Teachers face renewed redundancy threat next year

Teachers are facing the prospect of more redundancies next year after a senior civil servant admitted yesterday there was no guarantee this summer's school budget crisis would not be repeated.

David Normington, permanent secretary at the Department for Education and Skills, failed to promise that schools would avoid deficits when he appeared before the all-party Education Select Committee. Hundreds of teachers are likely to be made redundant this year after a £2.7bn national increase in funding was eaten up by £2.45bn of extra costs, including pay rises and changes to national insurance and pension contributions.

Next year the increase will drop to £1.4bn, and MPs raised fears that rising inflation and teachers' pay rises could even lead to a slight decrease in real terms. Mr Normington said officials were working with education authorities to try to alter the funding formula to ensure no school suffered next year.

Barry Sheerman, the committee chairman, warned that it was probably too late to make significant changes for next year. "I do not think you can avoid turbulence without changing it [the formula]," he said. "But what we are saying is that we do not think you can change it ... If you were in a private company you might want to consider your position."

Mr Sheerman lambasted the Education Department's handling of this year's school budgets, and said it was the third incident in the past year to cast doubt on the department's competence. He cited the fiasco of Individual Learning Accounts, which resulted in the DfES being found guilty of "serious maladministration" by the parliamentary ombudsman after fraud cost the taxpayer £100m,and theA-level grading scandal in which sixth-formers were awarded the wrong grades.

Mr Normington disputed the committee's figures suggesting a real-terms cut in funding next year. "We can agree there is less going in next year but it is still an increase," he said.

He appeared to rule out a move to the direct funding of schools by central government, arguing that a local intermediary - such as a local authority - would always be needed to reflect local circumstances. "I am not saying it will be all right next year," he said. "I am saying that we cannot repeat the problems we have this year. We are discussing how to change this formula so we do not have these problems again. If we simply did what we did this year we could not guarantee there would not be problems."

Mr Normington also admitted that ministers and officials knew last autumn that there was not enough money in the system to protect all schools from deficits. "Before Christmas it was clear to us that the demands in the system were quite significant and although there was more money than demands in the system there was not much headroom nationally," he said. "It felt much tighter than it should have done."

Even after Mr Normington and Charles Clarke, the Education Secretary, were confronted by angry teachers at the Secondary Heads Association conference in March they still did not realise the scale of the problem. Mr Normington admitted that officials had made mistakes. "I take responsibility for it but we will say that we are not solely responsible," he said. "I think neither we nor ministers believed it would have this impact on some schools ... Some schools have been winners, some have been losers. Overall we believed there was enough money to cover all the demands."