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Spending Review Impacts on Education
Following the announcement on 20 October of the Spending Review here is a short analysis of the main impacts on the education and skills sector:
Schools/ DfE
- Overall reduction of 3% in spending over the spending review period. Overall resource savings in non-schools budget of 12% in real terms; with 33% reduction in central administration and capital budgets cut by 60%. Schools budget to rise from £35bn to £39bn
- At least £1bn of procurement and back office savings within the schools budget
- £1.1bn in savings through public sector pay freeze
- Five Arms Length Bodies to be abolished
- Schools budget for 5-16 education to rise by 0.1 per cent in real terms each year
- £15.8bn of capital funding including rebuilding or refurbishing more than 600 schools in Building Schools for the Future and Academies programmes. BSF to be abolished and capital to be focused on areas of severe demographic pressures and addressing essential maintenance needs
- Teachers to be given greater freedom from bureaucratic burdens
- Headteachers to have greater flexibility over school budgets
- Parents, teachers and community groups supported to establish Free Schools outside of Local Authority control
- Sure Start services maintained in cash terms, including new investment in Sure Start health visitors, but refocused on the original purpose of improving life chances of disadvantaged children
- Independent review of Early Years Foundation Stage
- Payment by results for Sure Start children’s centres
- Introduction of early years single funding formula
- Free early education and care to all disadvantaged two year old children to be extended to 15 hours per week from 2012-13
- £2.5 billion pupil premium targeted on educational development of disadvantaged pupils
- Participation age to be raised to 18 by 2015
- Unit cost reductions in 16-19 participation budget
- Savings of £0.5bn through refocusing of Education Maintenance Allowances on the most disadvantaged Children
Learning and Skills Sector/ BIS
- Overall annual average budget reduction of 7.1% over the spending review period. Overall 25% cut in resource spending. Administration budget cut by 40 per cent and capital spending cut by 44%
- Further Education resource budget will be reduced by 25%, or £1.1billion, from £4.3 billion to £3.2 billion by 2014-15
- Spending on administration reduced by £400 million a year by 2014-15
- Number of Arms Length Bodies to be reduced from 57 to 33, with 9 still under consideration
- Up to £250m in additional spending for new adult apprenticeships by 2014-15
- Additional places provided for participation in 16-19 learning
- Mechanisms for increasing employer contributions to Further Education (such as voluntary training levies) to be explored
- Train to Gain abolished and replaced with an SME-focused training programme, English for Speakers of Other Languages (ESOL) funding for people not in settled communities abolished in 2012
- Free entitlement for first level 2 qualifications removed for the over 25s. Fees to be paid by those over 24 studying for a level 3 qualification. Loans to be introduced, with payback dependent on the learner’s income
- All age careers service to be developed
Higher Education
- Overall resource budget for Higher Education, excluding research funding, reduced by 40% by 2014-15
- Universities able to raise fees, broadly offset by reductions in teaching grant by 2012-13
- Continued funding for teaching in Science, Technology, Engineering and Mathematics (STEM) subjects
- A National Scholarship fund of £150 million a year by 2014-15 for students on the lowest incomes
- Higher Education Innovation Fund to be reformed to incentivise Universities to increase commercial interaction between business and research
Communities & Local Government
- Government Office network and Regional Development Agencies to be closed
- Overall savings in funding to councils of 7.1% a year for four years
- Ring-fencing of all local government revenue grants, except simplified school grants, and a new public health grant to end from 2011-12
- Funding to enable Local Authorities to freeze council tax in 2011-12
- £200m available to councils in 2011-12 to accelerate reforms of local services
- New Community Budgets to pool departmental budgets for families with complex needs introduced in 16 local areas from 2011-12. All areas able to operate these approaches from 2013-14
Families
- Pension age to increase to 66 for all by 2020.
- Child benefit withdrawn for families with a higher rate tax payer.
- Replace all working age benefits and tax credits with a single Universal Credit.
Voluntary Sector
- £100 million transition fund for the voluntary and community sector facing hardship.
- Pay private and voluntary sector providers by results for delivering reductions in reoffending.
Other
- Reduction in total public sector headcount of 490,000 over the Spending Review period – anticipated from natural turnover of approx. 8% and leaving posts unfilled as they become vacant and some inevitable redundancies
- Green investment bank funding of £1bn, with an additional £0.5bn in the third year
- Additional allocations to support Big Society, establish community organisers and launch the pilots for the National Citizen Service
Next steps:
- Each government department to publish ‘later this year’:
- vision and priorities to 2014-15;
- a structural reform plan, including actions and deadlines for implementing reforms over the next two years; and
- the key indicators against which it will publish data to show the cost and impact of public services and departmental activities. This section will be published for consultation to ensure that the Government agrees the most relevant and robust indicators in time for the beginning of the Spending Review period in April 2011
- Government to publish a reform White Paper early in the 2011
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