Speech by David Laws: Government needs to allocate additional £1.3bn to protect school spending in real terms, per pupil

Speaking at the British Educational Suppliers Association summer insights conference, David Laws, Chairman of the Education Policy Institute (EPI), will outline the options available to the government for school funding and the introduction of a new National Funding Formula.

Key points in speech 

• New analysis by EPI finds that, in order to address the inflation pressures faced by schools, the government would need to allocate an additional £1.3bn in the schools budget by 2021-22, over and above the £4bn commitment made in the Conservative manifesto.

• Without this £1.3bn, there will be a real-terms per pupil reduction of 3 per cent by the end of the Parliament. This £1.3bn is on top of the Conservative manifesto commitment, which would have already required Chancellor Philip Hammond to find more for the schools budget. Since the government may no longer be able to rely upon redirecting savings from abolishing universal infant free school meals (UIFSM), the Chancellor already faces challenges to deliver the £4bn manifesto commitment. The Treasury may therefore need to find over £2bn of new money to deliver real terms protection. 

• The government has committed to introducing a new national funding formula with no losers in cash terms, at a potential cost of £350m per year. If the government does decide to put in the extra £1.3bn to protect real per pupil spending, then Justine Greening could use some of the extra money to help ensure that schools in lower funded areas see bigger budget rises. This might help persuade more of the government’s own MPs to support the new funding formula. 

• The government therefore needs to confirm whether it will maintain its commitment to implement the national funding formula in April 2018. Local authorities and schools need to know how much funding they are likely to have next year so that they can plan accordingly.

Rt Hon. David Laws, Executive Chairman at the Education Policy Institute, commented:

 "The Education Policy Institute has been clear that a new funding formula is needed to address disparities in school funding across the country. At present, similar schools in similar circumstances can receive very different budgets, and that needs to be addressed through a new, transparent, formula.

However, as we observed during the general election campaign, schools are increasingly nervous about their financial position due to both the impact of the proposed national funding formula and inflationary pressures. If the government wants to address both these issues, it would need to find a further £1.3bn (over and above its manifesto commitment). This would protect real per pupil spending, and could address the concerns of the lowest funded areas.”

The analysis can be found here.