Report published 29 March 2017. Government response published 12 October 2017.
Report and response published
Scope of the inquiry
The Department of Education's approach to managing the risks to schools' financial sustainability cannot be judged to be effective or providing value for money until more progress is made, according to a recently published National Audit Office report.
The Department estimates that mainstream schools will have to find savings of £3.0 billion (8.0%) by 2019–20 to counteract cumulative cost pressures, such as pay rises and higher employer contributions to national insurance and the teachers' pension scheme. It expects that schools will need to make efficiency savings through better procurement (estimated savings of £1.3 billion) and by using their staff more efficiently (the balance of £1.7 billion). However, the Department has not clearly communicated to schools the scale and pace of the savings required. While it can show, on the basis of benchmarking analysis, that schools should be able to achieve such savings without affecting educational outcomes, it does not know whether schools will achieve them in practice.
The Department's overall schools budget is protected in real terms but does not provide for funding per pupil to increase in line with inflation. In the 2015 Spending Review, the Government increased the schools budget by 7.7% from £39.6 billion in 2015–16 to £42.6 billion in 2019–20. While this increase protects the total budget from forecast inflation, the Department estimates that the number of pupils will rise over the same period, by 3.9% (174,000) in primary schools and by 10.3% (284,000) in secondary schools. Therefore, funding per pupil will, on average, rise only from £5,447 in 2015–16 to £5,519 in 2019–20, a real-terms reduction once inflation is taken into account.
National Audit Office report
According to the National Audit Office, the Department continues to develop and publish advice and guidance to help schools improve their financial management and achieve efficiency savings.
It has made progress in some areas, including publishing benchmarking, efficiency tools and guidance, and providing access to framework contracts, such as for energy.
However, it has not yet completed work to help schools secure crucial procurement and workforce savings. Without such support, there is a risk that schools may already be making poor decisions about how to cope with the financial pressures.