Budget 2021: A level playing field for schools?

Published by on 27 October 2021

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After details of the pay freeze for school staff were leaked ahead of today’s announcements, many Chief Financial Officers and School Business Managers were starting to count their pennies as they assessed the impact this would have on their budgets. Little did they know that Rishi had something up his sleeve that even the press was not aware of – restoring per-pupil funding to 2010 levels in real terms. But does today’s Spending Review (SR) spell good news or just a clear sign that the sector has been under-funded for more than a decade?

It was cold outside…

Let us start with the pay freeze first of all. The pay freeze imposed last year on school leaders, teachers and support staff earning more than £24,000 will be scrapped. These increases will be confirmed next year once the government have responded to the School Teachers’ Review Body’s and other review organisations’ recommendations.

But there is pressure for this to be significant. It is estimated that inflation will rise to 4% next year and therefore any rise below that will be seen as a real-terms cut. Balancing the expectations of those who work in schools will be key.

The government also committed to increasing teacher starting salaries to £30,000 a year. However, the pandemic meant this was paused until 2024. So any rises announced next year will need to be significant to get back on track to achieving this target. Had the old target of 2022-23 remained in place, a starting salary would have had to be increased by over 16 per cent in just one year – a budget buster.

We also must not forget the National Living Wage increasing from £8.91 per hour to £9.50, nor the Health and Social Care Levy (effectively a National Insurance increase) of 1.25% from April 2022. It all adds up and budgets will need to balance. Chief Financial Officers and School Business Managers will be feeling the heat.

Levelling up?

To support schools in balancing their budget, today brought some good news. To level up education outcomes, SR21 confirms an additional £4.7 billion by 2024-25 for the core schools budget in England, over and above the SR19 settlement for schools in 2022-23. This will be equivalent to a real-terms growth rate of 2% per year over the SR21 period (21-22 to 24-25). This is broadly equivalent to a cash increase of over £1,500 per pupil by 2024-25 compared to 2019-20.

To put that into context, the average primary school class size is currently 26.6 which based on a one-form entry primary school equates to approximately 160 pupils. Using the £1,500 per-pupil increase this equates to an extra £240,000 or the equivalent of 8 new teachers based on the new starting salary (excluding on costs!). The big question is, is the additional funding enough? We’ll let you be the judge.

Still recovering

A new package of £1.8 billion over the SR21 period that is directly targeting education recovery was announced. This includes a £1 billion Recovery Premium for the next two academic years for schools. Primary schools will continue to benefit from an additional £145 per eligible pupil, while the amount per eligible pupil in secondary schools will nearly double. It means the average secondary school can now get up to £70,000 per year.

Currently, a secondary school of 1,000 pupils this year gets around £35,000, while a primary of 200 children gets £6,000.

Of the £1.8 billion recovery cash, £324 million will also fund additional learning hours for 16 to 19-year-olds. It appears most of the cash will support the continuation of the school-led tutoring fund.

Whilst this extra money is welcomed, it continues to be pushed into specific areas. This is fine as the government clearly want certain outcomes, but it means the cash is restricted in its use as any unspent element could contribute towards the potential pay gap.

SEND places covered

To support the most disadvantaged and vulnerable children an extra £2.6 billion will be made available over the SR21 period for school places for children with special educational needs and disabilities, more than tripling current capital funding levels to over £900 million by 2024-25 creating 30,000 new school places.

The holiday activities and food programme will also continue to receive funding of around £200 million a year, providing enriching activities and healthy meals for disadvantaged children during school holidays. Marcus Rashford continuing to make an impact.

This is good news but will there be enough teachers available to help deliver to these places and programmes? Recruitment remains tough (Brexit and Covid) for many schools although the pay freeze removal may improve this.

Will the new schools help towards the government’s sustainable targets? Or will they be structured much like many of the thousands of schools in the UK which are now proving to not be environmentally friendly. Gen Z will soon be assessing schools based upon their environmental impact not just educational.

In summary

As I summarised back in March, as usual, any additional funding has been lacking in detail and therefore schools will have to continue to adapt their budgets as and when new information is released. Yes, they can budget the costs but can they realistically budget and forecast the income? It continues to represent an unfair position for those looking to balance the books, especially when the playing field continues to appear anything but level. Perhaps the new UK-wide numeracy programme could be better utilised by those funding it.

Join our Budget question time – Connecting the dots webinar on Friday 29 October, where our panel of tax and finance experts will be on hand to answer your Budget related questions

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