Thursday, 21 October 2010

Education in the Spending Review

The devil is in the detail. This was the cliché of choice for the pundits commenting on the long awaited Spending Review, which George Osborne announced yesterday.

In a speech that was peppered with small concessions designed to balance the bad news there was also a blinding amount of detail. This had the effect of obscuring the scale and breadth of cuts to the welfare system which will have a disproportionately large effect on the poorest 10% of our society.

From an education perspective the news was less severe than had been feared. The Chancellor made specific reference to his success in achieving a personal goal of seeing if it was possible “even when spending was being cut – to find more resources for our schools and for the early years education of our children.”

The decision to protect the education spending and increase the schools budget from £35bn to £39bn was a political one, but as with much of this budget, closer analysis of the figures revealed a more complex picture.

The supporting documents from the Treasury, which were released immediately after the speech revealed that the actual increase in funding was "£3.6 billion in cash terms by the end of the Spending Review period - this is a 0.1% increase in real terms in each year.”

A 0.1% increase in real terms will in many cases seem like a cut for school budgets used to a decade of year on year budget increases; however this settlement must be seen as broadly positive news considering the draconian cuts being faced by other departments.

Of real significance to the schools budgets will be effect of the 7.1% cuts to local government budgets. If schools are forced to face the brunt of the cuts which are devolved to LA's schools could still suffer.

On the morning of the announcement, a report surfaced indicating that the nature of the settlement “means 70% of the youth budget, which includes youth clubs and after-schools activities, will be cut. But the most alarming figure is that the 40,000 teachers now find themselves in insecure positions.” If the back room savings which this speech promised do result in teachers losing their jobs, it will be difficult to resolve this with the coalition pledge to protect front line services.

On capital spending, the Chancellor sought to frame the decision to do away with the “wasteful” BSF programme as rolling back expenditure to 1998-2005 levels - £15.8bn over the spending review period. The promise that “ there will be enough funding to meet demographic pressures and to address maintenance needs” does little to negate the undeniable impact of a real terms 60% cut to capital investment over the coming years.

An interesting element of the funding structure that these details reveal is that while the school budget is ring-fenced, the DfE its self will have its budget cut by 3.4% in real terms. Included in this is a huge 33% cut to DfE administration budget through “closing NDPBs, reducing headcount, reducing the costs of the DfE estate and cutting non-essential expenditure.”

Osborne argued, that “Sure Start services will be protected in cash terms” which of course amounts to a cut in real terms. The same kind of unclear language clouded the meaning of the decision to “replace education maintenance allowances with more targeted support.” The decision to scrap the EMA at a saving of £0.5bn may come to be seen as another disguised attack on the support for the poorest in our society.

There will be a real and gaping hole in the provision of services for those post 16 learners, with a huge cut of 25% to the FE budget and the Train to Gain programme scrapped.

It is unlikely that the promised increase in the numbers of apprenticeships and “targeted support” for those most in need, will balance out the cuts in this vital area. More so when you consider that many of these functions, now devolved to councils battling a 7.1% budget cut, are non-statutory.

Much remains unclear about the true implications of this highly complex restructuring of the nations finances. The reality of how school budgets and bottom lines are ultimately effected may not become clear for some time. It is almost certain that other programmes not mentioned directly yesterday will face the axe in coming months. For example, the ending of School Sports Partnerships was announced in this separate press release.

Most interesting of all are the figures relating to the 'Fairness Premium' which was announced with much fanfare by Nick Clegg as one of the key prizes to justify the Lib Dem role in the coalition. Immediate analysis of the documentation seemed to dispute the claim that the fund is 'new money'. This was later confirmed by the definitive Channel 4 Fact Check which concluded “In June, David Cameron promised to 'take money from outside the education budget to ensure that the pupil premium is well funded'. But now it looks as if the lion’s share of the money is recycled from within the education department’s budget. A senior education department source told Fact Check £1.7bn of the £2.5bn comes from other education cuts – things like the educational maintenance allowance. Only £800m comes from elsewhere – the welfare budget.”

Not only is this policy of taking from one group of children to benefit another fundamentally regressive, it may present a very hard sell to Lib Dem activists who had been promised that this was a uncrackable red-line for the party hierarchy in the Coalition agreement.

There are real concerns about the longer term impacts of this restructuring and the significant cut in support for younger people in FE. What remains to be seen is how schools choose to allocate the many revenue streams for defined groups which will now fall under one 'Dedicated Schools Grant' and how the cuts to LA budgets impact on individual schools – something which is unquantifiable at this stage.

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