Must do better: spending on schools

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Spending on schools has almost doubled in the last decade in real terms:

• Spending on primary and secondary education in the UK increased by 86 per cent in real terms between 2001-02 and 2011-12.
• Per-pupil funding for primary and secondary schools in England increased by almost 90 per cent in real terms between 1999-00 and 2009-10.
• On the most recent comparable data (2009), the UK spent more on primary and secondary schools as a percentage of GDP than 26 of the 32 OECD countries for which data was available, including France, Germany, Japan, Canada, the USA and Australia.

The ring-fence is not justified by better outcomes

The schools budget in England has been ring-fenced since 2010-11. Ministers’ justification for higher school spending can only be that higher spending leads to better outcomes. Reform has therefore carried out an extensive comparison between funding and results:

• Reform’s research finds that there is no correlation at all between spending and outcomes. On a fair comparison, for both primary and secondary schools, some schools are spending more than twice as much as other schools to achieve the same outcomes in value-added measures in English and maths.
• It finds that there is no link between higher per pupil spending and quality of teaching as measured by Ofsted. On average the same level of funding produces “Inadequate”, “Satisfactory”, “Good” and “Outstanding” teaching.
• Recent research for the Department for Education found that there is a poor relationship between funding per pupil and outcomes at Key Stage 4. Reform’s study both confirms and extends this research to cover primary schools as well. The dataset used in Reform’s study includes 16,727 primary schools and 2,653 secondary schools.

There is also little link between resources and results at the national level. As Andreas Schleicher, the OECD’s Deputy Director for Education, and Special Advisor on Education Policy to the Secretary-General, wrote for Reform in 2012: “spending per student explains just around one fifth of the performance variation observed in PISA. In other words, two countries with similar spending can produce very different educational results.”

Removing the ring-fence is consistent with good education

The ring-fence around the schools budget is damaging education:

• It is preventing schools from thinking hard about how best to use their budgets. Research shows that headteachers should focus their resources on improving the quality of teachers rather than employing teaching assistants or keeping class sizes small (except for the youngest children).
• It requires greater cuts in other public services that benefit schools. That includes spending by councils on early intervention into troubled families and school readiness.
• Schools need to debate value for money urgently because per capita school funding will almost certainly have to fall in the next decade. The number of primary and secondary school pupils will rise from 7 million to 8 million between 2012 and 2020 (an increase of 13 per cent).

Government policy is contradictory and confused

In other areas of policy including policing, criminal justice, local government and defence, Ministers have rightly argued that financial pressure can go hand in hand with innovation and better results. In an interview with The Times on 24 April, the Chief Secretary to the Treasury rightly said: “This should be seen as an opportunity as well as a challenge …. you can use the process to drive some really good changes in the way the public sector works.”

Recommendations

The Government should abolish the ring-fence around the schools budget in the forthcoming Spending Round, to be published on 26 June. The necessary cuts in the schools budget will depend on HM Treasury decisions in other spending areas. That said, the Institute for Fiscal Studies has estimated that average departmental spending will fall by around 18 per cent between 2010-11 and 2017-18 in real terms. Given the extremely high increases in school spending in recent years, an 18 per cent reduction would be a reasonable ambition for school spending in the 2015 Parliament.

For comparison, services such as policing and justice have seen budgets fall by 25 per cent in real terms in the 2010 Parliament alone. They expect further cuts in the 2015 Parliament.

In addition, the Government should not introduce a ring-fence for the pupil premium. It is important to recognise that greater funding alone will not lead to an improvement in outcomes for pupils from disadvantaged backgrounds. It is how schools spend money that is crucial.

For headteachers, the overriding priority should be to invest in the quality of teaching. Ministers should support schools that reduce numbers of teaching assistants and allow class sizes to rise. Ministers should also make the case that having a high quality teacher is more important than smaller class size.