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How The Spring Budget Affects School Funding

During the lead-up to the Spring Budget 2024, the education sector was hopeful for funding announcements that would help schools maintain their estates and keep pace with rising costs. However, this wasn’t the case and many are left disappointed with what the Chancellor presented to Parliament on 6 March. 

In order to fully compensate schools for the expected cost rises, the Institute for Fiscal Studies (IFS) estimated that funding would need to rise by a further £700 million over and above existing plans for 2024–25. To compensate schools for the 5% loss in the purchasing power of school budgets since 2009–10, the government would need to go even further and allocate an extra £3.2 billion in funding. Yet, this doesn’t seem to be happening, at least not this spring. 


Key Takeaways 

Among the Chancellor’s spending plans, some of the most highlighted points in the Spring Budget were in regard to inflation and taxes. The Office for Budget Responsibility (OBR) summarised that inflation has receded more quickly than expected and markets now expect a sharper decline in interest rates, strengthening near-term growth prospects. It is hoped this will enable a faster recovery in living standards, with household disposable income exceeding the pre-pandemic peak two years earlier than forecasted in November. But the medium-term economic outlook remains challenging.

Tax cuts were also announced, including a further 2 percentage point cut to employee and self-employed national insurance contributions from April 2024. Employee national insurance will be reduced to 8% and when combined with the cuts announced in the Autumn Budget, the average employee can expect to save over £900 a year. Self-employed national insurance will be reduced to 6% and the average self-employed person can expect to save around £650 a year. The combined effects of these reductions mean that someone on the average wage now has the lowest effective personal tax rate since 1975.

While the OBR’s projections are now slightly more positive, Director of IFS, Paul Johnson said “the picture on living standards remains dismal” and more importantly for the education sector, “the overall public finance picture remains largely unchanged from the autumn’. The IFS isn’t alone in its concerns regarding how actually implementing the Chancellor’s provisional post-election spending plans would require cutting unprotected services either, including councils, further education and colleges. Implied cuts to funding of public services, many of which are already struggling with their current level of funding, could have a significant effect on the education sector moving forward.


What Schools Need to Know 

The only light in the dark for schools was the £105 million announced as an initial investment to fund 15 special free schools for children with special educational needs and disabilities (SEND). Creating additional places for children with SEND is undoubtedly important and the locations of these special free schools are set to be announced by May 2024. 

The government is also introducing two new data pilots to drive high-quality Artificial Intelligence (AI) in education. It is hoped this will help to reduce workloads and free up teachers’ time, having a knock-on effect on recruitment and retention rates in the sector. The design details of the data research cloud pilots announced last year were also confirmed. 

A new “Public Sector Productivity Programme” was announced too, including a comprehensive NHS productivity plan backed by £3.4 billion of funding. Part of this Programme includes investing £800 million in wider public services, yet it’s not clear which public services will be benefiting and in what way. Relevant departments will develop detailed productivity plans in the run up to the next Spending Review. 

Unfortunately, there wasn’t anything else announced to help schools deal with rising pressures and no further revenue was allocated to the education sector. 


The Views of the Education Sector

Many have been critical of the Spring Budget and believe not enough is being done to support schools, students and staff. 

Director of Policy at the Association of School and College Leaders, Julie McCulloch said “The Chancellor spent more time name-checking film stars than he did on education”. “This Budget has failed to support schools, colleges, trusts, and the children and young people they serve”. “The reality behind the rhetoric is that the Department for Education’s own analysis shows that schools only have enough headroom in their budgets to increase spending by 1.2% in the next financial year. This is unlikely to meet rising costs or be enough to fund anything other than a derisory pay award which will worsen the recruitment and retention crisis.”.

General Secretary of the School Leaders’ Union NAHT, Paul Whiteman said “Our children deserve better – today’s spending announcements mean that too many will continue to be taught in decrepit classrooms for the foreseeable future. School leaders will be concerned to hear the chancellor talking about the need for greater efficiencies in education, and many will be left wondering where they will be found when budgets have already been cut to the bone.”

General Secretary of the National Education Union, Daniel Kebede said “Once again, the Chancellor has shown that he does not care about the crisis that threatens to paralyse education in this country”. “Jeremy Hunt has done nothing to address the funding crisis in our schools and colleges”. “The inescapable fact is that 70% of schools have less funding in real terms than in 2010. And today, Jeremy Hunt’s message is that he wants them to just keep doing more and more with less and less”. 


Moving Forward in a Time of Financial Difficulty

With no further funding announced for schools, many are expected to experience financial challenges throughout 2024 and beyond. The need for strategic financial planning and resilience remains, and our team at Barker is here to support you in any way we can. By carefully assessing your needs, exploring innovative solutions and leveraging available funding, schools can ensure they continue to provide inspiring spaces where people learn, work and play. Don’t hesitate to contact our team for some advice about maintaining your estate.

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