The Financial Sustainability of Schools inquiry
Closed
What the inquiry looked at
“The Department of Education's approach to managing the risks to schools' financial sustainability cannot be judged to be effective or providing value for money until more progress is made, according to a recently published National Audit Office report . The Department estimates that mainstream schools will have to find savings of £3.0 billion (8.0%) by 2019–20 to counteract cumulative cost pressures, such as pay rises and higher employer contributions to national insurance and the teachers' pension scheme. It expects that schools will need to make efficiency savings through better procurement (estimated savings of £1.3 billion) and by using their staff more efficiently (the balance of £1.7 billion). However, the Department has not clearly communicated to schools the scale and pace of the savings required. While it can show, on the basis of benchmarking analysis, that schools should be able to achieve such savings without affecting educational outcomes, it does not know whether schools will achieve them in practice. The Department's overall schools budget is protected in real terms but does not provide for funding per pupil to increase in line with inflation. In the 2015 Spending Review, the Government increased the schools budget by 7.7% from £39.6 billion in 2015–16 to £42.6 billion in 2019–20. While this increase protects the total budget from forecast inflation, the Department estimates that the number of pupils will rise over the same period, by 3.9% (174,000) in primary schools and by 10.3% (284,000) in secondary schools. Therefore, funding per pupil will, on average, rise only from £5,447 in 2015–16 to £5,519 in 2019–20, a real-terms reduction once inflation is taken into account. National Audit Office report According to the National Audit Office, the Department continues to develop and publish advice and guidance to help schools improve their financial management and achieve efficiency savings. It has made progress in some areas, including publishing benchmarking, efficiency tools and guidance, and providing access to framework contracts, such as for energy. However, it has not yet completed work to help schools secure crucial procurement and workforce savings. Without such support, there is a risk that schools may already be making poor decisions about how to cope with the financial pressures.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
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. Drawing on a desk-based benchmarking exercise, the Department for Education (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. 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.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 8 January 2017 to 29 March 2017.
- Oral evidence 23 Jan 2017
- Report 29 Mar 2017
What it recommended
The committee's recommendations are not listed here yet. Read them in 49th Report - Financial sustainability of schools ↗ on parliament.uk.
Evidence
Oral evidence sessions 1
- 23 Jan 2017No witnesses recordedparliament.uk ↗