Page last updated at 13:40 GMT, Friday, 12 June 2009 14:40 UK

Education spending feels squeeze

By Mike Baker

Primary school classroom
Will public spending cuts affect plans for schools?

We have heard dire warnings about public spending cuts in the NHS this week, but what about education - how will schools, colleges and universities fare as public finances are squeezed over the next few years?

There are many uncertainties but let's start with what we know.

There is still over a year remaining of the spending plans that were set back in 2007, before the recession had begun.

At that point, education in England was due to receive a 2.5% growth, over and above inflation, in each of the three years from 2008-9 to 2010-11.

So the education budget for the next financial year is still set for real terms growth.

Of course, the government could yet change these plans but, with an election looming, that is unlikely.

The real crunch will come in the years from 2011-12 to 2013-14.

However as April 2011 is only 22 months away, there is no room for complacency.

Public sector debt

The first big warning came in this April's Budget, when the Chancellor said assumptions for spending growth for the three years from 2011 amounted to just 0.7% per year in real terms.

That's OK, you might think. It is slower growth than we have been used to, but the rise in spending will still outrun inflation.

But the 0.7% growth figure is an average across all public spending.

According to the Institute for Fiscal Studies, some areas are bound to grow by more than that average, in particular the costs of servicing the growing public sector debt and the rising costs of social security as unemployment rises.

Overall, therefore, the IFS predicted that other spending departments would face an average spending cut of 2.3% in real terms.

If the Conservatives are elected, they have promised to protect spending on the NHS and International Aid.

This is what lay behind the row this week in which the Conservatives health spokesman, Andrew Lansley, appeared to be saying that other spending departments would face cuts of 10%.

Although he later clarified his position, saying he was only stating what would happen under Labour's plans, his comments show what could happen to education spending if the next government, whatever its political colour, failed to extend the special protection to education as well as health.

Leaving age

But whether it is a real terms growth of 0.7% or a cut of between 2.3% and 10%, the simple fact is that there are some very tough decisions ahead.

Just consider, for a moment, some of the cost pressures in education.

One of the biggest arises from the raising of the education leaving-age: From 2013 all young people must continue in education or training until they are 17.

From 2015 the leaving-age rises to 18.

At present about 10% of this age group are not in education or training, so extra capacity will be needed.

There are other expensive reforms in the pipeline.

From 2013 all young people in England will be entitled to a place to study any one of the 17 new Diploma subjects.

As yet only five of these have started, but a further five begin in September, four more in 2010, and the final three in 2011.

Introducing new qualifications is expensive. Schools and colleges need new facilities, staff require retraining, and - in the case of Diplomas - there will be additional costs involved in moving students around between the schools in local consortia.

Mike Baker
In 2010 the Learning and Skills Council will be abolished and replaced by two new funding agencies and by local authorities. No wonder college principals are nervous.
Mike Baker

Even smaller reforms come with a price tag.

For example, the government now expects every new teacher to gain a Masters in Teaching and Learning within five years of qualifying.

There will be fees to pay and associated costs of staff cover.

And on Thursday, the government announced a tighter regime of monitoring home educating families, and better training for local authority staff responsible.

Belt-tightening

But because school spending is such a sensitive area with the public, cuts are likely to be deeper in further and higher education and at the centre of government itself.

The Department for Children, Schools and Families was told in last April's Budget that it had to find an extra £650m savings in 2010-11 on top of value-for-money savings that had already been set.

While few people cry for civil servants, many do jobs that support schools and some of the extra burden may fall on local authority or school staff.

Further education has already had some spending shocks, although the April Budget did fill the most pressing gaps.

But throughout the sector there is concern that after a good run, it will soon be belt-tightening time again.

To make matters worse, this is set to happen just as FE funding goes through seismic change.

In 2010 the Learning and Skills Council will be abolished and replaced by two new funding agencies and by local authorities.

No wonder college principals are nervous.

Tuition fees

Universities have also had a taste of what is coming. Earlier this year the government cut back on its previously planned increase in student numbers and it asked universities to find £180m in efficiency savings by 2011.

Some vice-chancellors may be pinning their hopes on the forthcoming review of student finance, hoping it will lift the cap on tuition fees to £5,000 or even £7,000.

But there are two problems with this.

Firstly, with an election looming and the assent of Parliament required, it is extremely unlikely that the fees cap could be lifted before 2013.

The second problem is that while it might be imagined higher student fees would ease the burden on government spending, this is not the case in the early years.

That is because, unless the system is changed, higher fees also mean higher student loans.

Since the loans are at a subsidised zero "real terms" rate of interest, that would mean a rise in the cost to the Treasury.

So, while the headlines this week were all about the threat to NHS spending, education may be set for even more pain from the spending squeeze.

Mike Baker is an independent education journalist and broadcaster and former BBC education correspondent.



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