A little under a year ago Primary Headship reported on the education cuts planned by Ed Balls and the Department for Children, Schools and Families as it was then known. In case you have forgotten the details, here is a recap: Balls claimed he could cut £2bn off the £42.8bn education budget. That is about 5%, and he believed he could do this by reducing the number of headteachers, clawing back surpluses and encouraging schools to form local buying partnerships to reduce the cost of supplies.

One general election later and we were looking at a possible 25% cut in the education budget over four years. Early talk was all about reducing waste and reductions in local authority services, but with a possible £10bn to save over four years it was feared that the talk would soon turn to redundancies in schools.

In June, one month after the general election, Michael Gove detailed in a letter to Ed Balls how the DfE would contribute to the £6.2bn of cuts immediately promised by the coalition. These cuts would take effect in the current financial year (2010-11).

The letter stated that the DfE was committed to reducing spending this year by £670m. This figure was to be made up of a £311m cut in the area based grant to local authorities along with £359m worth of efficiency savings at the DfE, including a ‘bonfire of the quangos’.

Since then there has been, one would imagine, much back room bickering over the extent of cuts. In recent weeks the government has been keen to show that education, or at least schools, would come out of this rather well.

The schools budget

And now the waiting is over and we finally have some hard figures to discuss. The coalition government published its comprehensive spending review (CSR) on Wednesday 20 October 2010. This set out spending plans for the four financial years 2011-12 to 2014-15. To cut a long story short, central government spending on schools is to rise from £34bn to £39bn per year in England over the next four years.

The Department for Education has been allocated £57.6bn per year overall in the spending review and is the second highest spending department after health (£106.4bn). Defence is third (£46.1bn). Schools are, of course, not the sole interest of the DfE. The £57.6bn per year has to cover various national initiatives, pre-school provision, youth services and the 16 to 19 sector as well as teenage pregnancies and drugs awareness and the operating costs of the department itself. With the exception of the early years all these other areas are in for substantial cuts. The non-schools part of the DfE budget will be cut by 12% over the next four years.

Biennial spending reviews were introduced by Gordon Brown when he was chancellor to give details of government expenditure by department over the following three years. The intention was that longer term departmental planning would be possible and that this would filter down to the organisations delivering the services. The spending reviews do seem to have achieved this aim and the coalition chose to maintain the tradition.

George Osborne opened the part of his delivery of the CSR that dealt with education by stating, ‘The most important ingredient of a 21st-century economy is well educated children who believe in themselves and aspire to a better life whatever their background or disadvantages.’ He then went on to detail how spending on schools would actually grow over the next four years. Let’s take a look at some of the detail.

The pupil premium

The much heralded pupil premium has been set at £2.5bn per year for the next four years. This makes up a big chunk of the £3.6bn annual increase by 2014. The treasury initially said that this initiative was being funded out of the £18bn cuts in the welfare budget. Closer scrutiny in the days after the review and an admission by Michael Gove revealed that this is not the case: up to £500m will come out of the education department budget. I’m sure we all welcome the pupil premium, but we will need to watch carefully to ensure that this ‘new money’ is not simply filling a gap left by the cutting of other services. The most likely way in which the pupil premium will be distributed is based on the number of children in any school who are entitled to receive free school meals.
While it can be difficult to get every family with entitlement to register, it would certainly be worth putting in some extra work now to ensure that your school receives the full benefit of what Nick Clegg has described as the ‘fairness premium’.

Early years

The entitlement to 15 hours per week of free childcare for three- and four-year-olds is to be maintained. On top of this the most disadvantaged two-year-olds are to receive the same entitlement. It is not clear if this will come out of the pupil premium. Now, this is something we do need to give credit for. Labour achieved a great deal during its time in office in extending the educational franchise and it is good to see that political point scoring is not going to stand in the way of what will always be a good thing regardless of who is in power. That is, bringing greater educational opportunities to the disadvantaged in our society.

Capital expenditure

While the BSF programme has been scrapped George Osborne has committed £15.8bn over the next four financial years to ‘meet demographic pressures and to address maintenance needs’. This represents a 60% cut in capital expenditure at a time when there are still schools smarting from being told they cannot have the new school they had put so much time and effort into planning and preparing for. The government has said it will ‘rebuild or refurbish over 600 schools from the BSF and academies programme’, but with capital projects often coming in over budget it remains to be seen just what can be achieved with reduced expenditure.

Sure Start

This important scheme will continue and will be protected, ‘in cash terms’. Sure Start will now focus on ‘its original remit’. Let’s just remind ourselves what that was. Sure Start was set up to tackle social exclusion and child poverty in the most deprived areas of the country. A key objective was to increase speech and language development in children at two years and to ensure that pre-school children were adequately prepared for school in order to increase future life chances. Long may it continue. What is likely to happen is that some Sure Start initiatives will be deemed not to meet the ‘original remit’ and they will face closure. Schools may find themselves in the position of having to defend what they are doing under the name of Sure Start.

Special educational needs

There was a hint in George Osborne’s speech about a plan to give money for SEN provision directly to parents and for them to decide how to spend it. If this materialises it will have a major impact on the way in which LAs and schools organise their SEN provision. This is a key policy change that we will need to watch closely.

Teachers’ pay freeze and pension increase

A two-year public sector pay freeze was already in place before the CSR. With public service employee pension contributions set to rise by 3% this effectively means a pay cut for teachers. The extent to which this leads to demoralisation among the schools workforce, reduced applications to train and difficulties in recruitment should become clear over the next couple of years. An internal memo circulating within the DfE, according to the Guardian on the day after the review, predicts that 40,000 teachers will be laid off as a result of the measures within the spending review.

Local authority cuts

If you had your attention focused on the education budget on 20 October you may have not noticed the massive cut in local authority funding that was slipped through at the same time. The schools grant to LAs is to be ringfenced, but with a 28% cut over the next four years to the LA grant there is bound to be some knock-on effect on schools. LAs are likely to retreat to delivering statutory services such as SEN/statementing, admissions, health and safety, schools in Ofsted categories and capital projects. School transport, children’s mental health services and behaviour support could all be affected by cuts to the grant. It is this indirect effect of the cuts that will impact on schools. In addition to the deficit reduction policy of the coalition government many local authorities were already engaged in their own attempts to get on top of their debts. Levels of austerity will vary around the country and the number crunchers have already calculated that it is the poorest communities that will be hit hardest by the spending review cuts.

Who is losing in education?

While the overall cut in the education budget is 3.4% it is the post-16 sector that is the biggest loser with a 12% cut in its funding. With the school leaving age set to rise to 18 by the end of this parliament and presumably therefore a greater number of students in that sector, it will be interesting to see how the coalition plan to square this particular circle. Youth clubs, after-school clubs and hundreds of proposed community playgrounds are also likely to feel the effect of the cuts. With many schools hosting after-school clubs as a valuable local service, cuts will be felt in the communities you serve.

The DfE administrative budget is to be cut by 33%, but it is not just in Whitehall that cuts of this nature will be felt. Schools will also be expected to make £1bn of ‘procurement and back office’ savings. This will presumably take the form of neighbouring schools sharing resources and some staff. This is not always a bad thing.

Bonfire of the quangos

The British Educational Communications and Technology Agency (BECTA), the Qualifications and Curriculum Development Agency (QCDA) and the General Teaching Council for England (GTC) are the three big casualties of the coalition efforts to reduce the number of non-elected bodies, which stood at 1,200 when they came to power.

Cutting BECTA saved £80m a year, with the abolition of the QCDA saving another £128m. The GTC is almost entirely self-funding from the registration fee and may continue in some form. It remains to be seen how abolition will affect its status and just what it will do once it has ceased to exist! Maybe this is emblematic of the times.

A decision is still awaited as to the fate of the National College (National College for Leadership of Schools and Children’s Services). It will be a great shame if it is lost; many of you reading this will have benefited from this particular initiative. Jamie Oliver’s Food Trust is another quango that has gone by the wayside, but it plans to resurrect itself as a charity. Will we really miss Teachers TV if it is unable to find funding? I’m not sure.

Short-term impact

Between now and 31 March 2011 you should not notice any sudden changes to your school budget. The money is all allocated for this financial year. You might like to use this hiatus to plan ahead, as detailed below.

Long-term impact

If we take the longer term to mean the four years running up to the next general election, then we will see substantial changes in education funding and provision. Some of this will undoubtedly be ideological, but what we are concerned with here is money. In purely cash terms your school should be better off if you have more than the average number of children entitled to free school meals. Michael Gove believes that the pupil premium will encourage ‘good’ schools to take a greater number of disadvantaged children. We’ll see.

Financial action planning

I will close by bringing all of this back to the reality of everyday life in a primary school. Your budget is made up of both national and local money and while the mechanisms of how that is raised and allocated are of background interest to the process of school budget setting it will be the numbers in the cells on your Excel spreadsheet next April that will make the real difference to your school. Here are my recommendations:

Organise an immediate review of your budget
While you and your admin officer and your governors’ finance committee will have procedures in place for monitoring the budget on a quarter by quarter basis, it would be worth taking a good close look at where you currently stand. By identifying potential overspends now you could make adjustments that will cancel them out by year end. If a potential surplus is indicated you may choose to invest in areas that are likely to be hit.

Ensure your school improvement plan remains focused
It is in difficult financial times that our plans can begin to go astray. A review of your SIP would also be timely and this would be a matter for staff and governors. Of course your SIP is focused on improving pupil attainment, but how tight is that focus and are the links to the budget explicit? Do you provide value for money, in other words?

Build stronger links with your local cluster
For years the emphasis, albeit unspoken, has been on setting school against school. League tables have encouraged competition between schools. At the same time many local clusters have been evolving, usually comprising those schools that feed into a particular secondary school.

Now is the time to strengthen those links and to start exploring possibilities for greater cooperation. At this stage we are talking about things like shared professional development and procurement of services. In the next few years we may need to consider sharing SEN staff or caretakers. Some schools already are.

Talk to your local authority
Suffolk LA has arranged a meeting with all of its heads to share details of how the cuts are likely to affect their services. Give your LA a call and find out what they are planning. We’re all in this together, and while there may be some aspects of LA procedure that we can find exasperating, there are many services they provide that we really would find it difficult to replace. At the same time a realistic appraisal tells us that some services such as personnel and finance are likely to continue being outsourced. This is the time to start putting out feelers and finding out what is available.

Identify additional sources of income
In last month’s issue of Primary Headship we detailed how Tom Donohoe and his staff and community raised £180,000 in one year for an exciting creativity project. Take a leaf out of Tom’s book and redouble your efforts to raise additional funding.

And finally

Those of us who keep at least one eye on the workings of government could have predicted that the scaremongering of the last five months would give way to something a little less scary. That is the way of politicians.

The 19% average cut to departmental budgets was less severe than expected, and for schools there were no cuts at all. But with a 0.1% increase in schools spending over four years and cuts in many other areas affecting schools, this less scary reality effectively means four years of standing still and most likely regression in some areas. How schools organise for that individually and collectively over the coming months is now the key issue.

Steve Mynard is editor of Primary Headship