Real-terms funding per pupil will fall, warns IFS

21 Oct 10
Real-terms spending on school pupils will decrease by 2.25% over the next four years, despite the chancellor’s pledge to protect funding, Public Finance has been told.
By Jaimie Kaffash

21 October 2010

Real-terms spending on school pupils will decrease by 2.25% over the next four years, despite the chancellor’s pledge to protect funding, Public Finance has been told.


Chancellor George Osborne announced that spending on schools would increase by £3.6bn by 2014/15 – an annual increase of 0.1%. This includes supplementary funding for the pupil premium, which will direct extra money to disadvantaged pupils. The premium will grow to £2.5bn a year by 2014/15.

The Department for Education said that the premium would be additional to core school budgets with funding coming from cuts to the welfare budget. A DfE spokeswoman said that a 60% reduction in capital spending would ensure cash-per-pupil funding did not decrease despite demographic changes. 

However, Luke Sibieta, an economist at the Institute for Fiscal Studies, told PF that when inflation is factored in, spending per pupil will decrease by 2.25% over the Spending Review period.

‘Ignoring the pupil premium and inflation completely, Osborne does increase schools spending enough to meet the increase in pupil numbers,’ he said. ‘In other words, before the pupil premium the government just about maintains spending per pupil in cash terms.’ However, when inflation is factored in, this represents real-terms cuts of 10% over the four-year period, he said.

‘But the pupil premium then limits the real-terms cut in spending per pupil to about 2.25%,’ he added.
Shadow education secretary Andy Burnham said the inclusion of the premium funding within Osborne’s 0.1% increase was a ‘complete con’.

‘[The premium] does not come from outside the schools budget as the Coalition Agreement promised… it is to be recycled from within it, creating huge winners and losers among schools,’ he said.

Teachers and heads called for greater clarity over the pupil premium. Russell Hobby, general secretary of the National Association of Head Teachers, said: ‘We need to understand more about the pupil premium and how it will affect the distribution of funding between schools.’

Mary Bousted, general secretary of the Association of Teachers and Lecturers, said: ‘It is good to see… the pupil premium agreed and funded.

‘However, while we fully support the pupil premium in principle, the devil will be in the detail of how it is allocated.’