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NAO: Ministers failing to support schools to make £3bn cuts

Schools will have to make £3bn efficiency savings by 2019-20, but the Department for Education (DfE) has not provided sufficient support to help them achieve it, according to a report from the National Audit Office (NAO).

The schools’ budget is protected in real terms, but does not provide funding per pupil to rise in line with inflation, despite a projected increase of 174,000 primary school pupils and 284,000 secondary school pupils by 2019-20.

On top of this, the DfE estimates that schools will have to make £3bn efficiency savings by the end of the decade to meet the costs of pay rises, the national living wage, higher employer contributions to national insurance and pensions, and the apprenticeship levy.

Sir Amyas Morse, head of the NAO, said: “The department is looking to schools to finance high standards by making savings and operating more efficiently but has not yet completed its work to help schools secure crucial procurement and workforce savings.

“Based on our experience in other parts of government, this approach involves significant risks that need to be actively managed.”

The DfE had used statistical benchmarking to prove that schools could make the savings on their workforce and procurement without educational outcomes being affected, but the NAO found that it could not prove that this would be achieved in practice.

It also criticised the DfE for failing to make the total level of savings clear to schools. Schools were also uncertain about how much funding they would receive, in part because the DfE has delayed publishing the new funding formula, although education secretary Justine Greening is expected to make an announcement later today.

London mayor Sadiq Khan has previously warned that any new formula could mean less money for London’s schools.

In addition, the DfE has not assessed the impact of other policy changes, such as the decision to abolish the Education Services Grant. The NAO predicted that this could lead to even higher cuts than £3bn.

Overall, the report warned of an increasingly difficult financial future for schools. Between 2010 and 2015, the proportion of schools spending more than their income rose from 33.7% to 59.3% for maintained schools, and from 38.8% to 60.6% for academies. However, the proportion of primary schools in deficit fell during the same period.

Schools reported that they were planning on coping with cuts by recruiting less experienced teachers and relying more on unqualified staff.

Kevin Courtney, general secretary of the National Union of Teachers, said: “Already class sizes are going up, teacher and support staff jobs are being lost and curriculum choices are being narrowed. Pupil numbers continue to grow, but the teacher recruitment and retention crisis intensifies as the government continues to attack teacher pay and conditions.

“Something has to give – the government must reverse its cuts and invest in our schools, for the sake of our social and economic future.”

The NAO report called on the DfE to publish its assessment of the financial challenges facing schools between now and 2020 “as soon as possible”. It should then keep this information updated, and support schools to meet cost pressures in a financially sustainable manner.

Furthermore, the NAO said the Education Funding Agency (EFA) should intervene more often and earlier when it has financial concerns about maintained schools.

The EFA currently intervenes when academies are at risk of financial difficulties, and the NAO suggested that it should work with local authorities to consider if a similar approach is feasible for maintained schools.

The LGA has previously warned that it does not consider the EFA capable of preventing fraud in academies.

Sir Amyas added that the DfE “needs effective oversight arrangements” and should “be ready to intervene quickly” where problems occur.

A DfE spokesperson said: “We are introducing a national fair funding formula so schools are funded according to their pupils’ needs, rather than by their postcode. This will give headteachers certainty over their future budgets, helping them make long-term plans and secure further efficiencies.

“We recognise the increasing cost pressures schools are facing and will continue to provide advice and support to help them.”

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