Recent estimates on the health of public finances have been better than expected indeed July this year witnessed the first government surplus since 2002.

Nevertheless, over the medium term the uncertainty of Brexit looms large. A significant downgrading in the OBR’s forecast could lead to a further tightening of the country’s finances on top of an already depreciated pound, longstanding poor productivity, and UK inflation hitting its highest point since 2012.

As always, there are competing calls for the Chancellor to commit to new spending or tax cuts – including from public services which have already been squeezed; speculated costs associated with leaving the EU; delivering on ambitions for housing; and taxpayers feeling the pinch of inflation.

So, what does this all mean for education and schools?

Social mobility has been the repeated focus of government speeches under both Theresa May’s premiership and Justine Greening’s leadership at the Department for Education. We can expect a ‘Social Mobility Action Plan’ to be published in the next few days and, the fact that it has been in the pipeline for months but only being published after the Budget, means it is likely to include some new funding commitments.

Opportunity Areas

The Department’s strategy to improve social mobility has so far centred on identifying 12 ‘Opportunity Areas’ which are local authority districts where educational performance and capacity to improve is low. This first wave of Opportunity Areas has been backed by a significant £72 million spending aimed at supporting local education providers and communities to address the challenges they face compared with more affluent areas.

A criticism of the programme so far has been the omission of any Opportunity Areas in the North East

A criticism of the programme so far has been the omission of any Opportunity Areas in the North East – a part of Britain with poor attainment and progress, particularly for the most disadvantaged children, and sparse access to high quality schools. The Budget could therefore announce a new wave of Opportunity Areas (with new funding).

However, EPI’s analysis shows if the Department uses the same selection method as it has done to date, we would still be unlikely to see any inclusion of areas in the North East just yet (here’s why). Opportunity Areas are not the only tool at the Government’s disposal of course, if there were any new capital funding for school buildings, allocating it to the North East and other low-performing areas would be worth considering. Especially given the findings of our recent Free Schools report which found that they have not been targeted in areas where more good schools are needed.

Early years

Justine Greening has also already announced £12m for literacy hubs in the North and a further £5m to trial parenting interventions. We can expect both of these commitments to be confirmed in the Budget alongside the Social Mobility Action Plan.

We may also see a renewed focus on early years, given the Conservative Party manifesto pledge to introduce a new capital fund to help primary schools develop nurseries where they do not currently have one.  Such a fund will almost certainly help to increase the number of early years places and could help to improve earlier identification of children with special educational needs.

While support for early years provision is to be welcomed, given how much of the disadvantage gap opens between 0-5 years, there remains insufficient evidence to say whether school-based early years provision offers better quality of outcomes than other types of nurseries. What we do know is that teacher-led settings are associated with better outcomes, particularly for disadvantaged children, and so any commitment to expand the provision of early years education, must also be supported by a developing a well-trained and professionalised workforce.

Core schools budget

Given that the government has already announced an additional £1.3bn for the core schools budget between 2018 and 2020 and confirmed that the overall pot will be distributed more transparently under a new national funding formula, it is unlikely that we will see any new money being announced. Indeed, we don’t yet know where the £1.3bn is coming from, other than it is being found from other budgets in the DfE.

Teacher pay

The extra funding hasn’t, however, quite silenced the unions as you would expect. Earlier this month, several unions wrote to Justine Greening to call for an increase in teacher pay of 5 per cent in 2018.

This follows years of pay rises being limited to one per cent, until a September 2017 pay award that allowed for a 2 per cent increase to the main pay scale but still left salaries trailing, with the Consumer Prices Index 12-month rate at 3.0 per cent in October 2017. Teacher pay growth has lagged behind that of the wider public sector in most years over the last decade, and there are concerns that it has contributed to current recruitment and retention problems. Typical school teacher pay fell by around 10 per cent in real terms between 2005 and 2015 in England, compared with an increase of 6 per cent across the OECD.

The unions may have been buoyed by the decision of the Chief Secretary, Liz Truss, to allow a 2 per cent pay award for police officers and a 1.7 per cent award for prisons staff in 2017-18, while signalling that the Government may grant greater flexibility from 2018-19 to deal with skill shortages. The Department for Education’s imminent piloting of a student loan reimbursement scheme, and new maths bursaries with a £20,000 up-front payment and further retention bonuses, show that the Government has recognised the difficulties schools are facing in the wake of pay stagnation and taking steps to address them.

Given the evidence on where teacher supply and pay shortfalls are greatest, it is encouraging the new recruitment measures are tightly focused on languages, science, and maths teachers, and will concentrate additional funding in ‘challenging schools’ or parts of the country with acute supply issues. With fiscal constraint continuing and macroeconomic uncertainty, this approach suggests there while there is a greater appetite for targeted interventions within current budgets, blanket increases to teacher pay funded with new money are unlikely.

Natalie Perera is head of research at the Education Policy Institute