School standards at risk from significant financial pressures

29 March 2017

The Public Accounts Committee warns that school standards in England are at risk as schools are required to make savings during the most significant financial pressure since the mid-1990s.

Funding per pupil is reducing in real terms

In the report, the Committee concludes the Department for Education "does not seem to understand the pressures that schools are already under" and is not well-placed to act swiftly if efficiency measures threaten the quality of education and its outcomes.

Funding per pupil is reducing in real terms and, if they are to manage within the funds available, mainstream schools in England must find efficiency savings rising from £1.1 billion in 2016–17 to £3 billion by 2019–20.

The Department believes schools can save £1.3 billion through better procurement and the balance of £1.7 billion by using staff more efficiently.

Department does not have plan to monitor real-time impact of plans

However, the Committee concludes: "The actions schools take are likely to increase teachers' workload, with implications for recruitment and retention, and put at risk the quality of education."

It is concerned the Department does not seem to have a plan to monitor in real-time how schools are making savings and their impact, instead relying on existing information such as Ofsted inspections and exam results.

The report states:

"[T]hese indicators are time lagged and we may not know the full impact on educational outcomes until 2021 when the new GCSE results come through. This will be too late for the children who are in school now."

The Committee raises concerns about the Education Funding Agency's approach, which means it does not intervene as often as it should, and the Department's savings estimates, which it finds do not properly consider the impact of policy changes on cost pressures—for example, curriculum changes that require new textbooks and materials.

Department is not learning from experience of other sectors

It also highlights the additional cost to schools of the new apprenticeship levy, the financial impact of which has not been set out by Government and from which schools "will only be able to benefit in a limited way".

The Committee warns that the Department does not seem to be learning from the experience of other sectors, "in particular from how over-ambitious efficiency targets in the NHS proved counter-productive".

Schools facing reduced spending power need to reconcile financial, workforce and quality expectations, says the Committee, and the Department must help them manage the risks.

Chair's comment

Meg Hillier MP, Chair of the PAC, said:

"Pupils' futures are at risk if the Department for Education fails to act on the warnings in our report.

It sets out more evidence of what increasingly appears to be a collective delusion in Government about the scope for further efficiency savings in public services.

Unrealistic efficiency targets imposed on the NHS, together with weak leadership from the centre, have caused long-term damage to the finances of NHS trusts struggling to meet increasing demand.

Government must not allow this to happen in schools but there are troubling similarities in its approach—similarities the Department for Education is unwilling to recognise.

It must not be deaf to the experiences of head teachers who, as we heard in evidence, have already had to make potentially damaging cuts in areas such as maintenance, teacher recruitment and pastoral services.

The Education Funding Agency's record on intervention, as well as its failure to evaluate whether its interventions are helping schools to address financial risk, does not inspire confidence.

Government must take all necessary steps to ensure it can intervene quickly if action taken by schools to meet efficiency targets risks damaging standards.

That means properly monitoring in real-time performance as well as spending, making use of frontline indicators such as class sizes, the ratio of pupils to teachers and the breadth of the curriculum.

Senior officials in the Department must ask themselves: what more can we do to help schools meet our targets?

Grand plans drawn up in Whitehall are dangerous if they are implemented without regard to real-world consequences and we will expect to see measures to address our concerns as a matter of urgency."

Report summary

Schools in England are now facing the most significant financial pressure since the mid-1990s.

Funding per pupil is reducing in real terms. If they are to manage within the funds available, schools will have to find efficiency savings rising from £1.1 billion in 2016–17 to £3.0 billion (equivalent to 8% of the total budget) by 2019–20 because of costs which are outside their control such as pay rises, higher employer contributions to national insurance and the teachers' pension scheme, and the apprenticeship levy.

They will also have to cope with the consequences of reductions in the Education Services Grant and the cost of implementing other policy changes, such as changes to the curriculum and assessment.

Department believes £1.3 billion can be saved through better procurement

Drawing on a desk-based benchmarking exercise, the Department believes schools can save £1.3 billion through better procurement and the balance of £1.7 billion by using staff more efficiently.

Schools have already been making savings in a number of ways, but the Department considers they can save more, such as through better energy deals.

However, staff account for three-quarters of schools' spending, and savings here will be harder to achieve without detrimental effects on the quality of education and educational outcomes.

Risk that Department won't be able to prevent declining standards

It is not clear how the Department will monitor both spending and performance so that it can intervene quickly where schools make efficiency savings in ways that risk causing damage.

Without effective and timely monitoring of areas such as the breadth of the curriculum and class sizes, there is a real risk that the Department will not be able to prevent declining standards.

Further information

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