While inflation-adjusted per-pupil spending is projected to surpass 2010 levels in 2024, a closer inspection reveals a different reality. The surge merely keeps pace with school costs, revealing a stark disconnect between nominal increases and the actual financial landscape schools face.
CREDIT: This is an edited version of an article that originally appeared on IFS
After a notable rise in the 2000s, total school spending per pupil in England experienced a real-terms decline of 8.5% from 2009–10 to 2019–20. This dip, including cuts in day-to-day spending and substantial reductions in school capital spending, marked the most significant and sustained cut in at least 40 years.
Government commitments
In response, the government laid out ambitious plans, aiming for a £7 billion annual increase in school funding by 2024–25, as per the 2021 Spending Review. Additional pledges, such as £2 billion yearly in the 2022 Autumn Statement and over £800 million annually to cover higher teacher salaries from September 2023, are expected to elevate the school budget from £44.4 billion in 2019–20 to £59.6 billion in 2024–25, reflecting a substantial 15% real-terms rise over five years.
Real-terms puzzle
However, the rosy picture painted by standard measures of inflation, using the GDP deflator, presents a different reality when juxtaposed with the actual costs schools are likely to bear. A 13% real-terms increase in school spending per pupil between 2019–20 and 2024–25, as indicated by the GDP deflator, contrasts sharply with the anticipated less than 6% rise when considering the actual costs faced by schools.
Notably, during 2020–21 and 2021–22, school funding per pupil outpaced total costs, driven by freezes in public sector pay and relatively low inflation during the pandemic.
2022–23 onwards: Faster cost escalation
From 2022–23, a shift occurs, with accelerated growth in school costs. While teacher pay per head sees a 5.4% average pay increase from September 2022, the surge in other staff pay per head (8.5%) and non-staff costs (10%) in 2022–23 reflects inflation-driven spikes. As a result, schools, on average, teeter on the brink of breaking even in 2022–23.
Future projections: Tight funding and growing costs
For 2023–24, continued fast growth in school costs is anticipated, with average teacher pay per head expected to rise by 6%, alongside an 8% increase in support staff salaries. With inflation persisting over 6%, non-staff costs for schools are set to rise, projecting a 7.2% increase in total school costs. Although extra funding is injected in the 2022 Autumn Statement, school funding is expected to grow by 8%, barely outpacing overall cost growth.
2024–25: Balancing act
Anticipating pay raises of 3% for both teachers and school support staff in 2024–25, the projection suggests a 4.3% increase in total funding per pupil and a 3.7% uptick in overall costs. Despite the expected rise in per-pupil spending, the increase mirrors the surging school costs, presenting a complex challenge for school leaders.
Implications of the discrepancy
The disconnect between trends in school spending per pupil measured by the GDP deflator and the costs faced by schools raises concerns. Policymakers, when claiming real-terms growth in school spending, must acknowledge this disconnect. Using the Consumer Prices Index (CPI) instead of the GDP deflator to analyse school costs could provide a more accurate reflection of non-staff costs.
Call for reform: Timing of salary announcements
The timing of salary announcements exacerbates the situation, causing uncertainty for schools. Late decisions on teacher and support staff pay create challenges in financial planning and lead to controversies over funding adequacy. To address this, policymakers should consider adjusting the process for agreeing on teacher pay, with final decisions published in March each year, providing schools with more time for financial planning and minimising the need for late adjustments.
As we anticipate a purported rise in per-pupil spending by 2024, it becomes evident that the increase merely mirrors the surging school costs, presenting an intricate challenge for school leaders, requiring astute financial planning and innovative solutions to navigate the complex and evolving terrain of school funding.
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