EPI and IFS publishes impartial assessment of English education policies of the main political parties

Friday, 26 May 2017 03:25

Ahead of the 2017 General Election, the Education Policy Institute and the Institue of Fiscal Studies have published an assessment of the English education policies of the main UK political parties. This analysis considers the extent to which each of the parties address some of the key challenges facing education today, as well as whether their policies appear to be based on credible evidence of likely impact. Where possible, we have compared each party’s...Request free trial

Ahead of the 2017 General Election, the Education Policy Institute and the Institue of Fiscal Studies have published an assessment of the English education policies of the main UK political parties.

This analysis considers the extent to which each of the parties address some of the key challenges facing education today, as well as whether their policies appear to be based on credible evidence of likely impact. Where possible, we have compared each party’s spending commitments with our own estimates of likely costs. We have not attempted to analyse in any detail the credibility of the revenue assumptions which underlie the education spending commitments, unless these involve a transfer from within the education budget.

You can read the report in full here.

In the Conservative Party Manifesto, we conclude that the policies which are likely to have a beneficial impact on education outcomes include:

A proposed early years capital funding pot to help primary schools develop nurseries;
Plans for a baseline assessment to help properly measure progress and school performance;
Introducing a National Funding Formula in which no schools would lose funding;
A commitment to review schools’ admissions policies; and
A review of the funding of tertiary education.

However, we have also identified several areas of concern in the Conservative manifesto, where available evidence suggests that policy proposals are not well based in evidence or could harm outcomes, including:

A real terms cut in per-pupil funding of around 3 per cent over the course of the Parliament which would bring funding to below 2015-16 levels without an indication of how these savings would be made, combined with ongoing planned real terms pay reductions for teachers which could worsen retention and recruitment problems;
No clear estimate of how much some new policies would cost and whether these costs would be found from within, or in addition, to the extra £4bn committed to investing in schools over the next Parliament;
A lack of evidence for the proposed focus on ‘Ordinary Working Families’, whose attainment levels are above average, combined with some policies likely to adversely impact on this group (e.g. withdrawal of infant free school meals);
A commitment to remove the ban on grammar schools, despite evidence showing that the policy risks worsening social mobility and is unlikely to raise overall standards;
No mention of supporting pupils with special educational needs and disabilities (SEND).

In the Labour Party Manifesto, we conclude that the policies which are likely to have a beneficial impact on education outcomes include:

A planned real terms per pupil increase in school funding of around 6 per cent over the next parliament, including additional money to remove the public sector pay cap for teachers, which will help teacher retention and recruitment compared with a scenario of continued real pay declines.
Introducing a National Funding Formula in which no schools would lose funding;
Parity of funding for 16-18 year-olds which would put them on a more equal footing with 11-16 year-old pupils;
A pledge for a new SEND strategy, to help vulnerable learners, combined with extra resources to tackle mental health issues in schools; and
Some planned steps to raise the quality of early years education.

However, we have also identified several areas of concern in the Labour manifesto, where available evidence suggests that policy proposals are not well based in evidence or could harm outcomes, including:

No clear strategy to improve capacity in the early years to deliver an expensive increase in provision which could therefore deliver only modest impacts on attainment;
A risk that the pledge to enforce infant class sizes at 30 or fewer could either result in significant capital costs or compromise parental choice, without clear benefits for attainment;
The huge proposed cost of abolishing tuition fees – Labour’s largest manifesto pledge – badly targets some of the country’s most significant educational challenges.
The opposition to a baseline assessment, which may risk development of a more rational accountability system for schools.
Significant funding risks linked to revenue raising assumptions, around higher income tax rates for top earners and significantly higher corporation tax yields.

In the Liberal Democrat Party Manifesto, we conclude that the policies which are likely to have a beneficial impact on education outcomes include:

Increasing the Early Years Pupil Premium to £1,000 per eligible child, per year, to seek to narrow the significant attainment gap which emerges before school;
Introducing a National Funding Formula in which no schools would lose funding;
A pledge to remove the 1% teacher pay cap, which along with protected real per pupil spending should help with the recruitment and retention of teachers; and
Plans for earlier identification and support of children with Special Educational Needs and Disabilities.

However, we have also identified several areas of concern in the Liberal Democrat manifesto, where available evidence suggests that policy proposals are not well based in evidence or could harm outcomes, including:

The risk that large expenditure on the early years free hours policy will fail to deliver any significant attainment gains without stronger and affordable measures to raise quality.
The 2020 target for continuing professional development for teachers represents fewer hours of CPD than in 2013;
Policy plans are reliant on higher government borrowing, which might be risky if the economy weakens.
A lack of clarity over the future of school improvement drivers in a part academy and part maintained school syste

IFS publishes comparison of manifesto proposals on school spending in England

The Conservative, Labour and Liberal Democrat manifestos all commit to increase overall school spending in cash terms over the next parliament.

Once expected inflation and student numbers growth are accounted for, Conservative plans would imply a real-terms fall in school spending per pupil of 2.8% between 2017–18 and 2021–22, which makes for a total cut of 7% between 2015–16 and 2021–22.

Labour would increase school spending per pupil by 6% compared with present levels and leave spending per pupil in 2021–22 1.6% higher in real-terms than its historic high in 2015–16.

Liberal Democrat plans would protect spending per pupil in real-terms at its 2017–18 level.

All three major parties would continue the process of school funding reform, though with additional protections to ensure no school loses out in absolute terms.

In this observation, we detail what these commitments would mean for the path of overall school spending in England and the prospects for continued reform of the school funding system.

Increases to the overall schools budget

Under current plans for school spending in England, spending per pupil is set to fall by about 6.5% between 2015–16 and 2019–20. This fall increases to about 8% if we include some of the additional costs schools have faced in recent years such as higher pension contributions. Figure 1 shows that this would leave spending per pupil in 2019–20 at about the same real-terms level as it was a decade earlier, though still substantially higher than before the rapid increases over the course of the 2000s. Figure 1 then also shows how spending per pupil would evolve under each of the main parties commitments on school spending.

The Conservatives have committed to “increase the overall schools budget by £4 billion by 2022”. Once you strip out inflation, this equates to a real-terms increase in the schools budget of around £1 billion compared with the level in 2017–18. Taking account of forecast growth in pupil this equates to a real-terms cut in spending per pupil of 2.8% between 2017–18 and 2021–22. Adding this to past cuts makes for a total real-terms cut to per-pupil spending of around 7% over the six years between 2015–16 and 2021–22.

Labour would reverse real-terms cuts to spending per pupil since 2015 and then protect it in real-terms over the course of the next parliament. This would require an increase in school spending of around £4.8 billion in 2017–18 prices compared with its level in 2017–18. If delivered, this would increase spending per pupil by 6% over the course of the parliament, leaving it about 1.6% higher in real-terms compared with its historic high in 2015–16 (the small real-terms increase results from compensating schools for some of the additional costs they have faced in recent years).

Under the Liberal Democrats commitment, spending per pupil would be frozen in real-terms over the course of the parliament, which would require a total increase in the school budget of around £2.2 billion compared with today.

These different commitments imply quite different levels of spending per pupil by the end of the next parliament. For instance, under Labour plans, we project secondary school spending will be about £6,500 per pupil, which compares with about £6,000 under Conservative spending plans.

Spending per pupil in primary and secondary schools: actual and plans

Notes and Sources: See Belfield, Crawford and Sibieta (2017). https://www.ifs.org.uk/publications/8937; Authors’ calculations based on Conservative, Labour and Liberal Democrat General Election Manifestos; GDP deflator and Department for Education Pupil Projections .

Uncapping public sector pay

The figures above exclude any additional money schools may receive from removing the 1% cap on public sector pay increases. Exactly how much schools might receive is, however, uncertain. Labour have committed to following the recommendations of Pay Review Bodies, whilst the Liberal Democrats have committed to increasing public sector pay in line with inflation. If Pay Review Bodies recommended increasing public sector pay in line with private sector earnings, IFS researchers have used current forecasts for average earnings growth to estimate that this would increase the cost faced by public sector employers by £9.2 billion in 2021–22, of which about 30%, or £2.8 billion, would be schools. Increasing pay in line with inflation would increase costs faced by public sector employers, relative to the 1% cap, by £5.3 billion, or about £1.6 billion for schools.

In reality, fully compensating public sector employers would probably require less funding than these headline numbers as cash-terms growth in spending per pupil would already allow for some of the planned increases in public sector pay. Nevertheless, any compensation given to schools would probably equate to a significant further increase in the schools budget over and above what is planned. For instance, £2.8 billion equates to 7% of the current schools budget. Any additional funding could be seen as simply compensating schools for higher costs, but one could also view such increases as providing for a higher quality of schooling than would otherwise be possible. For instance, the School Teachers Review Body has warned about the implications of the 1% pay cap on teacher recruitment and retention. Providing funding for higher pay increases could be one way to avoid such problems, though comes with a price tag.

National Funding Formula – Everyone’s a winner?

The outgoing government also proposed a national school funding formula in England to ensure similar schools receive similar levels of funding. Reforming the school funding system is long overdue, but doing so was always going to create winners and losers, at least in relative terms. Existing proposals came with transitional protections: no school would face cash-term cuts of more than 3% per pupil between 2017–18 and 2019–20 and no school would gain more than 5.6%. These protections cost £300 million and result in only 60% of schools receiving the funding level given by the formula in 2019–20.

All three major parties have decided to go further and have committed to ensuring that no school will face cash-terms cuts as a result of the national formula. This requires around an additional £350m of funding and leads to an asymmetric roll-out the formula; the winners will still gain, but the losers will still not see their budget fall in cash terms. The above calculations ignore this as such funding is temporary and will gradually reduce as more schools move on to the formula. Though this might not happen that fast.

Starting with current policy, Figure 2 shows the proportion of schools due to receive gains and losses of given amounts as a result of the National Funding Formula between 2017–18 and 2019–20. The Figure shows three scenarios under the current policy of a cash-terms freeze in overall school spending per pupil: with no transitional protections; with the existing protections and with the additional protection that no school will face cash-terms loses. The striking result is that with a cash-terms freeze in overall spending and the additional protections that have been announced only 40% of schools are on formula in 2019–20.

As discussed above, each of the major parties has also committed to increase overall spending on schools. These increases in spending have the potential to ease the implementation by allowing some schools to move towards the formula level while their budgets remain protected in cash-terms or grow at a slower rate than the headline increase.

Conservative proposals imply a cash-terms increase in spending per pupil of around 4.5% between 2017–18 and 2021–22. This could allow them to get around 25% more schools on to the formula by 2019–20 if some see their funding frozen in cash-terms. However, this freeze would be on top of cash-terms freezes for some schools from 2015 onwards.

Figure 2. Cumulative distribution of changes between 2017–18 and 2019–20: primary and secondary schools

Notes and Sources: See Figures 10 and 11 in Belfield and Sibieta (2017). https://www.ifs.org.uk/publications/9075

In principle, Labour and the Liberal Democrats have more headroom to get more schools on to the formula faster, as their plans imply larger increases in spending per pupil. However, they could only do so by delivering below inflation increases in funding per pupil to some schools. Labour’s proposals imply school funding per pupil increasing by 9.5% in cash-terms between 2017–18 and 2019–20. Under one hypothetical scenario set out in Figure 2 above, Labour could get most schools on to the formula by 2019–20 by simply imposing a cash-terms floor of 0% and a maximum real-terms increase of 5.6%. Only about 5% of schools would actually experience a cash-terms freeze and 80% would be on formula by 2019–20. However, this is policy would still result in a significant number of schools facing real-terms cuts between 2017–18 and 2019–20. If instead Labour chose to protect all school per pupil budgets in real-terms this would preserve the current distribution of school spending and only about 40% of schools would be on formula by 2019–20, with further adjustment presumably required after 2019–20.

This highlights the difficulty of introducing the NFF at a time of constrained overall funding. Such a reform necessarily creates relative winners and losers, but with no overall growth in funding the reform must create absolute losers to transfer the additional funding to those that gain. Imposing additional protections does not solve this problem; it just delays schools’ transition to the true formula level.

Luke Sibieta, an Associate Director at IFS and an author of this piece, said:

“The commitments made by each of the main parties would imply quite different paths for school spending in the next parliament. Labour would increase spending per pupil by around 6% after inflation over the course of the parliament, taking it to just above its previous historic high in 2015. Proposals from the conservatives would lead to a near 3% real terms fall in spending per pupil over the parliament, taking it back to its level 2010.”

Conservative response to Education Policy Institute and IFS reports on school spending

Responding to the Education Policy Institute and IFS reports on school spending, Schools Minister Nick Gibb said:

“Jeremy Corbyn can’t deliver any of his promises on school spending – this analysis shows his numbers categorically do not add up and he is too much of a shambles to negotiate a Brexit deal that works for Britain.

“Only Theresa May can provide the strong and stable leadership our country needs through Brexit – so we protect the economy and are able to fund our schools to educate our children. We will increase the overall schools budget by £4 billion by 2022 – a real terms rise for every year of the Parliament compared to current spending plans – and ensure that no school has its budget cut as a result of a fair funding formula.”

Notes to Editors

We will continue to increase spending on schools by £4 billion in real terms

We will increase the overall schools budget by £4 billion by 2022, representing more than a real terms increase for every year of the parliament. Over the course of the parliament we will invest £4 billion in schools, make funding fairer whilst ensuring that no school has its budget cut as a result of the new formula, and continue to protect the Pupil Premium to support those who need it (Conservative Party Manifesto 2017, link).

Corbyn’s plans don’t add up

The Education Policy Institute has questioned whether Labour would be able to pay for their promises, suggesting they may have to scale-back their commitments. ‘Labour has made by far the biggest additional spending pledge on education […] However, this relies on sources of revenue which are in some cases highly uncertain – for example, higher than planned income tax rates on relatively high income individuals, higher than planned corporation taxes, and large sums from reduced tax avoidance. There must be a significant risk that the actual revenues would be lower than budgeted, which could lead to decisions to reduce spending commitments’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.14, link).

There’s a £2 billion black hole in Labour’s flagship tuition fee pledge. ‘Labour have committed both to abolishing tuition fees entirely and to reinstating maintenance grants which they state would cost £11.2 billion. The IFS, however, have suggested this would cost around £13.5 billion, taking into account the cost of replacing loans with direct teaching grants (£11 billion), the cost of paying for individuals who would otherwise pay for themselves upfront (£1 billion) and the cost of reinstating maintenance grants (£1.5 billion)’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.54, link).

Labour’s childcare proposals are under costed by £1.1 billion and there are no details about the amount of capital investment needed.

o ‘Labour have costed this package at an additional £5.3 billion per year, but our estimates suggest it is closer to around £6.4 billion per year above current plans’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.5-6, link).

o ‘Labour have pledged to invest more capital funding to support the free entitlement; however, no information on the size of this commitment is offered’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.20, link).

· Labour haven’t considered the public sector costs involved in their private school VAT policy, and the amount raised could vary significantly if independent schools raise fees to offset VAT.

o ‘The Labour Party proposes to impose Value Added Tax (£1.6 billion) on private school fees. This will make private education more expensive, and could lead to a modest shift in pupil numbers from the private sector back to the maintained sector, particularly in the less affluent parts of the country. It is unclear if Labour has taken account of any impact on public sector costs’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.10, link).

o ‘The overall amount raised could vary significantly from this figure if, as seems likely, independent schools raise fees to at least partly offset the imposition of VAT. These higher fees are likely to encourage some parents to move their children back into the state sector, incurring additional costs for the state’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.37, link).

· Their offer on lifelong education is also unclear. ‘Labour plans to offer a free entitlement to lifelong education in Further Education. They cost this at £1.5 billion but it is not clear how many people this is envisaged to benefit or what the scale of the offer will be’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.12, link).

And he has backtracked on his class size policy

· The EPI report shows that Corbyn has backtracked on his own class sizes policy. The Labour manifesto committed to reducing ‘class sizes to less than 30 for all five-, six-, and seven- year-olds’, but the information they’ve given to the EPI suggests their policy is now to restrict classes to no more than 30. Having realised their initial numbers were unworkable, they’ve now backtracked on a key pillar of their education manifesto (Labour Party Manifesto 2017, Towards a National Education Service, link).

o ‘The party’s manifesto text suggests a limit of ‘less than 30’, but it has been clarified that the intention is to restrict classes to no more than 30’ (EPI, General Election 2017: An analysis of manifesto plans for education, p.25, link).