Over six in ten schools bust their budget, study finds

19 Mar 18

More than 60% of primary and secondary schools in England overspent their income in 2016-17, research from a think-tank has revealed.

The proportion of local authority maintained secondary schools in deficit also nearly trebled over a four year period – from 8.8% in 2013-14 to 26.1% in 2016-17, the Education Policy Institute found, in a report released on 16 March.

From a level of around 4% in 2013-14, the proportion of primary schools in England in deficit went up to 7.1% in 2016-17.

“Over two-thirds of local authority maintained secondary schools spent more than their income in 2016-17, while 40% had done so for at least one year,” the report, School funding pressures in England highlighted.

“The proportion of local authority maintained primary schools which have spent more than their income rose significantly in 2016-17, to over 60%. A quarter had a falling balance for two years or more.”

David Laws, chair of the Education Policy Institute, said it was concerning that schools had been running deficits “for a number of years”.

“The move into deficit is particularly notable for maintained secondary schools,” he wrote in the report.

“Our analysis suggests that schools may struggle to deliver the cost savings needed without making reductions in staffing  – if correct, this means that there needs to be close scrutiny on how such staffing reductions are made and whether they can be delivered without an impact on standards.”

The report found teaching staff was the “single biggest cost for local authority maintained schools”. Teaching staff for secondary schools accounted for more than half of school revenue expenditure across England, the think-tank concluded.

It found more than 40% of schools would not have the additional funds to pay teachers even a 1% pay rise. Teachers’ pay has been at 1% since 2011. The government has recently agreed to lift the pay cap for other public sectors workers

“A total of 7,615 state-funded mainstream schools, or 41%, would not receive sufficient additional funding in 2018-19 to meet the single cost pressure of a 1% pay settlement. This rises to 8,780 schools in 2019-20, or 47%,” the report said.

The report authors, Jon Andrews and Tom Lawrence, highlighted National Audit Office findings, which showed some schools were looking at replacing experienced, higher-paid teachers with younger, less experienced recruits to cut down costs.

Richard Watts, chair of the Local Government Association’s children and young people board, said: “This report raises a number of concerns around the squeeze on council-maintained school funding, and in particular the possible impact on the quality of education children receive. 

“Council-maintained schools are under significant funding pressures as a result of cuts to local authority budgets, an increase in wages and the additional costs of paying the apprenticeship levy.”

All employers – including schools, either through the local authority, government body or multi-academy trust – with an annual pay bill of more than £3m must pay the levy to the government at a rate of 0.5% of the employers’ bill.

The Education Policy Institute used seven years of publicly available data for 13,404 local authority maintained primary schools and 1,136 local authority maintained secondary schools.

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