Schools have been particularly affected by “rapid rises” in energy and food prices and have also been hit hard by rises in support staff pay and higher than expected rises in pupil numbers.
An analysis from the Institute for Fiscal Studies (IFS) says that this outpacing of general inflation levels will result in school budgets “stagnating in real terms after 2022/23”.
The report (Sibieta, 2023) says that with current increases to school funding, real-terms spending per-pupil in England should finally have been higher in 2024 compared to 2010 – after adjusting for economy-wide inflation.
These increases include a £7bn rise in annual school funding by 2024/25 (pledged at the 2021 Spending Review), an extra £2bn a year in the 2022 Autumn Statement, as well as £800m announced in September this year to cover the teachers’ pay settlement.
As such, the schools budget is expected to increase from £44.4bn in 2019/20 to £59.6bn in 2024/25 in cash terms (a total real-terms rise of nearly 15% over five years and 3% higher than 2009/10 in real-terms).
However, the news that school costs are rising faster than general inflation means that school funding and costs have actually been growing at similar rates since 2021/22 and look likely to continue to do so until 2024/25.
This would leave the purchasing power of English schools in 2024 about 3% lower than in 2010, the analysis concludes.
The Bank of England says it expects inflation to fall to around 5% by the end of 2023. It was more than 11% in October 2022. It’s currently sitting at 6.7%.
However, the IFS analysis says that it expects school costs to grow by 7.2% in 2023/24, while school funding will grow by 8%. In 2024/25, total funding is predicted to grow by 4.3% and school costs by 3.7%.
As well as the rises in energy and food costs and the higher than expected increases in support staff pay, other factors hitting schools include growing costs of high needs provision, the impact of higher than expected inflation on non-staff costs, and higher than expected pupil numbers – in January 2023 numbers were 0.7% higher than many recent forecasts.
The analysis states: “From 2022/23 onwards we see a consistent picture of total school funding per-pupil only just about growing by more than school costs. This explains why we see school spending per-pupil largely stagnate in real terms after 2022/23 when we account for the costs likely to be faced by schools.
“This illustrates the importance of using the schools-specific inflation measure to assess real-terms funding changes at the present time.”
The analysis adds that there will be variation within schools. Some schools will be hit harder by rising costs, such as special schools which tend to employ more support staff.
The author, Luke Sibieta, a research fellow at the IFS, said: “Schools are currently seeing large cash-terms increases in funding, which look like large real-terms increases when using standard ways of tracking government spending.
“However, schools are also currently facing rapid rises in costs, particularly support staff pay, energy and food costs, which are not captured in those standard economy measures. School funding per-pupil is in fact increasing by only just about enough to keep pace with overall school costs. Policy debate should reflect the acute pressures on school budgets.”
Commenting on the report, Daniel Kebede, general secretary of the National Education Union, said: "This report is a valuable contribution to the debate. It highlights that the headline figures on education funding do not translate into funding increases per-pupil once school-specific costs are taken into account.
“Rapid rises in food and energy costs mean school budgets are yet again being stretched further. We are also concerned that inflation is proving more persistent than expected in the 2022 Autumn Statement. If this continues then education will have lost out in real-terms even ignoring school-specific costs.
“The education system also needs to deal with past underspending on capital projects, which has resulted in the RAAC crisis. We currently spend around £2.6bn a year on capital. It needs to rise to at least £7bn a year to fix the school estate."
The IFS analysis has been funded by the Nuffield Foundation.
- Sibieta: What is happening to school funding and costs in England? IFS, 2023: https://ifs.org.uk/articles/what-happening-school-funding-and-costs-england