School funding: What does the Autumn Statement mean in 2023 and beyond?

Written by: Julia Harnden | Published:
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An additional £2bn is to be added to the core school budgets in each of the next two years – but what does this mean for your financial planning now? Specialist Julia Harnden offers her analysis to help you prepare for 2023 and beyond

In November, chancellor Jeremy Hunt delivered his first fiscal statement. It was, of course, the second fiscal statement of the autumn term. The first – the disastrous “mini-budget” which largely ignored education – was in September. The November statement lasted about 60 minutes and the accompanying document is 70 pages long (HM Treasury, 2022). Here are the things you need to know about it.

First a health warning: The following is based on the information available at the time of writing…

The money

The November Autumn Statement confirmed that an additional £2bn will be allocated to the core school budgets in each of the next two funding years, starting April 2023.

This is new money and is in addition to the spending envelope delivered in the October 2021 Spending Review. It means that by the 2024/25 funding year the core schools’ budget will be £58.8bn. It is reasonable to assume that the new money is now locked into the education budget.

At the time of writing there are still more questions than answers as the whole sector battles to unpick the announcement and make use of it in budget planning documents that are in tatters following the influence of recent economic instability, late announcements about public sector pay, and the uncertainty around financial support for surging energy costs.

The Institute for Fiscal Studies (IFS, 2022) has said that this additional money will restore school spending to 2010 levels in real terms.

The government has said that this provides an average cash increase for every pupil of more than £1,000 by 2024/25, compared to 2021/22. This is a high-level assumption that considers the total core schools’ budget and the total pupil population. It is not an increase that you are likely to see in your per-pupil allocation at individual school level.

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What’s included in the core schools budget?

The core schools budget has a huge remit. It must meet the revenue-funding demands for mainstream schools for children aged five to 16 (the schools block), high needs specialist and alternative provision, as well as top-up funding for children with SEND in all types of provision (the high needs block); also it funds the Pupil Premium.

Overall, the additional funding represents an increase of around 3.5% in the next two years, compared to what we were expecting from the October 2021 Spending Review settlement.

How will the money be split between the schools block and the high needs block?

As this article was being published, the DfE announced that £400m of the extra £2bn is to go to children and young people with high needs. A statement said: "This £2bn of new money will be allocated between mainstream schools and high needs funding. Local councils will get an extra £400m for high needs budgets, to help support children with SEND." (DfE, 2022)

How will the new money be distributed?

Given time constraints, it is reasonable to expect that this new money for 2023/24 will be distributed outside the national funding formula (NFF) allocations for both the schools block and the high needs block.

How will institutions get access to the cash?

For mainstream schools we can expect this to be in the form of an additional grant, probably distributed in a way that makes it straightforward to roll into the NFF the following year.

We can anticipate a methodology that will consider a basic per-pupil element, Pupil Premium cohort, and possibly a lump sum. Exactly what this means in financial terms should be revealed at the same time as final dedicated schools grant (DSG) allocations are confirmed along with the Pupil Premium rates for 2023/24. Historically, this is done in December.

For special schools and alternative provision institutions this question is both harder and more contentious. In the current funding year, local authorities received additional money to support the high needs block.

This has been problematic because the accompanying conditions of grant have meant that local authorities have not all passed the money on to institutions. The conditions of grant mean that it is legitimate for local authorities to hold on to the money and use it to support pressures on the high needs block in a way that has felt inequitable at school level.

While it might make operational sense that the additional money for specialist and alternative provision is devolved to local authorities, more needs to be done to restore equity across all types of schools.

The fact that we are facing this particular challenge is a stark reminder that the amount of funding made available for high needs is simply not keeping pace with demand.

Missed opportunities

There are two glaring omissions from the November statement. The chancellor missed the opportunity to address funding shortages in both early years and post-16 provision.

Evidence in a recent report by the Organisation for Economic Cooperation and Development looking at value for money in school education (OECD, 2022) indicates that investment in early years education is an important policy lever for achieving both efficiency and equity in education. A missed opportunity then for children, families and the education system.

The crisis in post-16 funding continues to loom large. The IFS tells us that without additional funding, by 2024/25 college funding will be 11% below 2010 levels in real terms, and for school sixth forms the figure is an eye-watering 27% below 2010 levels in real terms (Sibieta & Tahir, 2022).

A missed opportunity then for students at a crucial stage in their education and lives.

It goes without saying that both these parts of the sector are equally vulnerable to the range of cost pressures felt by schools, but must somehow manage without anything extra. This is despite the fact that the chancellor was clear in his speech that being pro-education is being pro-growth.

Energy bills

The Energy Bill Relief Scheme (DBEI, 2022) offers financial support for non-domestic energy users and runs until March 31, 2023. To be fair, the review of the scheme is on-going and therefore we couldn’t expect a definitive response to the big question “what happens from April 2023?” – but it is looking increasingly unlikely that support for the public sector will continue.

Free school meals

Also disappointing was the government’s failure to act on urgent calls to amend the criteria for free school meal eligibility by removing the household earnings threshold of £7,400 and extending entitlement to all families in receipt of universal credit.

According to the Child Poverty Action Group (CPAG) there are 800,000 children living in poverty who are not currently eligible for free school meals. The cost-of-living crisis is impacting on both the demand for and provision of school food. Funding to support extended access and provision to a nutritious hot meal really would make a difference. Another missed opportunity.

What next?

On the basis of best information available at the time of writing, a scenario that might be useful for mainstream schools would be for the government to include an amount similar to the schools supplementary grant received this year into its budget plans for next year. This can only be an estimate so keep a look out for more details about distribution and timelines. Schools will need to modify budget plans as the “known unknowns” slowly become “known knowns”.

  • Julia Harnden is a funding specialist with the Association of School and College Leaders.

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