Government criticised over school funding

National Audit Office

National Audit Office

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The government's approach to helping schools balance their budgets has been criticised.

Schools have been told to make £3billion of cuts within the next three years - but the National Audit Office (NAO) said efforts to manage the financial fall-out brought about by those cuts was not effective.

In a report published today (December 14), the NAO, which independently scrutinises public spending for Parliament, warned there were signs of "financial challenges" in the country's secondary schools.

Those challenges have long been felt in West Sussex - one of the poorest-funded local authorities - where heads have warned they will have to increase class sizes or even reduce school hours to make ends meet.

While East Sussex receives slightly more, teachers have still struggled to find the "savings" needed.

The report also acknowledged something headteachers have been saying for months - schools face a real-terms cut in funding over the next few years because the money they receive annually per pupil does not allow for inflation.

The 2015 Spending Review saw the government's overall schools budget rise from £39.6billion in 2015-16 to £42.6billion in 2019-20 - up 7.7 per cent.

But an increase in pupil numbers coupled with cost pressures, such as pay rises and higher contributions to national insurance and pension schemes, means schools will actually be 8 per cent worse off.

While acknowledging the Department for Education's (DfE) work to develop and publish financial advice and guidance for schools, the NAO said it had not "clearly communicated" the scale and pace of the savings required of them.

And it warned schools "may already be making poor decisions about how to cope with the financial pressures".

Amyas Morse, head of the NAO, said: "Mainstream schools have to make £3billion in efficiency savings by 2019-20 against a background of growing pupil numbers and a real-terms reduction in funding per pupil.

"The DfE is looking to schools to finance high standards by making savings and operating more efficiently but has not yet completed its work to help schools secure crucial procurement and workforce savings.

“Based on our experience in other parts of government, this approach involves significant risks that need to be actively managed.

"Schools could make the ‘desirable’ efficiencies that the DfE judges feasible or could make spending choices that put educational outcomes at risk.

“The DfE, therefore, needs effective oversight arrangements that give early warning of problems, and it needs to be ready to intervene quickly where problems do arise.”

The report found that, between 2010 and 2015, the proportion of secondary schools spending more than their income rose from 34 per cent to 59 per cent. Of those in the red, the average deficit rose from £246,000 to £326,000 during the same period.

Between 2012 and 2015, the proportion of secondary academies spending more than their income rose from 39 per cent to 61 per cent.

The report stated: "The Department [for Education] does not know with certainty why schools are overspending, or underspending to build up reserves, or for how long these patterns are sustainable."

The NAO also called for earlier and more regular intervention with local authorities when there were financial concerns about maintained schools.

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