 2010 spending review was one of the most gruelling experiences of my career. It's difficult to express to anyone who hasn't been through it how emotional SR negotiations can be. I felt a huge weight of responsibility for squeezing the best possible deal out of the Treasury.

So I have a lot of sympathy for what my old colleagues in the DfE have been going through over the past few months in preparations for today's announcement. Perhaps this makes me prone to being overly sympathetic but I do think they've done a pretty good job.

But what does it mean for schools?

"Protection" for schools

The headline is that the "schools budget has been protected in real terms". What this means in practise is that the revenue budget for pupils aged 5-16 has been held flat taking inflation into account. As there is a rising number of pupils that will mean a (small) per pupil reduction. It doesn't cover the 16-19 budget so school sixth forms aren't included in the protection. There's no news yet on what will happen to this budget.

Now they'll probably be some political debate about whether this picture constitutes genuine "protection" but it doesn't really matter. The reality is schools will feel that budgets are tighter but won't find themselves facing big cuts. They will be in a much better place than other public services (including the NHS as, while, that budget has also been protected costs are rising at much faster rate than in education).

National Funding Formula (NFF)

The Chancellor also announced that a NFF would be introduced. This is a big win for the DfE as it has been in the pipeline since 2010 but neither the PM, DPM or Treasury have previously been prepared to commit given the political risk of big changes to the distribution of school funding. It is badly needed as the current distribution of school funding makes no sense. At the moment LAs simply receive what they got the previous year (per pupil) - and this has happened every year since 2005. There is no account taken of demographic changes since then at all. There are a couple of things to look out for as details start to be unveiled over the coming months:

  • What factors are used? The, probably fair, assumption is that a NFF would see inner-city LAs lose out in favour of schools in rural and suburban areas. However, the distribution of funding is entirely dependent on which factors one decides to prioritise. If you up the amount attached to each EAL student, for example, inner cities will do better. If you up the amount for small schools then rural areas will benefit. There's no right answer.
  • Will Local Authorities be given any discretion? There are two ways to implement an NFF - give money direct to schools and bypass LAs altogether or publish indicative figures for schools but give LAs some discretion to take local factors into account (e.g. high levels of migration into a particular part of the Authority). Both ways have pluses and minuses.

Update: I understand that the NFF being considered would be at LA level. Authorities would still decide school level budgets but would only be able to use a limited number of factors (as per changes introduced this year).

Education Services Grant (ESG)

The ESG is what academies get in lieu of services they would previously have received from local authorities. Maintained schools get the same amount but their money goes to the LA rather than them directly. This budget - which is around £1bn at the moment - is being cut by £200m. So academies will lose roughly £20-£30 per pupil and LAs will lose the same amount for any maintained schools in the Authority. The DfE press release also says £150m will be saved from efficiencies to the academies process. I assume this will mean reductions to the start-up costs sponsors receive when they take over a new academy.

And that's it really. There's no detail about any of the other big DfE budgets like childcare and teacher training but we can probably assume they will not be protected in real terms given the overall cut to the DfE budget (of around 2%) and the relative protection given to schools.


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