George Osborne. Photo via Twitter

Autumn Statement: DfE plans for future of education

Chancellor spending review reveals plans for DfE budget over the course of this Parliament

Posted by Stephanie Broad | November 26, 2015 | People, policy, politics

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This week’s Spending Review and Autumn Statement has set out its plan for education for the next four years. 

The Department for Education plan to increase free childcare provision, protect the schools budget and pupil premium, make savings from the education services grant (ESG), grow apprenticeship schemes and open new free schools.

A place and a meal for every child 

In addition to promising 600,000 additional school places, funding for universal infant free school meals will be maintained, supporting healthy eating and saving families around £400 for every infant each year. 

Russell Hobby, general secretary of school leaders’ union NAHT, said: “As expected, the government has committed to a new funding formula for schools. Here, they have demonstrated a willingness to listen to expert voices like NAHT and to tackle a difficult issue. Finding a fair formula that is an improvement on the current system will be a challenge. It must not be a cover for cuts, nor should it be rushed in, in case it damages school funding to a fatal degree. But it is necessary and we will continue to work together with government to find a solution.

“Elsewhere, the pledge to retain universal infant free school meals (UIFSM) has been honoured and helps school leaders plan provision for the years ahead. The extra funding for early years is also welcome and reflects the strong case NAHT has made to government about the importance of this phase and the challenges of the Childcare Bill.”

On the promise of more school places, Mark Robinson, CEO of Scape Group commented: “There is a lot to celebrate in today’s Spending Review, which included a welcome focus on education and easing the school places crisis through investment in new school places and new school buildings. Our research shows 11,000 new primary school classrooms are needed by 2024 and this should go a considerable way toward providing our children with the quality learning environments they need and deserve.”

Payroll tax for apprenticeships

A new ‘apprenticeship levy’ has been introduced to help fund employer apprenticeship schemes and invest in future workers. 

The levy will be introduced in April 2017 at a rate of 0.5 per cent of an employer’s payroll bill, and aims to deliver three million apprenticeships by 2020.

Employers will receive an allowance of £15,000 to offset against their levy payment, however only companies with a payroll of over £3m will be liable to pay the levy. As a result, less than two per cent of UK employers will pay the levy.

John Longworth, BCC Director General, said: “Although we finally have clarity over the threshold of the apprenticeship levy, it will hurt larger businesses who will have to pay what is effectively a payroll tax. It is important that the delivery of the levy doesn’t undermine other types of vocational training, which could be better suited to some businesses. The priority must be delivering high quality apprenticeships, viewed positively by employers. Otherwise this is simply another cash cow from business that will not have the desired effect.”

Mike Thompson, Head of Apprenticeships at Barclays, said: “With the Chancellor confirming the government’s details on the planned apprenticeships levy, we at Barclays agree that something needs to be done to address the skills shortage in the UK. The government has suggested that based on current employer plans we will need to fill 13.5 million job vacancies in the next ten years, but only seven million young people will leave school and college in that time. We have to address this and find alternatives to the younger generation by providing opportunities to unlock the talent that is being heavily underutilised across all age brackets. 

“At Barclays, we believe that age or social circumstance shouldn't be barriers or deciding factors in finding a viable route to employment. Reskilling can be achieved at any age. That’s why Barclays has launched the Bolder Apprenticeship programme, to demonstrate our commitment to creating career opportunities regardless of age.”

Free childcare for pre-school children

The government will be investing over £1 billion more a year by 2019 to 2020 in free childcare places for two, three and four year-olds. To enable the doubling of free childcare for three and four year-olds with working parents, the government will invest at least £50 million of capital funding to create additional places in nurseries and over £300 million a year to increase the average hourly rate paid to childcare providers. From 2019 to 2020 the government will spend a record £6 billion a year supporting parents with their childcare costs - this includes tax-free childcare and Universal Credit. 

Fair funding 

The first ever ‘national funding formula’ will be introduced for schools, high needs and early years. This will end the unfair system where a child from a disadvantaged background in one school attracts half as much funding as a child in identical circumstances in another school, simply because of where they live. There will be a transitional phase to help smooth the implementation of the new schools formula. The government will launch a detailed consultation in 2016 and will implement the new formulae from 2017 to 2018.

Cuts to ESG funding

Savings of around £600 million will be made on the ESG, including phasing out the additional funding schools receive through the ESG. The government will reduce the local authority role in running schools and remove a number of statutory duties. The government will consult on policy and funding proposals in 2016.

“The investment in 600,000 new school places is not new money. This is the minimum required to keep pace with pupil numbers.”

Russell Hobby continued: “We are concerned about further cuts to local authority services - a fixation with ever greater autonomy will not help build capacity and sustain improvement. The claim that removing the role of local authorities will save £600m on the Education Services Grant looks uncertain: these support services must come from somewhere and forced academisation is a costly, disruptive business. 

“The investment in 600,000 new school places is not new money. This is the minimum required to keep pace with pupil numbers.”

The government will help schools to make savings on procurement, including by exploiting economies of scale. In 2016 the government will publish a set of specific actions to support school leaders target over £1 billion a year in procurement savings by the end of the parliament through benchmarking, guidance and improved framework contracts.

FE academies

As part of the government’s one-off restructuring of post-16 education and training, sixth-form colleges in England will be given the opportunity to become academies, allowing them to recover their non-business VAT costs. They will have the option of joining a multi-academy trust if they choose to, which will help drive up standards and improve efficiency of 16 to 19 education by enabling further collaboration between schools and sixth-form colleges.

Secretary of State for the Department for Education, Nicky Morgan, said: “Providing educational excellence everywhere is at the heart of this government’s drive to extend opportunity and deliver real social justice, which is why we are protecting per pupil funding in the dedicated schools grant and pupil premium rates for the duration of this parliament.

“We want every child to have the opportunity to fulfil their potential, no matter where they live, so we have taken the historic step of introducing a new national funding formula, to end the unfair school funding by postcode. We are also investing £23 billion in the school estate to rebuild schools, open hundreds of new ones and create hundreds of thousands more school places.

“But we know that education doesn’t start, or stop, at the school gates. We will invest a record £1 billion extra in free childcare each year by the end of this Parliament - more than any government has invested before. And we have protected core 16 to 19 funding, to ensure all young people leave education with the skills they need to thrive in modern Britain.”