Tuesday, 14 December 2010

Schools face big cuts not budget protection

Until I saw yesterday's schools settlement, I knew school budgets would be cut next year, but expected them to be mitigated by a Minimum Funding Guarantee, probably set at zero per cent. Having seen what is actually proposed - a flat Dedicated Schools Grant at local authority level and an MFG of -1.5% at a time when schools are likely to need at least 2% to stand still even with a pay freeze (to cover inflation, increments, 2010-11 pay rises and national insurance) - it is clear that schools that are not cushioned by a significant pupil premium will face cuts of around 4% in their 2010-11 budgets. There will be additional cuts in school sixth form funding that are not protected by the MFG.

This is not the real terms protection that the Chancellor promised in his spending review. Far from it. What it will mean in reality is that a typical secondary school with a £5-6 million budget and limited numbers of FSM pupils will lose around £200-250,000, the equivalent of around five or six teachers' jobs or 10-12 support staff. Primary schools will lose a similar proportion of their budgets, and potentially of their staff. If a 1500 pupil school has 15% of its pupils in receipt of free school meals, it will be mitigated to some extent: it will only lose £116-£166,000, or three or four teachers, or 6 or 7 support staff. Some schools may be cushioned by reserves this year and may make savings through shared services, but the impact is still likely to be harsh. There are also big cuts in funding for 'early intervention' including Sure Start, despite promises to protect under-threes funding.

Across the country, it could still mean the loss of tens of thousands of school staff, since over 80% of school budgets are spent on staffing. At the same time, schools' formula capital is being slashed with just £195 million to be allocated across all schools compared with £959 million this year, which is a cut of 80%. That is the cruellest cut of all: formula capital had allowed schools to undertake vital repairs, a crucial lifeline with Building Schools for the Future sidelined.

To imagine that schools will now joyfully be using their pupil premium for anything other than plugging the gaps in funding caused by these cuts is fanciful, especially in the absence of any ringfencing for the money. It is a bad settlement for schools, and the poorest pupils will suffer too, with fewer teachers and crumbling buildings.

Perhaps it would not have appeared quite so bad if ministers had been straight during the spending review. They weren't: they misled schools into believing that their funding would be protected in cash terms, assuring specialist schools and school sports partnerships, for example, that the removal of ringfencing simply meant they would have the chance to spend the cash as they liked. They said nothing about formula capital or Sure Start cuts. Now all we see is yet another Liberal Democrat and coalition promise broken.

This post also appears at Public Finance.

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