How much the Government is spending on Education and whether it has risen would seem at first glance to be questions having simple factual answers. So why is this such an issue, with different figures bandied around in political claim and counter claim? A key reason is that spending on Education can be expressed in many different ways:
Spending figures adjusted for inflation so different years can be compared in real terms. The following table from a parliamentary answer looks at year on year real increases in spending (http://www.publications.parliament.uk/pa/cm199900/cmhansrd/vo000314/text/00314w01.htm#00314w01.html_sbhd2).
| Year | Education spending (£ billion) | Percentage change | Change(£ billion) |
|---|---|---|---|
| 1994-95 | 37.8 | 3.3 | 1.2 |
| 1995-96 | 37.6 | -0.3 | -0.1 |
| 1996-97 | 37.1 | -1.5 | -0.6 |
| 1997-98 | 37.4 | 0.9 | 0.3 |
| 1998-99 | 37.4 | 0.0 | 0.0 |
| 1999-2000 | 39.3 | 5.1 | 1.9 |
| 2000-01 | 41.6 | 5.9 | 2.3 |
| 2001-02 | 43.5 | 4.6 | 1.9 |
It can be seen that during the first 2 years of the current Labour administration less was spent than the earlier years of the last Conservative administration. However more was spent in total in real terms over the 4 year period than over the previous 4 years. If you wish to compare figures from different tables and which have been converted to real terms prices for different years it is possible to do this using the gross domestic product deflator published by the Treasury: http://www.hm-treasury.gov.uk/deflators/figures.html.
Most Government spending is now planned over a 3 year period. Confusion can then be caused when extra spending is announced as a cumulative total. Using the above table which gives all figures at 1997/98 prices from a baseline of spending in 1998 an extra £1.9 billion was spent in 1999/00. In 2000/01 it is predicted that the amount spent will be the 1997/98 total plus £1.9 billion plus an extra £2.3 billion. The cumulative extra spending on education in real terms between 1997/98 and 2000/01 was thus predicted to be £6.1 billion.
Spending per pupil is in the short term this probably the figure which has most effect. However there are dangers in just considering these figures. In a period of dropping pupil numbers it is easy to maintain or even increase spending per pupil but if overall real term spending on education is allowed to drop during these periods then this has implications for progress in the long run. (See the class size article for an illustration.) Maintaining real term increases in overall spending during periods of dropping pupil numbers and real term increases in spending per pupil during periods of rising pupil numbers would be the ideal route to constant progress in the long run. There has been an increase in pupil numbers each year for the last 5 years but that that trend is slowing and by 2002/03 will have reversed and pupil numbers will be decreasing. Primary children numbers reached their peak 1997 to 1999 but secondary figures continue to rise as those higher numbers work their way through the system. Table Q http://www.dfee.gov.uk/insidedfee/report/annexes.shtml.
Spending per pupil in real terms stayed the same from 1995/96 to 1997/98 and then gradually increased – it will be 13% higher this year than it was in 1995/96. School based expenditure in secondary schools however only reached 1995/96 levels in 1999/00 (Tables 4.5 and 4.6 in http://www.dfee.gov.uk/insidedfee/report.htm).
Spending as a percentage of the gross domestic product (GDP) for the year in question. The following table shows cash spending on education over a 9 year period The GDP is shown in cash terms to work out the percentage but also in real terms to show its rate of increase.
| Year | Education Spending(£ billions cash) | GDP(£billions cash) | % of GDP | GDP (£billions in real terms at 1999/2000 prices) |
|---|---|---|---|---|
| 1992/3 | 31.4 | 615 | 5.1 | 736 |
| 1993/4 | 33.1 | 648 | 5.1 | 756 |
| 1994/5 | 34.7 | 688 | 5.0 | 791 |
| 1995/6 | 35.6 | 722 | 4.9 | 807 |
| 1996/7 | 36.1 | 768 | 4.7 | 832 |
| 1997/8 | 37.2 | 816 | 4.6 | 859 |
| 1998/9 | 38.8 | 859 | 4.5 | 879 |
| 1999/0 | 40.9 | 907 | 4.5 | 907 |
| 2000/1 | 45.9(estimated) | 4.9(est) |
UK spending figures taken from Public Expenditure Statistical Analyses 2001–02, Table 3.2 http://www.official-documents.co.uk/document/hmt/5101/5101-03t2.htm
The table shows a substantial real terms increase in GDP so if the goal is to keep the percentage of GDP spent on education constant or rising it is necessary to spend considerably in excess of inflation. Even though there was a real terms increase in spending (see the previous table at 2) between 1996/97 and 1999/00 the percentage of GDP slumped from 4.7 to 4.5. Since then the real terms increases (actual and planned) are greater than that required to keep pace with the increase in GDP. The percentage of GDP has risen back to 1995/96 levels and is estimated to continue to rise to 5.0% in 2001-02 and 5.3% by 2003-04. (DfEE Press release – budget details (March 7 2001)http://www.dfee.gov.uk/pns/DisplayPN.cgi?pn_id=2001_0125 Comprehensive Spending Review 2000 - pub July 2000 http://www.official-documents.co.uk/document/cm48/4807/csr2000.html).
The Department for the Environment, Transport and the Regions (DETR) announces the education Standard Spending Assessment (SSA) for each LEA towards the end of the calendar year. The local authority then has to decide how much extra money it has to raise to meet its needs through Council Tax.
LEAs are not obliged to spend the amount specified in the education SSA on education. There is consequently a wide variation in LEAs, many regularly budgetting more than their SSA others consistently budgeting less than their SSA (DfEE Departmental Report - The Government’s Expenditure Plans 2001–02 to 2003–04 and Main Estimates 2001–02 Annex P LEAs SSA http://www.dfee.gov.uk/insidedfee/report.htmParliamentary written answer - SSAs - Amount above or below SSA by LEA http://www.publications.parliament.uk/pa/cm199900/cmhansrd/vo000620/text/00620w19.htm#00620w19.html_sbhd4).
It will be seen from the table given in the Parliamentary written answer that each year between 1995/96 and 1999/00 taking LEAs as a whole there has been a budgeted overspend compared to SSAs but that this overspend has decreased year on year so that it was £387.7 million in 1999/00 compared to £703.9 million in 1995/96.
The formulae used to determine SSAs and distribute the money fairly have long been criticised and attempts have been made to adjust the Additional Educational Needs formula and the Area Cost Adjustment. The Government is at present consulting on proposals to simplify the formulae. It is also consulting on proposals designed to make it clearer to the public when a Local Authority underspends on Education (The Green Paper Schools: Building on Success - Chapter 6 The capacity to deliver http://www.dfee.gov.uk/buildingonsuccess/capacity_to_deliver/index.shtml).
With the divergence between SSA formula and actual spending, and with the DfEE having some strong priorities of its own, various ways have been found to control aspects of LEA spending from the centre. Many areas of spending are now ring-fenced. Grants are offered as incentives to spend on particular projects, available to LEAs if they contribute part of the total or seek additional private funding. Some of these grants are available to selected LEAs following competitive bidding. Spending through the Standards Fund has increased from £0.32 billion in1997/98 to £2.49 billion 2000/01 (Parliamentary written answer 12-Mar-01 Education Funding http://www.publications.parliament.uk/pa/cm200001/cmhansrd/cm010312/text/10312w08.htm#10312w08.html_sbhd3).
Many key priorities such as the literacy and numeracy projects are currently targeted through the Standards Fund. Most of these areas have been funded 50/50 by DfEE and LEA but the Government plans to increase the proportion it contributes to the fund to around three quarters and to make all new allocations by formula removing any bidding (DfEE Press Release -Streamlined Standards Fund – 5/9/00 http://www.dfee.gov.uk/news/news.cfm?PR_ID=984).
This increase in the proportion contributed by the government may be in response to the increasing number of LEAs not accepting Standards Fund grants presumably mainly because of the problem of matching funding. In 1999/00 21 LEAs did not take up grants leading to a total surrendered of £1.4m. In 2000/01 58 LEAs did not take up grants leading to a much increased total surrendered of £18.7m (Parliamentary written answer –Standards Fund - 22/6/00 http://www.publications.parliament.uk/pa/cm199900/cmhansrd/vo000622/text/00622w10.htm#00622w10.html_sbhd4).
The government is also trying to influence the proportion of LEAs’ Local Schools Budget which goes directly to schools. In 2000/01 it set a target of 80%. As can be seen from the table in http://www.dfee.gov.uk/news/news.cfm?PR_ID=890 the actual % varies from 79.8% in Cornwall to 89.8% in Southend on Sea. The target has been increased to 85% in 2001/02, the fair funding system giving schools more responsibility in areas such as school meals, building repairs, personnel and financial administration etc.
Once schools receive their individual budgets according to local formulae, they are then free to set their own priorities, though in practice their hands are largely tied by the law, and by national pay structures.
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