Monday, 31 October 2011

Institute for Fiscal Studies: Trends in education and schools spending

All  areas  of  public  education spending are expected to see real-terms cuts between 2010–11 and 2014–15, but the severity of cuts will differ.

Current spending on schools will see the smallest real-terms cut (about 1% in total). The areas seeing the largest real-terms cuts will be current spending on  higher education (40% in total) and capital spending (more than halved). However, reforms to tuition fees will increase total resource spending  – via public and private contributions  – on higher education. Spending on the early years and youth services is expected to be cut by over 20% in real terms in total.
Planned cuts to age 16–19 education spending are likely to be of a similar magnitude. 

The government has chosen to create a  Pupil Premium from 2011–12 onwards. This will add somewhat  to  the already considerable additional money provided for the poorest pupils by the current school funding system. The government has announced a cash-terms freeze in other per-pupil funding. As a result, only the most deprived schools are likely to see real-terms increases in funding per pupil in 2011–12.

Compared with  economy-wide inflation or an estimate of schools specific cost inflation, the majority of schools are expected to see realterms cuts in 2011–12. Although  spending on  the Pupil Premium will grow to £2.5 billion by 2014–15, given the continued freeze in other per-pupil spending this pattern looks set to continue up to 2014–15.

Until recently, education spending has enjoyed healthy  year-on-year increases, but that is set to change. Along with most areas of government spending, education spending is set to shrink over the current Spending Review period. What will be the size of the total cuts and how will they be shared across different areas of education spending? Somewhat surprisingly, the answers to these questions cannot be easily  found  in current data published by the government.

Looking ahead, education spending will almost certainly fall in real terms during the period covered by the 2010 Spending Review. Under our calculations, it will fall by 3.5% per year in real terms between 2010–11 and 2014–15, or  13.4% in total over the four years. This would be the largest fall in education spending over a four-year period since at least the 1950s. If these forecasts are realised, then education spending as a share of national income will fall from 6.2% in 2010–11 to 4.6%  by 2014–15.

The full Trends in education and schools spending Report from The Institute for Fiscal Studies can be found here

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