Schools budget could be cut by £3bn, National Audit Office report warns

Schools must reduce spending by 8 per cent per pupil by 2020 - the biggest real terms cut 'in a generation'

Schools are expected to make savings by 'using their staff more efficiently', the National Audit Office said (Daniel Lynch)

School budgets are facing a real-terms cut of £3bn over the next four years, a report has warned.

A National Audit Office report into the financial sustainability of schools has warned that mainstream schools will need to reduce spending by an average of 8 per cent per pupil by 2019-2020 - a difference education leaders say is the biggest real terms cut in a generation.

The independent parliamentary audit group named staff pay rises, higher employer contributions to national insurance and the teachers’ pension scheme as examples of rising industry costs that are unsustainable.

It also warned that while the Department for Education’s overall budget is protected in real terms, it does not provide for funding per pupil to increase in line with inflation.

Shadow Education Secretary, Angela Rayner called the projections “an appalling indictment of Tory policies” that would surely lead to redundancies.

Teaching groups and education leaders have also condemned the government for not offering a clear plan as to how schools might meet cost-saving targets.

Responding to the budget forecasts, the DfE said schools would have more funding than ever for the current 2016-17 academic year.

But the department also forecasts the number of school-age pupils to rise by 7.7 million before January 2020, meaning funding per pupil will, on average, rise only by 1.3 per cent from £5,447 in 2015-16 to £5,519 in 2019-20.

The DfE provides separate funding for pupils aged 16-19, which fell by 14 per cent in real terms between 2010–11 and 2014–15.

Publishing the NAO report, the Committee of Public Accounts said schools are left uncertain about how much funding they will receive each year, with “growing financial pressure”, making it difficult for bodies to plan and budget effectively.

According to the NAO, it is expected that schools will make “efficiency savings through better procurement (estimated savings of £1.3bn)” and by “using their staff more efficiently (the balance of £1.7bn)”, prompting fears that recruitment cuts and job losses may be on the cards.

When questioned on this, a DfE spokesperson said the changes were not indicative of redundancies or job cuts.

Ms Rayner said: “I am not sure how teachers can be expected to work more efficiently - the government have got a bloomin' cheek suggesting that.

”The only conclusion I can come to is that these cuts will mean teachers are going to be made redundant, or that there is going to be a recruitment freeze, at a time when teachers are already leaving the profession in droves and we have a crisis in teacher recruitment and retention.

“This is really an appalling indictment of Tory policies.”

Adrian Prandle, Director of Economic Strategy and Negotiations at the Association of Teachers and Lecturers (ATL), said: “School staff will be worried that the NAO is talking about ‘using staff more efficiently’ and ‘workforce savings’, and the Department for Education, which refuses to admit there is already a crisis in teacher recruitment and retention, should also be deeply concerned.

The NAO’s analysis indicates that while the financial position of primary schools has been relatively stable, there are signs of “financial challenges” in secondary schools.

The proportion of maintained secondary schools spending more than their income increased from 34 per cent in 2010-11 to 59 per cent in 2014-15, with more than 60 per cent of secondary academies spending more than their income in that time.

“The Department does not know with certainty why schools are overspending, or underspending to build up reserves, or for how long these patterns are sustainable,” the report said.

In a joint statement, ASCL, ATL, NAHT, NUT and Voice union leaders said: “The Government’s long-awaited and much-delayed plans for reform of school funding will not solve the funding crisis facing schools and colleges.”

The Government says it is protecting the education budget. School funding is in fact frozen, but inflationary factors mean that schools face the biggest real terms cuts in a generation.

They added: “We are already seeing job losses, increased class sizes and cuts to courses in our schools and colleges.”

The budget projections come just three weeks after the Chancellor announced a £240m spend on expanding grammar schools across England.

Liberal Democrat Shadow Education Secretary John Pugh said:

“It is a disgrace that while schools face a severe funding crisis, £240 million is being spent on expanding grammars.

“This Conservative Government has completely the wrong priorities.

“Instead of protecting funding per pupil to give every child a chance in life, it is pushing through plans that will stretch our schools and teachers to breaking point.”

More than 60 per cent of secondary academics spent more than their income in the 2014-15 academic year.

Meg Hillier MP, Chair of the Committee of Public Accounts, said: “I hope the Department for Education get their act together to understand and address a sector facing increasing financial challenges faster than the Department of Health have.

A DfE spokesperson said: “We want schools to have the resources they need, and through our careful management of the economy we have been able to protect the core schools budget in real terms. That means that in 2016-17 schools will have more funding than ever before for children’s education, totalling over £40 billion.

“We are introducing a national fair funding formula so schools are funded according to their pupils’ needs, rather than by their postcode. This will give headteachers certainty over their future budgets, helping them make long term plans and secure further efficiencies.

“We recognise the increasing cost pressures schools are facing and will continue to provide advice and support to help them use their funding in cost effective ways, and improve the way they buy goods and services, so‎ they get the best possible value for their pupils.”