Why Mr Osborne’s ‘good settlement’ for education will mean extra cuts for thousands of schools

Academies are to lose all the extra funding they receive through a key government grant, as part of today’s public spending review.

The news was not directly announced by chancellor George Osborne, but revealed in two small paragraphs in a huge document setting out the details of the spending deal.

As predicted by TES last week, there will be significant extra cuts for thousands of academies as the government slashes what is known as the education services grant (ESG).

But it is even worse than was expected. Not only will £600 million be slashed from the grant but “additional funding” that schools receive through the funding stream is to be phased out.

The reduction comes on top of the £200 million cut the Department for Education was forced to make to the ESG budget – then £1.02 billion – earlier this year.

For academies that meant a per-pupil cut from £140 to £87. Now the money will go altogether. Some schools have already told TES that if this happens they will be unable to cope.

The extra ESG money was a key reason why so many schools decided to convert to academy status in the past five years.

The cut to the grant will also mean a significant further reduction of the local councils’ role in running schools, the review document reveals.

It states that: “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.”

But with even less local authority support and the disappearance of the money that academies received in its place, many headteachers will now be wondering how to make ends meet.

The government says it “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 to target over £1 billion a year in procurement savings by the end of the Parliament through benchmarking, guidance and improved framework contracts,” the review adds.

Jonathan Simons, head of the education unit at the Policy Exchange thinktank, told TES that today’s announcement was an “incredibly good settlement for education across the board” but would “feel like a cash cut” for some academies.

“Academies will have inflationary cuts because per-pupil funding is only protected in cash terms, and there will be the ESG cut as well,” he said. “On top of this some academies will lose money under the changes to the funding formula.”

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