Cuts start to bite as DfE faces £1.5bn budget blackhole

The Department for Education is wielding the axe on schools-related schemes as it faces up to a potential £1.5 billion budget black hole to fund teacher pay rises.

Government funding for national professional qualifications and teacher top-up courses has been scaled back, while a governance recruitment scheme will be axed in September, it was announced this week. It is likely that there will be more cuts to come.

The DfE used one-off capital and tutoring underspends to pay its near £500 million contribution to the 6.5 per cent pay deal reached with unions last summer.

The department must now find nearly £850 million savings to fund the impact of that pay rise in the 2024-25 financial year.

On top of this, the DfE is working on a pay deal for 2024-25, which experts say must be at least 3 per cent. But the money must come from within the DfE’s own budgets.

The Treasury has refused to provide extra cash. Chancellor Jeremy Hunt announced in the budget that day-to-day departmental spending will rise by just 1 per cent, far below current inflation.

Education ‘seen as drain on Treasury coffers’

Nick Brook, chief executive of Speakers for Schools and chair of the government’s tutoring advisory group, said it was “abundantly clear that the DfE does not have enough money in their budget to maintain a world-class education system.

“Education needs to be seen as a priority for government, not just a problem for the DfE to fix alone.

“Until education is seen as an investment in this country’s future, rather than a drain on Treasury coffers, we stand little chance of shifting the dial far, in improving life chances of young people.”

Part of the problem is the lack of headroom in the DfE’s budget.

Although it presides over revenue of £85 billion, £60 billion is taken up by direct school funding, while £8 billion is spent on colleges and sixth forms, £6 billion is for early years and adult learning and apprenticeships cost £5 billion.

That leaves, at the most, around £6 billion from which to find savings. Some of this would be politically difficult to cut, such as at least £1 billion in higher education support and funding, universal infant free school meals, teacher bursaries and children’s social care support.

According to the Institute for Fiscal Studies (IFS), if teachers get a 3 per cent pay rise and reimbursed for rising costs from September 2024, schools would need at least £700 million extra funding over and above existing plans.

Taken with the cost of last year’s pay award, that leaves a potential £1.5 billion shortfall.

Development and governance schemes cut

This week, the government has pulled the plug on its Inspiring Governance scheme, which has helped to recruit 8,000 school governors and trustees since it launched in 2016.

The National Governance Association said the move was “nothing short of a disgrace” amid record-high vacancies.

Schools Week also revealed that funding for national professional qualifications and subject knowledge enhancement course has also been scaled back.

Luke Sibieta, research fellow at the IFS, said the government’s use of capital and tutoring underspends to fund pay was “never really a long-term strategy as the government can’t permanently rely on unexpected under-spends”.

He said it would be “crazy” to agree anything less than a 3 per cent pay rise for next year. But finding the cash from day-to-day spending within existing budgets “seems a rather tall order and cutting budgets within a year always risks bad decisions”.

DfE ‘searching down the back of every settee’

The government is also reorganising the Institute for Apprenticeships and Technical Education “in line with wider civil service efficiency savings”, it emerged this week, introducing a voluntary exit scheme for staff.

A spokesperson said it had a “duty to deliver value for money for taxpayers, so regularly makes sure we are operating as efficiently as possible”. Its work including on T-levels and post-16 qualifications “remains unchanged”.

Geoff Barton, outgoing general secretary of the ASCL school leaders’ union, said the DfE was “desperately searching down the back of every settee in the department for any money it can claw back to pay for ongoing commitments including the pay awards for teachers”.

The cuts “further highlight the reality of the government’s underfunding of education over the past 14 years, despite boasts about record spending”.

It follows the chancellor’s decision not to award further funding for tutoring in this month’s  budget. State subsidy of tutoring now ends in July and schools have warned that they cannot afford to continue to provide it themselves.