Budget 2018 – Is the focus all on Brexit or will education benefit?

Published by Phil Reynolds on 22 October 2018

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We are less than a week away from the final budget to be delivered before the UK leaves the EU and already we are feeling the changes – a different day (a Monday rather than a Wednesday) and a rumoured 3.30pm start – as Philip Hammond looks to “build a stronger, more prosperous economy”.

The education sector will be watching on with great interest along with the rest of us. So what do we expect to see?

Teachers pay and pension

Teachers pay and pension contribution increases have already been confirmed in recent weeks and months– thankfully with some financial support from the government. The Chancellor will no doubt confirm these as a way of showing the government’s support for the sector.

Fairer funding

Whilst this has been promised for 2019/20 with £4,800 per secondary pupil and £3,500 per primary pupil, Local Authorities still have the ability to top slice the funding if they wish. This still leaves some scope in the system for a regional bias.

Government could solve this by directing funding straight to the schools and not via Local Authorities and this has been proposed from 2020. Confirmation of this would be welcomed though as schools need this certainty to budget effectively.

Insurance

Insurance is one area to bring a cause for concern. Any schools still paying insurance (outside of Risk Protection Arrangement) should gear themselves for an increase in insurance premium tax. The tax has already increased from 6% to 12% in recent years and now looks set for another hike. This may also impact upon the current “deal” for RPA and cost per pupil may rise too in the future.

Self-employment

Those who are deemed to be “fake self-employees” are fully expected to be targeted. These are people who take on work as a private company but are actually employees and should pay national insurance contributions.

Since April 2017 when IR35 legislation was introduced the onus has been placed upon public sector organisations to ensure the correct treatment. This tends to be in areas schools interim Heads, CEOs or COOs are put in place and previously would have been self-employed but are now deemed employed.

Schools are improving at identifying this problem and dealing with it. But some can still slip through the net. Therefore, schools should ensure going forward to do all they can to avoid any penalties being incurred from skeletons in the closet.

Climate change

Climate change is another topic that has been popular in recent months. Rumours have circulated the Treasury are looking at increasing the Climate Change Levy (CCL) on gas usage to match the same rate of tax on electricity in a bid to reduce carbon emissions.

Thankfully schools are deemed exempt charities and unless they have significant business activities, should not be charged the CCL by their suppliers. So schools should monitor their bills closely in case there is a sudden increase on the next invoice post budget.

The surprise?

There is usually a surprise announcement on budget day and plastic pollution is another popular topic currently. It would not surprise me if the Chancellor introduced a “plastic tax” to help generate more funds and accelerate towards the government’s 2042 target to eliminate plastic waste in the UK. Could schools reap the benefit of this much like they did with the “sugar tax”?

There is no doubt this could well be an unusual budget, the change of day and start time are a sign of this along with it being Halloween week. But as the dust settles and budget commentators survey the announcements, those in education will be hoping to wake up the following morning having avoided any “bumps in the night”.

Make sure you download your complimentary copy of Kreston’s Academies Benchmark Report 2019 here: http://eepurl.com/ge8wvr

This year the report includes over 350 Trusts representing nearly 1000 schools and is based on those Academies that prepared financial statements for the period ended 31 August 2018 and which were audited by member firms of Kreston UK.

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