The Big Issue

“Flat cash”.

Sounds good, doesn’t it, in the current economic climate? As a school you are going to get the same amount of cash next year (and for the following 4 years). Let’s for the moment give the benefit of the doubt that ‘Flat cash per pupil” translates into same cash income (though I doubt it will). What is the real effect going to be on a typical secondary school?

First we have to make some assumptions. I’ll pick a random school. Total DfE revenue of around £6.0 million. The school has around 80 teachers. Of those, a fair assumption would be that four are coming up for threshold and another twenty are not yet at the top of the main scale. In all, total teacher costs are around £3.9million, with other, non-teaching staff, costing £1.1million. So, total staffing costs are around 83% of DfE income. Leaving 17% of DfE income on other costs.

There are six significant effects on the costs:

  1. Changes to NI coming through will add around 3.4% of staff costs for all staff currently contracted out of the additional state pension. For the sake of this model I’m going to assume this is all staff. This takes effect from 2016.
  2. Changes to the teachers pension scheme will add 2.3% to the cost of teachers in the scheme. This takes effect from 2015.
  3. Movement of staff through the threshold. This is £2.6k for each member of staff it affects.
  4. Movement up the pay spine. Depending on where you are on the scale this amounts to around £2k per person it affects.
  5. Wage inflation. Lets assume that there is a general wage inflation of around 1% (I know, my friends call me Mr Generous). This affects all staff.
  6. Cost inflation. Currently at a low, but we are promised by the Bank of England they will get it back up to their target of 2% soon. We’ll use that.

Now we can see what happens when we apply this to our random school (NB change 3 will only be applied once and change 4 will be applied for half the number of teachers as the previous year):

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
£’000s £’000s £’000s £’000s £’000s £’000s
DFE Income 6,000 6,000 6,000 6,000 6,000 6,000
Teachers 3,900 4,081 4,272 4,325 4,373 4,419
Other Staff 1,100 1,111 1,157 1,169 1,181 1,192
Other Costs 1,000 1,020 1,040 1,061 1,082 1,104
Total Costs 6,000 6,212 6,470 6,555 6,636 6,716

This is a random school, with some assumptions made. And to be fair I’ve done the calculations quickly on the veritable back of a fag packet. But to my accountants brain, with my knowledge of school budgets, they seem reasonable. A total of £2.5million additional cost over the five years. Grossed up to 3,000 secondary schools the impact amounts to somewhere in the region of £5bn. Even if I’m out by a factor of five, it’s still a huge problem.

What they clearly show is a huge potential effect on schools over the next Parliament if “flat cash” is the settlement.

Get your SBM to run the figures for your own school.

There is no bigger issue.


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