Academy funding cuts among George Osborne’s spending review announcements

Thousands of schools face significant extra cuts, despite a far better than expected Department for Education spending settlement, it emerged today.

The DfE has managed to negotitate a real terms cut of just 6 per cent to unprotected areas of its spending, much lower than the savings of 20 to 25 per cent that TES understands had been discussed with the Treasury.

But the settlement, announced as part the Chancellor’s spending review today, was not generous enough to stave off extra cuts to academies’ funding that were first revealed by TES last week.

Under plans announced today, the education services grant – which is handed to academies to cover the cost of services that would otherwise be provided by local authorities – will be slashed by £600m, with the additional funding that schools receive phased out altogether.

TES reported last week that ministers were considering further reductions to the grant, which has already been cut by £200m this year.

Mr Osborne said today that his measures added up to a “comprehensive reform of the way education is provided, from childcare to college”. He also said that:

  • As expected, a new national funding shools funding formula will be introduced from 2017/18. The current system, in which school funding is based on historic data, had “systematically underfunded schools in whole swathes of the country”, he said.
  • The amount of cash in the “dedicated schools grant” – schools’ core funding from the government – will rise.
  • Mr Osborne said the government would “help every secondary school become an academy”, adding that he wanted local authorities running schools to be “a thing of the past”.
  • Sixth form colleges will be able to become academies so they no longer have to pay VAT
  • Pupil premium funding and funding for free infant school meals will be maintained
  • Total funding for education, including childcare, further and higher education, would rise by £10bn
  • 500 new Free Schools and University Technical Colleges will be opened
  • £23 billion will be spent on school buildings
  • 600,000 new school places will be funded
  • Core adult skills funding for FE colleges will be protected in cash terms and the “base rate” of funding for 16-19 year-olds will be maintained
  • Mr Osborne announced the “largest ever investment in free childcare”, with 30 hours of free childcare available from 2017 for working families with three and four year olds. Free childcare for the most disadvantaged two year olds will be maintained. Funding to nurseries will rise by £300m.

Schools’ per-pupil funding for 5 to 16-year-olds has been frozen in cash terms for the rest of the parliament, although many schools are facing a real-terms squeeze because of the impact of rising costs such as extra pay, pensions and National Insurance contributions. Figures published by the Institute for Fiscal Studies last month showed school spending per pupil was expected to fall by about 8 per cent in real terms between 2014-15 and 2019-20.

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