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School spending per pupil to drop by 8%, first net fall since mid-1990s

School spending per pupil is likely to drop by around 8% in real terms during this Parliament, representing the first time since the mid-1990s that school spending has fallen, the Institute for Fiscal Studies (IFS) has said.

Although the government has offered English schools considerable spending protection, higher costs and increasing student numbers mean that resources per pupil will actually fall significantly. This means that funding settlement for schools will feel very different over the next five years, the IFS says.

OBS schools spending Oct 2015

Costs are growing because of schools’ increased employer national insurance contributions bill from April 2016, when reduced rates linked to contracting-out will cease. This will build on a rise in employer pension contributions to the teachers’ pension scheme, implemented in April.

But another major reason is the average public sector pay rise of 1% per year announced in the Summer Budget. However, the IFS said that the tight pay increase actually means that spending per pupil will suffer a less severe squeeze that initially expected at the time of the election, when cuts per pupil were forecast to be 12%.

The fact that pay rise is so tight will therefore help ease pressure on school costs, but could make recruiting and retaining teachers and other staff more difficult.

In fact, the IFS listed workforce recruitment and motivation as a significant challenge over the next five years, given the continued public pay restraint and growing pupil numbers.

If the government were to maintain the same pupil to teacher ratio at present, the number of teachers would have to increase by 30,000 until 2020.

But this could provide especially difficult at a time when public sector pay seems like to fall relative to that in the private sector.

The institute added that substantial reform to the school funding system will be particularly hard to implement when overall school spending per student will be frozen in cash-terms.

It said: “Delivering a cash-terms increase to some schools or local authorities as a part of a set of reforms would require cash-terms cuts to some other groups of schools or local authorities.

“Schools do have some experience of receiving overall cash-terms cuts when pupil numbers fall. However, delivering cash-terms cuts in funding per pupil could be a lot more challenging.”


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