Theresa May embroiled in fresh Budget controversy over unfunded grammar school places

Budget pledge will only fund 13,000 pupil places – not 70,000

The Prime Minister was so proud of the pledge to create the places at 140 new schools, that she chose to announce it personally the day before Philip Hammond’s Budget statement

Theresa May faces a fresh Budget storm after it emerged that £320m announced to create thousands of places at her flagship grammar schools will only cover a fraction of the cost of setting them up.

Treasury officials admitted to The Independent that money set out in the Budget will not be enough to pay for the 70,000 free school places promised by the Prime Minister.

Ms May was so proud of the pledge to create the places at 140 new schools, that she chose to announce it personally the day before Chancellor Philip Hammond’s Budget statement.

But an analysis of existing government data shows the £320m will only deliver a meagre 13,000 places by 2020, with additional money earmarked for the next parliament still only creating just over half of the promised 70,000.

Labour frontbenchers who uncovered the anomaly claimed it pointed to “broken promises” in the Budget, but even some nervous Conservative MPs last night urged the Government to be clear how they will make up the funding gap.

It follows an earlier row over the Budget plan to hike National Insurance contributions, breaking a Tory manifesto pledge, which left Ms May facing a backbench rebellion and urgently signalling extra measures to mitigate the impact – some Tories expect the NICs rise to be quietly ditched later on.

On the Tuesday before Budget day the Prime Minister visited a classroom to proudly announce new cash for the 70,000 free schools places.

It is widely expected that many of new spots would deliver a selective education, the expansion of which the Prime Minister has made a cornerstone of her drive to boost social mobility.

But information previously given by the Department for Education to the National Audit Office indicates it costs £24,600 to create a new free school place, at which level the £320m promised would only pay for 13,008 places.

Treasury officials said money set aside in the next parliament for the year 2021/22 would go further to meet the pledge, but even with that year’s extra £655m, only 42,073 places could be delivered.

They accepted that further funding would have to be set out in later spending rounds for the pledge to be fulfilled.

A Department for Education spokesman also added: “The £320m announced at the Budget is the amount committed in this parliament, up to the 2020-21 financial year. The total budget required for opening these schools will be set out at a later date."

He added that the free schools programme is "demand-led" so it is not possible to accurately predict the location, size or type of schools for which the department would receive applications.

Shadow Education Secretary Angela Rayner said: “This is yet another pledge that simply won’t be met. The money the Chancellor has allocated can only provide a small fraction of the places the Prime Minister promised.

“The Government is sinking greater sums of taxpayers’ money into a free schools programme that is over budget, behind time, and can’t provide the places that are needed.”

She added: “This Budget was a chance for the Government to meet their election pledge to protect the funding that follows every child but instead it is set to be a Budget of broken promises.”

One Tory MP told The Independent it was his understanding that the rest of the money could be met from the existing schools capital budget, raising the prospect of money that might pay for improvements to state comprehensives being siphoned off to build grammars.

Another senior Conservative figure said: “We need to be clear where the money is coming. If you are going to launch a whole new policy area it diverts attention away from existing areas and it diverts money away from a system that is already under immense pressure.”

Conservative MP Andrew Bridgen said: “We have a growing population and there is going to be an increasing need for new school places.

“Whether they are found through free schools or existing schools expanding, the money will have to be found.”

A Dept for Education spokesperson said: “Free schools are playing a vital role in creating more good school places and are 29 per cent cheaper to build than schools built under the previous programme.

“The £320m announced at the Budget is the amount committed in this Parliament, up to the 2020-21 financial year. The total budget required for opening these schools will be set out at a later date."

In the 24 hours following last Wednesday’s Budget statement, Tory MPs took to the airwaves to raise concerns about Mr Hammond’s plan to raise NICs paid by self-employed workers.

Enough Tories fearing the measure targeted “our people” – entrepreneurs and small business owners – spoke out, that Ms May used a press conference in Brussels on Thursday to signal potential concessions.

She said the changes would not be brought in till the autumn and indicated negative impacts could be mitigated following two papers due out over the summer.

Business minister Margot James appeared to prepare the ground for a U-turn by claiming the tax hike had merely been “mooted” by the Chancellor in his Budget speech, and then said in the Commons on Tuesday that the policy is “under review”.

Downing Street later said there was no change in the position set out by Ms May in Brussels at the end of last week.

Meanwhile, the Government’s Budget pledge to protect England’s pubs by giving them a £1,000 business rates discount has been described as a “stay of execution” after industry estimates suggested thousands of businesses would get no help at all.

EU rules restrict state aid to £174,000 per business over three years and the British Beer and Pub Association said it meant larger pub-owning companies with managed premises might not be able to receive the business rates discount, or would be eligible only for part of it.