School spending per pupil in 2024 to remain 3% below 2010 levels in real-terms once you account for actual costs faced by schools

Between 2009-10 and 2019-20, we estimate that school spending per pupil in England fell by 9% in real-terms.  In the 2019 and 2021 Spending Review, the government allocated extra funding to schools and explicitly stated that this would restore spending per pupil to 2010 levels in real-terms by the end of the parliament in 2024-25. Unexpectedly high cost pressures on schools mean that the government is no longer on track to deliver on this objective.  

Many factors are currently acting to increase the actual costs faced by schools, including increases in teacher salaries, support staff pay, and food and energy prices. At the same time, the normal measure of economy-wide inflation using to assess real-terms changes in public spending has become more volatile (and potentially more unreliable) in the aftermath of the pandemic.

In new research, we estimate the actual costs faced by schools and conclude that they are growing by more than economy-wide inflation. In 2022-23, the growth in school costs looks just about affordable within the government’s spending plans. But current spending plans for future years are likely to be insufficient to meet the cost pressures facing schools, with implied real-terms cuts in 2023−24. By 2024−25, after accounting for the specific costs facing schools, we estimate that school spending per pupil will still be 3% lower than in 2010. This analysis was funded by the Nuffield Foundation and forms part of a larger programme of work examining trends and challenges in education spending across different phases.

Other key findings include:

• School costs are expected to grow by 6% in 2022-23. We estimate that teacher pay costs will rise by 4% in 2022-23, including the effects of last year’s pay freeze, the 5.4% average increase in teacher salaries in September 2022 and the new Health and Social Care Levy. Local government employers have offered support staff pay rises of between 4% and 10.5% in 2022-23. This implies increases in the average cost of support staff of at least 9%. Rising energy and food prices are driving an increase in CPI inflation, forecast by the OBR in March to average 8% over 2022-23, which seems likely to further increase non-staff costs.
• But cost increases look just about affordable in 2022-23. Overall growth in funding per pupil is relatively high this year (7.7%) and is still likely to be above growth in school costs (6%).
• Cost increases won’t be felt equally. A large amount of the extra funding this year has been allocated to the high-needs budget to reflect fast rises in the number of pupils with special educational needs. The expected growth in total mainstream school funding per pupil (6.8%) is only just above expected growth in costs (6%). Schools that rely more on support staff, such as special schools, will also likely see faster growth in costs.
• Real-terms cuts are likely after this year. We project that school costs will grow by 4% in 2023-24, which is above expected growth in school funding per pupil (3%). In 2024-25, growth in school funding per pupil is expected to be only just above projected cost growth.

Luke Sibieta, IFS Research Fellow and author said 

“On top of rising energy and food prices, schools now also face the cost of rising salaries for teachers and support staff. Within the context of a £4 billion rise in the school budget this year, these costs look just about affordable – at least on average. Next year looks much more problematic, however, with growth in funding per pupil expected to fall below growth in school costs. Indeed, the fast rises in school costs will reduce school budgets’ purchasing power and leave spending per pupil in 2024 still about 3% lower in real-terms than in 2010.”

“The big fiscal choice for policymakers this autumn is whether or not to provide more funding to public services to compensate for rising costs and the significant challenges they face. It will be that much harder for schools to meaningfully contribute to levelling-up ambitions when they face real-terms cuts from next year onwards”

Ruth Maisey, Education Programme Head at the Nuffield Foundation said:

“The Schools White Paper set a target that 90% of primary pupils would achieve the expected standard in reading, writing and maths by 2030. However, the recent SATS results show that disruption during the COVID-19 pandemic has led to falling attainment levels. It is essential that the government addresses the cost pressures highlighted by this IFS analysis, to ensure that schools can deliver on ambitions for student attainment.”

Read the report here.

Sector Response

Julia Harnden, funding specialist at the Association of School and College Leaders, said:

“It is a very poor reflection on the government’s priorities that it will have presided over a 15-year decline in school funding by the end of this parliament.

“While it may argue that there are inflationary pressures beyond its control, the fact is that it is the government itself which has proposed a teachers’ pay award for September without providing any additional funding for schools to afford these costs, and it has also consistently ignored our repeated warnings about the impact of soaring energy costs.

“The government insists that schools can broadly afford cost pressures in 2022/23 and the IFS says costs look just about affordable before real-terms cuts the following year.

“However, it is important to understand that the figures for 2022/23 are averages and that cost pressures and funding allocations will differ widely with the result that many schools will face deficit budgets and the prospect of having to cut educational provision.

“The trends highlighted in this report represent an increasing risk to school budgets in future years and the erosion of pretty much any chance of levelling-up aspirations being achievable.

“The situation in post-16 education is even worse. IFS analysis from last autumn showed college funding per pupil in 2024-25 will still be around 10% below 2010-11 levels, while school sixth form funding per pupil will be 23% below 2010-11 levels. It is likely that rising cost pressures will exacerbate this desperate situation.

“The government simply must respond by ensuring that schools and colleges have the funding they require to at least maintain provision, and if the government is serious about raising pupil attainment it must provide the resources that are needed to make that ambition achievable.”

Stephen Morgan MP, Labour’s Shadow Schools Minister, said:

“Twelve years of Conservative government has left schools doing more with less and the cost is measured in opportunities for our children.

“The Conservatives are failing our children with staff numbersfalling,school buildings in a state ofdisrepairand fewer trips, clubs and enriching activities. But Conservative leadership contenders would rather bluster about the return of grammars than pledge any real actionto secure children’s education.

“Labour would end tax breaks for private schools to invest in a brilliant education for every child.”

Paul Whiteman, general secretary of school leaders’ union NAHT, said:

“NAHT has been warning for months that the current unprecedented cost-of-living crisis is hitting school finances hard, and that the budgets schools set for the coming year are no longer balancing. We have said that there is a real risk that we are about to face another full-scale school funding crisis and this report supports that analysis.

“The impact of massively increased energy costs, as well as the cost of food, amongst other things, has coincided with an unexpected increase in staffing costs, due to the government’s decision not to fund pay awards, leaving schools scrambling to find the money to pay it. School leaders are already worried that they simply won’t be able to make their budgets balance next year, let alone the years that follow.”

“There is no doubt that the reality of the government’s current approach to education funding will lead to cuts to education, services and school staff next year. The government’s boast last year that it had restored school funding to 2010 levels was a feeble one, admitting a lost decade of no investment in education at all. It is now clear that even that meagre claim no longer holds true. For there now to be a real-terms decrease is scandalous – it is, after all, children that will ultimately suffer.”

Dr Patrick Roach, General Secretary of the NASUWT – The Teachers’ Union, said:

“The Government has since 2010 systematically reduced real-terms funding for schools and wider services for children and families.

“Pupils, teachers and schools are being asked to pay the price for years of Government under-funding.

“It is simply not acceptable to expect teachers to work longer and harder for less, or for the education and support available to pupils to be cut back further. The system is at breaking point.

“We have record numbers of teachers and headteachers who admit they are planning to leave the profession due to the impact of under-funding and real-terms pay cuts.

“The Conservative Party leadership candidates need to tell the country the truth – whether they would stick to current plans to deliver more real-terms spending cuts or restore education funding following a decade of Government under-investment.

“We also need the Government to deliver the additional investment recommended by the Government’s Education Recovery Commissioner, rather than expect schools to make do with less.

 “Unless the next Prime Minister is willing to commit to delivering a substantially better deal which significantly improves the funding of schools in real terms, they cannot claim to be putting education first whilst children’s education continues to suffer.”