School spending: up or down?

“[Nicky Morgan] wrote me a letter just on Saturday saying that the school budget is going to be protected in real terms—which isn’t true. The Institute of Fiscal Studies says 8% cut.”

Kevin Courtney, Acting General Secretary, National Union of Teachers, 5 July 2016

“I’m afraid I just don’t recognise that picture. The schools budget is the highest it’s ever been this year at £40 billion. It has gone up by £4 billion since 2011/12”.

Nicky Morgan, Secretary of State for Education, 5 July 2016

There are a lot of possible ways to describe government spending on schools. The cash amount that the government spends on schools in England over the next parliament is expected to rise, but the value of that money is expected to fall because of rising prices and rising pupil numbers.

The Institute for Fiscal Studies does predict an 8% cut in school spending

Mr Courtney, representing the teachers out on strike today, invoked the Institute for Fiscal Studies.

The IFS has said that “school spending per pupil is likely to fall by around 8% in real terms (based on a school specific measure of inflation) between 2014–15 and 2019–20”.

There are three parts to this prediction: the actual cash spent; the real value of that money after inflation; and the number of pupils that money goes on. The IFS is looking at all three in combination: spending, adjusted for inflation, per pupil.

By contrast, the Conservative manifesto committed to protect spending against rising pupil numbers, but not against rising prices.

The effect of inflation—which the IFS thinks will affect school budgets slightly more than budgets in general—makes this a cut in real terms.

Ms Morgan’s letter

We haven’t seen a copy of Ms Morgan’s letter, but saying that the school budget will be protected in real terms is also what the government said last November.

What’s missing? “Per pupil”. Saying that the budget overall will be protected even after inflation doesn’t actually contradict the IFS, which adds in the per pupil calculation.

Put it another way: imagine your dad promises you £100 to go to the pub with your friends when you turn 18. That’s not until 2020.

What’s your booze budget? You could argue, £100. Or you could say that £100 won’t go as far in 2020 because of inflation, so it’s more like £95 in today’s money. And either way, you could say that you need to divide by the number of people in the round to see how far the money goes.

The size of the budget

Saying that the headline schools budget is “the highest it’s ever been” ignores the effect of inflation—budgets generally have to keep increasing just to maintain their real value. So while it’s correct that the core schools budget was £40 billion in 2015/16, up from £36.5 billion in 2011/12, that doesn’t necessarily tells us very much about education funding.

But the IFS can. It shows that real terms spending per pupil has generally risen since the late 1970s, by around 2% per year in the 1980s and 1990s and 5% per year in the 2000s. There was also a small increase under the last government.

A fall of 8%, if it comes to pass, would be the biggest reduction in spending under any parliament as far back as the data goes—as was the case with funding for 16-19 education in the last parliament.