School finance: The Spending Review, the Budget and you

Written by: Julia Harnden | Published:
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Now the dust has settled on last term’s Budget and Spending Review, we asked funding specialist Julia Harnden to look at the implications for the education front-line in schools


In October, the chancellor stood up in the House of Commons and spoke for an hour or two setting out both the Budget and the outcome of a comprehensive Spending Review (HM Treasury, 2021; SecEd, 2021).

The UK has a well-established budgeting framework, which includes the Budget statement and the Spending Review. In the last few years though, we have witnessed a rather topsy-turvy timetable – budget dates have been moved, spending review cycles have been rather shorter than we usually expect, and that was before the pandemic disrupted the nation’s finances.


What’s in it for you?

The Budget is a statement on the nation’s finances and the government’s proposals for changes to taxation that are required to deliver on public spending commitments. This will impact on our own purse but has less direct impact on your school budget. The Spending Review, on the other hand, sets out the amount that the government plans to spend across departments and on public services. It is the part of the process that really matters to education.


What’s new, and what’s not?

Getting into the detail of a Spending Review can be testing, but the first task is always to unpack what is “new money” and which announcements are confirmation of previously committed spending. The October 2021 Spending Review was no exception, with the lines blurred even further by the crossover that exists between the current core schools budget settlement and the October announcement.

The Association of School and College Leaders (ASCL) has long campaigned for three-year settlements for education, and in September 2019 we got just that for schools. The twist was that almost all other departments were given a string of single-year settlements, including early years and post-16. So let’s unpack what this Spending Review means for schools, early years and 16 to 19 provision between April 2022 and March 2025.


Core schools’ budget

Last term, on October 27, the chancellor announced an additional £4.7bn revenue for the core schools budget, by 2024/25. Think of the core schools’ budget as funding for mainstream pupils aged 5 to 16 and specialist provision, alternative provision and support for children and young people with SEND. The Spending Review pledged an additional £4.7bn for schools and high needs.

We anticipate that this will be split relatively evenly across the next three years and will include supplementary funding to cover the National Insurance levy beginning in April 2022. The government has indicated that they expect this additional funding to cover costs associated with implementing the rise in starting salary for teachers to £30,000.

Government is telling us that this all equates to a cash increase of around £1,500 per pupil by 2024/25, compared to 2019/20 spend levels.

While schools and high needs funding makes up more than 90 per cent of the dedicated schools grant (DSG), early years funding also sits within it. Funding for early years delivers the free childcare entitlement available to two, three and four-year-olds. The Spending Review has delivered an increase in the hourly rate that childcare settings will receive to provide the free childcare entitlement.


16 to 19 funding

The funding for programmes of study for 16 to 19-year-olds sits outside the DSG, and uses the same distribution methodology for school sixth forms, further education colleges and sixth form colleges. Student numbers in post-16 education are growing, with an additional 110,000 students anticipated by 2024/25. The Spending Review delivered a welcome extra £1.6bn for 16 to 19 by 2024/25. A critical element of this funding is support for additional hours for students. This will be funded by an increase in the learner rate to £4,542, effective in September 2022. More detail on delivery of the additional hours is much needed. The high value course premium will increase to £600 and the advanced maths premium will continue.


Investment in the estate

The Spending Review confirmed a significant amount of capital investment which will stretch beyond the next three years. This included the commitment to rebuild 500 schools over the next decade, £2.8bn for 16 to 19 provision and £2.6bn to increase school places and improve provision for children and young people with SEND.


Recovery funding

The Chancellor confirmed an additional £1.8bn to extend the recovery premium for primary and secondary schools and provide an additional hour of learning per week for students in post-16 settings. This is new money. Funding to support the 16 to 19 tuition fund and a range of training programmes for middle and late career teachers (National Professional Qualifications – NPQs) for the next couple of years had previously been announced.

The enduring frustration with funding to support recovery is that it feels like a short-term response to a long-term set of challenges. All funding is welcome, of course, but the sector should have confidence that the long-term investment required to mitigate the impact of the pandemic on our future workforce is assured. I don’t think we have that confidence.


Bigger picture

In its 2021 annual report on education spending, the Institute for Fiscal Studies provides a very useful analysis of where the Spending Review and the implications for education sit in the bigger picture that is public spending (Farquharson et al, 2021).

For schools, the IFS analysis indicates that by the end of the Spending Review period (March 2025) spending levels will have reversed real-terms cuts made since 2010. That must be a step in the right direction. Another way of looking at it is that schools will have survived 15 years with no overall growth in spending. This sounds pretty grim – and it is. In fact, the IFS says that this level of squeeze on school resources is unprecedented in post-war history.

The message for 16 to 19 provision is even harder to hear. By 2024/25 college spending per-student will be about 10 per cent below 2010 levels and, for school sixth forms, spend per-pupil will still be 23 per cent less than in 2010.


What can you do?

We always need more detail, but there are some very useful things that can be done now to start to assess the impact of what we know and support those difficult to pin down “known unknowns”.

  • Review budget plans and include the costs of the National Insurance levy from April 2022. Funding to cover this has been confirmed for schools but not for further education colleges and sixth form colleges.
  • If you are in buildings that are in poor condition, look out for the government response to the consultation on prioritising schools for the schools rebuilding programme (DfE, 2021).
  • Try out scenarios around implementation of the government policy that will increase the starting salary of new teachers to £30,000. The DfE’s unusual two-year remit to the STRB reconfirms its intention to implement the rise, although the timescales are still unclear (see SecEd, 2022). We are not anticipating additional money, over and above what has been committed in Spending Review, to support its implementation.
  • Talk to contractors of outsourced services, cleaning and catering for example. Are they imposing inflationary hikes? How this will impact you will depend on your contract terms and conditions. How are energy price hikes affecting your budget plans?
  • Julia Harnden is a funding specialist at the Association of School and College Leaders. Find her previous articles at https://bit.ly/seced-harnden


Further information & resources

  • DfE: Prioritising schools for the School Rebuilding Programme (consultation now closed), July 2021: https://bit.ly/3e74TE5
  • Farquharson et al: 2021 annual report on education spending in England, IFS, November 2021: https://bit.ly/3pbxsXe
  • HM Treasury: Autumn Budget and Spending Review 2021, October 2021: https://bit.ly/3pdpfBO
  • SecEd: Spending Review 2021: Questions and fears remain over teacher pay rise, October 2021: https://bit.ly/3qgq1x0
  • SecEd: An eight per cent pay rise? Latest STRB remit is ‘open but unclear’, January 2022: https://bit.ly/32TXYMh


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