An insight into the latest report for the Institute for Fiscal Studies, which sheds light on education spending

Government claims that school funding is at a record or historical high is ‘not much of an achievement’, according to a report from The Institute for Fiscal Studies (IFS).

The latest picture on School Funding and costs in England provides the latest analysis of trends in school funding and costs in England over time.

And it reveals that, if the Government wanted to compensate schools for the 5% loss in the purchasing power of budgets since 2009-10, it would require a total of £3.2bn in extra funding.

The report states that the core schools budget in England is set to be about £60bn in 2024-25, which includes day-to-day or current school spending on pupils aged 5-16.

Total spending is up about 11% in real terms on the level seen five years ago in 2019-20.

But it states: “The Government regularly makes the claim that school funding is at a record or historical high.

“While technically true, this is not much of an achievement.

“Practically every government could make this claim every year back to at least 1945, if not earlier.

“There are now an extra 900,000 – or 15% – more pupils than there were in 2010 and these pupils require extra teachers, extra books, extra seats, and total spending has thus gone up to meet this extra need.”

The graph above shows the IFS’s estimates of the total level of school spending per pupil, relative to its level in 2009-10.

The report states: “Following a substantial rise over the 2000s, total school spending per pupil fell by 9% in real terms in England between 2009-10 and 2019-20.

“This fall in school spending per pupil represents the largest and most-sustained cut in school spending per pupil in England in at least 40 years, and probably a lot longer.”

It adds: “Since 2019-20, we have seen rises in school spending, which is likely to lead to a 9.5% real-terms increase between 2019-20 and 2024-25.

 

Reversing the trend

“If delivered, this should be sufficient to reverse past cuts and take school spending per pupil back to its last historical high in 2009-10.

“Technically, we therefore also expect school spending per pupil to be at an equal historical high in 2024-25.

“Again, however, this is not really much of an achievement.

“Prior to 2010, school spending per pupil was usually at a record level every year.

“As a society, we have generally chosen to increase real-terms spending on schools as we have seen economic growth and become richer.

“The fact that school spending per pupil was not at a record high between 2010-2023 reflects the fact that we have just seen a historically-large real-terms cut in spending per pupil.”

Furthermore, the report reveals these trends do not account for the large drop in school capital spending, which has fallen significantly over time.

The three-year average up to 2023-24 is due to be about 26% lower in real terms than the three-year average in the late 2000s up to 2008-09.

And this all comes at a time when schools are facing increased costs.

 

Rising costs

The report states that average teacher pay per head grew by 6% in 2023-24, other staff pay per head increased by over 8%, and non-staff costs grew by 6%.

However, funding per pupil grew by 8.0% in 2023-24, which was just about sufficient, on average, to compensate schools for cost rises of 7.2%.

For 2024-25, the GDP deflator – the standard and most-consistent way to examine real-terms changes in public spending – is currently forecast to be 1.7%.

And, with funding per pupil due to grow by 3.8%, this equates to real-terms growth in school funding per pupil of about 2% and allows spending per pupil to return to 2009-10 levels by 2024-25, as shown in the graph above.

However, the IFS analysis suggests that school costs are actually likely to grow by 5%, outpacing funding growth and driving a 1% cut in the purchasing power of school budgets.

This projected increase in costs is based on a range of assumptions including teacher pay increasing and cost pressures from high-needs or special education needs provision.

In conclusion, the report states: “The government regularly claims that school funding and funding per pupil are at record highs. Such claims are, to put it mildly, unhelpful to public debate.

“Prior to 2010, school funding per pupil was at a record high almost every year. The fact that this has not been the case since 2010 just reflects the fact that we have seen historically-large cuts to school spending per pupil.

“Furthermore, the actual costs faced by schools are growing faster than overall inflation, such that the actual pressures on school budgets are likely to be much more challenging than when we use standard measures of inflation to calculate real-terms changes in school funding per pupil.

“On current policy and projections, we expect a 1% fall in the purchasing power of school budgets in 2024-25.

 

Lasting effects

“If the Government wanted to compensate schools fully for the expected cost rises, school funding would need to rise by a further £700m over and above existing plans for 2024-25.

“If the Government wanted to go even further and compensate schools for the 5% loss in the purchasing power of school budgets since 2009–10, it would require a total of £3.2bn in extra funding.”

Responding to the report, Daniel Kebede, general secretary of the National Education Union (NEU), said: “The NEU agrees with the IFS that the correct way to chart progress in the education system is by reference to school costs.

“It is school purchasing power that counts in providing an education system fit for the 21st Century.

“Persistent underfunding has led to deep and lasting effects on the education sector.

“70% of schools in England have lower real-terms funding this year than in 2010 and 380 schools have lost more than £2,000 in real terms per pupils funding due to government cuts.

“Up until this point Government has not listened to the clear evidence put in front of them. They are ignoring a growing existential crisis in education that is happening on their watch.”