Steve Besley's Education Eye: week ending 01 November 2024

Budget week of course with mounds of commentary and analysis to go with it.

The big picture is of the £40bn in tax rises and in particular the increase in National Insurance employer contributions and changes to capital gains and inheritance taxes. ‘Historic highs in tax’ according to some headlines with only modest growth forecasts. ‘Bold ambition, uncertain prospects’ the view from the FT.

On the positive side, the NHS and schools have benefitted, ‘the luckier end of the departmental table’ as the Resolution Foundation put it.

The Chancellor argued that these were ‘the right choices for our country’ and the headline verdicts have broadly acknowledged this.

The IMF gave it the thumbs up. “We support the envisaged reduction in the deficit over the medium term, including by sustainably raising revenue.” The IfS’s Paul Johnson praised the Chancellor for making some of the big choices but pointed to some the risks involved including future spending plans. “Despite the apparent scale of the increases, this is not going to feel like Christmas has come for the public realm.” While the Resolution Foundation raised concerns about ‘stagnating’ household income but said the Chancellor had ‘engaged with the seriousness of Britain’s economic challenges.’     

That’s the big picture context. What does it all mean for education?

First, money.

The Budget pointed to a planned rise in the funding settlement for the DfE leading to £99.7bn for 2025/26.This includes £6.7bn for capital expenditure and £63.9bn as core school allocation. This is above the average 2% figure quoted for depts generally and as the Budget document explains “is equivalent to an annual average real-terms growth rate of 3.4% from 2023-24 to 2025-26.”

So far, so good. That said, most of the money is already earmarked and as ASCL indicated, “there is an awful lot more to do and much of what we have heard represents relatively small spending commitments which do not match the level of investment that the education system requires.”

There are also concerns across education about the impact of the 1.2% increase in National Insurance employer contributions from next year and how far this will cut into budgets.

And the Chancellor is looking for 2% productivity/efficiency/savings target by all departments next year and has set up a Value for Money Office to do what it says on the tin as well as a Public Sector Reform and Innovation Fund “to support the development of a new approach to improving public services.”  

Improving public services will feature heavily in what’s called Phase 2 of the Spending Review, which will report late next spring and set dept spending limits for the years beyond 2025/26.

SEND, children’s social care and local government and devolution are mong those priorities listed for innovative approaches as part of this Spending Review.

Next, schools, given a prominent billing in both the build-up to the Budget and in the Budget itself and where the headline news was the promised increase in the core schools budget of an extra £2.3bn for next year.

Three things to note here.

First, some of the money, £1bn, is for SEND and Alternative Provision. It’s formal recognition of the mounting concerns around SEND. “This is an important step in realising the government’s vision to reform England’s SEND provision to improve outcomes and return the system to financial sustainability,” the Budget report explained.

Quite a challenge, and a focus for Phase 2 of the Spending Review. As the Confederation of School Trusts explained “Our whole approach to SEN needs significant reform, in addition to fair funding.”

Second, the additional funding for school rebuilding and improving the school estate may have been pre-announced ahead of the Budget but like SEND, was an important recognition of another big concern for schools. “Welcome,” as the NAHT added “but further investment needed.”

And third, the Chancellor was clear that VAT on private school fees will go forward under the Finance Bill as per the published consultation response, for 1 January 2025. The government suggests the measure will raise £1.8bn pa by 2028/29. The Independent reported that parents were ‘already turning down private school places’ and that it ‘will force 6% of the private school population to leave the sector. 

In summary, plenty of other announcements for schools including reiteration of the pledge to recruit more teachers, some welcome money but yes more needed, and a recognition at last of two big issues: SEND and school buildings.

On to FE where again an additional funding uplift, in this case £300m, provided some welcome news.

Here too some of the detail is important.  

First the government is keen to use some of the money, potentially £40m, to help transform the Apprenticeship Levy into the Growth and Skills Levy and “deliver on the commitment to launch shorter and foundation apprenticeships in key sectors.”

Some of the money also, £300m in this case, will help with provision for the still rising numbers of 16-18 yr olds. There’s also money, £950m, for skills capital, buildings and estate. Some of the details at present are sketchy but as the AoC said “they show that the Treasury recognises the need to invest more in FE colleges.”

Second, the focus on growth is gradually reshaping the skills system and the work of FE in it.

Along with Skills England which the Chancellor highlighted in her speech, a new Industrial Industry Strategy Council is being set up to guide the Industrial Strategy. Feeding into this and providing a local growth perspective will be the Council of Nations and Regions and Council of Mayors. While the forthcoming ‘Get Britian Working’ White Paper will set up Trailblazers, including eight Youth Guarantee Trailblazers, all helping to support people back into work.

It’s beginning to get a crowded field.

And third, and it was announced earlier in the week, the increase in the National Living Wage from next April,  part of a gradual move towards ‘a single adult wage rate.’

Potentially an important move forward in helping with youth unemployment which remained high in the latest labour market figures.

In summary, some much needed additional funding but yes again more needed, concerns about the costing of the impact of the employer NI increase, let alone VAT and pensions and a familiar and emerging frenzy around skills system reform. 

Finally HE, where tuition fees didn’t get a look in and nor incidentally was it listed as a priority area for Phase 2 of the Spending Review.

However, there were some details of note.

First on research, where the government committed to £6.1bn for core research, promised long-term certainty through 10-year budgets, and more importantly promised to fully fund the Horizon association. These were all welcomed by the Russell Group among others.

Second and less welcome the announcement of the increase in employer National Insurance contributions. To quote the Russell Group again, “this will have a significant impact on universities as major employers, adding to the funding challenges facing the sector.” The Times Higher quoted one estimate putting the cost at £372m. As the UCU remarked ‘this will hit the sector hard when HE is already on its knees.’ Expect to hear more on this.

And third, the Lifelong Learning Entitlement (LLE,) still promising ‘high-quality access to flexible education and training’ but now postponed for another year.

Learners, if they’re still around, will be able to apply from September 2026 for courses and modules from January 2027 as an accompanying set of guidance explains. More detail is promised next year but it may be hard to maintain excitement.

In summary, some welcome news on research but not much else for HE with questions about future funding, tuition fees, tertiary systems and so on untouched.

Away from the Budget, just a few of the other top headlines of the week.

In schools, former government adviser Sam Freedman reported on some of the myriad of policy changes for schools from over the past few decades, suggesting only marginal improvement in some areas and listing three ‘legacy challenges’ facing Labour. These included closing the disadvantage gap, building a stronger pastoral support system for young people, and developing 16-19 learning.

ASCL said “the report neatly summarises the changes in education over the last 20 years and the big policy questions facing the new government.”

And the Guardian reported on what some schools were doing to lure missing pupils back. “Therapy dogs, prize vouchers, wellness sessions, taxi rides and shepherd’s huts” were among the incentives being used they found.  

In FE, Edge published its latest Skills Shortage Bulletin offering, as Lord Aberdare explained in the Foreword, “both a sobering assessment of the current state of our nation’s skills needs, and an inspiring look at some possible solutions.” These included contributions from the Crown Estate and the Construction Youth Trust.

And in HE, the Royal Historical Society reported on the health of history as a subject finding a mixed picture.

Enrolments remain sound yet “history staff, and their students, are spending more time responding to cuts and institutional turbulence. They argued that this limited ‘historians’ capacity for teaching and research’ and called for more positivity around the subject.

Links to most of these stories below starting with the week’s headlines.

The top headlines of the week:

• ‘Schools in England and Wales use dogs and prize draws to lure absent pupils back’ (Monday).
• ‘Reeves hands young workers £2,500 pay rise despite warnings from business’ (Tuesday).
• ‘Extra billions for schools in England will be quickly swallowed up, say experts’ (Wednesday).
• ‘Schools to be funded for national insurance rise’ (Thursday).
• ‘Student AI cheating cases soar at UK universities’ (Friday).

More specifically ...

Schools:

• Budget headlines. The Chancellor announced a £2.3bn increase for the core schools budget as part of her Budget Statement with a £1bn uplift for SEND, along with earlier announcements of £1.4bn for school rebuilding and £30m for breakfast clubs.
• VAT consultation. The Treasury published the government response to the earlier consultation on applying VAT to private school fees acknowledging that fees may go up by 10% and that over 35,000 pupils may leave the private sector but that overall, the policy is expected to raise £1.8bn pa by 2029/30.
• VAT matters. The French and German ambassadors called on the government not to impose VAT on international private schools arguing that such schools are primarily for international students and partially funded by overseas governments who wouldn’t look kindly on such a fee imposition.
• School reform. Policy commentator Sam Freedman highlighted some of the many education changes from over the last 20 years in a new report for the Sutton Trust, pointing to a legacy of three major challenges facing the new government including closing the disadvantage gap, building post-16 provision and strengthening pupil pastoral support.

FE/Skills:

• Budget headlines. The Chancellor announced an extra £300m for FE as part of her Budget Statement with £950m for skills capital, along with reform of the apprenticeship levy, a White Paper on helping people get back to work and implementation of Skills England. 
• Skills Bulletin. Edge published its latest Bulletin looking at skills shortages in the UK with many contributors looking at likely future changes to the skills system and others providing examples of how they’re supporting different groups of workers in gaining skills and employment.
• Prison education. City and Guilds announced that it had secured a government contract, starting next October, to deliver English and maths, engineering, hospitality, and transport qualifications in prisons in England with the potential to include other qualifications over the seven-year period of the contract.
• Game Jam. WorldSkills UK reported on its recent benchmarking event designed to demonstrate skills in game design, which brought together over 25 teams to showcase their design and team skills in what’s becoming a growing industry.

Not-to-be-missed numbers of the week:

• 2.5%. The CPI inflation rate for the UK for 2024, increasing to 2.6% for 2025 according to projections from the OBR.
• 1.1%. The growth figure for the UK economy for 2024, increasing to 2% for 2025 before dropping to 1.8% for 2026, according to projections from the OBR.
• 4.3%. The unemployment rate for the UK for 2024, according to projections from the OBR.
• £99.7bn. The funding settlement for the DfE for 2025/26, according to the Budget.
• 6.7%. The increase in the National Living Wage from next April, as confirmed by the Chancellor.
• £728. The median weekly earnings in April 2024 for f/t employees, a 2.9% increase on the year in real terms according to latest figures from the ONS.
• 59%. The number of employers reporting that poor access to public services was costing them staff time, according to the TUC.
• 76%. The number of financial service industry leaders planning to increase office attendance over the next year, according to KPMG.
• 37,000. The number of private school pupils projected to leave the sector following the VAT-based increase in fees, according to the OBR.
• 399,500. The number of children classed as being in need and referred to social care services in the year up to March 2024, down 0.9% on last year but up 2.6% since 2020 according to latest government figures.

Everything else you need to know ...

What to look out for next week

• MPs’ Education Questions (Monday 4 November).
• CIPD Annual Conference (Wednesday 6 – Thursday 7 November).
• Publication of Ofqual data on access arrangements for this year’s exams (Thursday 7 November).
• AELP Autumn Conference (Thursday 7 November).
• Confederation of School Trusts Annual Conference (Thursday 7 – Friday 8 November).
• NIESR Autumn Economic Forum and Budget Response (Friday 8 November).

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