Schools First

What would be a good financial settlement for schools during the next parliament? I’m not talking about “What would be a good settlement given the current financial constraints…” sort of settlement. Rather, if we assume that as a national investment the continued good (and hopefully improving) schooling of our children is worth at least as much to the economy as getting to Birmingham a little quicker than we can at the moment, that sort of settlement. You know, the sort that doesn’t seem to be constrained by austerity.

I worked out the other day that the ‘flat cash’ on offer from the present government (the settlement announced by Labour a few days later was better for schools, but only marginally so) would cost secondary schools around £5bn in total over the coming five years. Largely this is due to the pension and NI increases, which have been announced but only take effect over the next couple of years. I regard these as quite sneaky cuts – announced to make the government look like it was taking action. Deferred for some time to make you forget about them and feel that the cuts, “well, they’re not that bad after all”, then BOOM, they hit, but at the beginning of a parliament so you have to put up with them for another five years. That sort of sneaky.

I didn’t do the calculation for primaries, but on the grounds that there are around 8 times of many of them as there are secondaries and they are around a fifth of the size on average then we could make a guess at the cost of not cutting school budgets will be somewhere in the region of £13bn over the parliament.

But that’s based on a steady state number for students in the system. Now, the current schools budget is around the £41bn mark. Already, we know that there will be an additional number of children coming into the school system, which will add around 7% on to that cost. That is without any assumption that there will be additional children moving into the system through immigration. So 7% is an additional £3bn (rounded to allow for a few more) per annum at the end of the parliament. Assuming this grows evenly through the parliament this is a total additional cost of £9bn over the parliament.

So if we take the £13bn extra needed to avoid imposing a real term cut and add the £9bn we get to a total of £22bn additional needed just to make the schools budget stand still. And I haven’t said a word here about FE or HE.

So £4.5bn a year. The sort of thing you would have to do to raise this sort of money is:

  • Raise the basic rate of income tax by 1% to 21%
  • Increase VAT by 1% to 21%
  • Increase Corporation Tax by 5%
  • Freeze all benefit increases
  • Align CGT and income tax rates
  • Abolish CGT Exemption on primary residence
  • Scrap Trident*
  • Scrap HS2*

There are of course other measures and groups of measures that would raise the necessary, but my intention is to give you a flavour of the scale of the problem.

All of the above options come under the political heading of “difficult”, whichever colour government you are.

My personal view is this.

If there is a Tory government for the next five years; if you thought that teachers (most of them) were cross with you now, think what they will be like after you take £22bn out of their school budgets. And don’t think the parents of the children in those schools will let you off lightly either.

If there is a Labour government for the next five years, well, much the same as above really. You won’t get a honeymoon on this. This is fixable, but requires political courage.

What would I do?

An educated population is a productive one. There is good data showing that education to tertiary level provides a 13% return on that investment. Education to tertiary level doesn’t happen without schools doing their bit first. So investment in education is a good thing. Where do we stand on that if we look at international comparisons (something the present government is keen on)? We find that we spend less than the OECD average (interestingly by a figure somewhere in that £4.5bn per annum ballpark). So it seems that we currently under-invest.

So I would find the money. I would squeeze the cash out by manipulating the last four items on my list above.

Remember, this would not be finding cash to inflate salaries, build new buildings or fix IWBs to every flat surface in a school. It would be to enable schools to stand still rather than move backwards. It would pay the additional NI and pension costs, it would allow for inflationary costs (including a 1% salary increase for teachers and support staff). It would pay for the extra children coming into the system (though probably not for all the classrooms they would need to house them). In short, it would allow schools not to have to worry about how they will pay the bills and to let them concentrate on teaching children. If we can’t do that then there’s no point getting to Birmingham faster, or being able to incinerate the 170 largest cities in the world.

A government that spoke for me would put schools first.

*These are of course capital programmes so you would have to find another funding source once the effect of the scrapping of the cost filtered through the years.