Trust chiefs warn PM a cash squeeze threatens ‘viability’ of schools

350 academy leaders raised 'grave concerns' in a letter to ministers as the government plans 'efficiencies' in public spending

350 academy leaders raised 'grave concerns' in a letter to ministers as the government plans 'efficiencies' in public spending

4 Oct 2022, 11:26

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Hundreds of academy leaders have warned ministers of their “grave concerns” about schools’ ability to stay afloat if government fails to provide extra cash despite soaring inflation.

Trust chiefs have written a joint letter to prime minister Liz Truss and education secretary Kit Malthouse, voicing alarm over plans to find “efficiencies” in government spending.

Chancellor Kwasi Kwarteng denied a return to austerity in a BBC interview this morning, but said he was committed to budgets set at the 2021 spending review. 

Chief secretary to the Treasury Chris Philps also made similar comments last week, and that he would write to departments asking them to find “efficiencies”. It follows market turmoil over unfunded tax cuts in the government’s recent mini-budget.

Leora Cruddas, chief executive of the Confederation of School Trusts, and other signatories told ministers in the letter that trusts are “concerned” by Philp’s comments – and by “speculation…school budget cuts will follow national insurance changes”.

More than 350 trust leaders signed the letter, representing around one in eight academy trusts nationwide.

Schools Week reported on Friday the Treasury will claw back an estimated £300 million a year from the Department for Education, after axing the national insurance hikes it was allocated to cover for schools.

Leaders wrote that such comments and speculation “further undermine fiscal confidence that our members should have in balancing budgets and preparing for audits”.

The letter adds: “We write to you to seek clarification on the position and to state again our very grave concerns about the viability and sustainability of schools and trusts if there is no further investment in school funding within this term of parliament.”

CST represents trusts with more than 6,600 of around 10,000 academies in England. Its intervention comes on the eve of Truss’ speech to the Conservative party conference in Birmingham on Wednesday.

It called for a meeting to discuss “solutions that would alleviate these significant challenges”.

The letter notes the spending review was “based on much lower inflation levels”. 

Recent energy relief measures will help, but only provide “short-term” respite. Schools face overall cost pressures that are “unaffordable within existing budgets”. Inflation is wider than energy costs, and public sector pay awards made after budgets were set are “unaffordable”.

The Institute for Fiscal Studies, a widely respected think tank, recently highlighted an £18 billion shortfall between public services budgets promised at the spending review, and how much they are worth now as inflation has eroded their value. A total of £3.4 billion would be needed to maintain the settlement’s value today for the Department for Education, according to its researchers.

Director Paul Johnson also said yesterday not raising budgets to match inflation will mean a “real-terms cut in their generosity” and “squeeze public services”. But he said it will “not be enough to plug the fiscal hole the chancellor has created for himself” through his mini-budget.

The government’s U-turn on tax cuts for the highest earners is also of “limited fiscal significance”.

“Unless he also U-turns on some of his other, much larger tax announcements, he will have no option but to consider cuts to public spending.”

A Department for Education spokesperson said: “We understand that schools – much like wider society – are facing cost pressures due to international events driving up inflation and global energy prices.”

She said all schools would benefit from the energy relief scheme, capping bills and giving “greater certainty over their budgets over the winter months”.

“We are supporting schools with £53.8 billion this year in core funding, including an increase of £4bn this year compared to 2021-22.”

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  1. The so called 7% per pupil increase in 2022-23 for schools is not true. I work for a LA in schools finance and our LA budgets for schools was more like a 2.5% increase.