School budget cuts follow national insurance change

Ministers face having to cut £300 million from school budgets next year after the recent national insurance (NI) contribution rise was axed.

In his “mini-budget”, Chancellor Kwasi Kwarteng announced the 1.25 percentage point increase in NI, that came into effect in April, would be reversed.

The increase, dubbed the “health and social care levy”, was meant to raise more funding for the NHS. Schools were given extra funding to cover the estimated £300 million a year cost.

The first instalment was paid this year, with future funding rolled into the national funding formula.

Although this year’s cash will not be clawed back, the Treasury confirmed department budgets will be adjusted from 2023-24.

Schools have been told their provisional budgets already for next year. The Department for Education could find the cash from elsewhere in its budget, but school funding makes up the vast majority of its spend.

Luke Sibieta, from the Institute for Fiscal Studies, said: “Even though the real effects will be approximately zero, announcing cuts to school funding rates at the present time will be a bit of an unfortunate look for the DfE.”

He added the clawback could be “quite difficult” to implement as the cash is rolled into the natioanl funding formula and school funding rates for next year are already announced.

The Treasury said there will be an update on school budgets in “due course”. The DfE would not comment.

It comes as government departments have been told to prepare for cuts to enforce “fiscal discipline“.

Simon Clarke, the levelling-up secretary, criticised the “very large welfare state” in The Times newspaper, adding that government departments would have to “trim the fat”.

School budgets have been squeezed for over a decade, although government has upped funding in recent years.

However rising costs – such as soaring energy prices and unfunded staff pay rises – have wiped out increases.

Caps on energy bills come in from October. A school with a £10,000 monthly bill will save about £4,000.

But aside from a £2.1 billion fund for public bodies to invest in energy efficiency and renewable heating, there was no further financial help in last week’s mini-budget.

Geoff Barton, the general secretary of the ASCL leaders’ union, said the government had “given away billions of pounds to promote growth, but not a penny for education”.

“Some schools, particularly small primaries, may no longer be financially viable,” he said – predicting larger classes, cuts to subject options and widespread job losses.