How does the Spring Budget impact the education sector?

Was this a school friendly budget? Read our analysis below, with our commentary that is specifically aimed at the education sector.

The Chancellor opened by stating he wants a high wage, high skilled economy. On the face of it this sounds like good news for individuals, but perhaps not for Trusts as employers. We know that the DfE have already given the School Teachers’ Review Body (STRB) guidance on teachers’ pay award for 2024, so will the Chancellor’s words impact this process?

Also, from 6 April 2024 National Insurance (NI) for employees will be cut a further 2% to 8%. The full 4% reduction since the Autumn Statement 2023 will save the average worker on £35,400 over £900 a year. Will this influence the decision of the STRB? The long-term ambition is to continue to cut NI to simplify the tax system. Based on the Chancellor’s comments, then it should have no impact on the STRB recommendation.

Overall, was the budget good news or bad news for the education sector? On one hand the Chancellor stated it was a budget for long term growth to ensure better public services, but he then failed to deliver much on education, other than the investment of £105 Million to build 50 new special schools, creating over 2000 additional places for SEND pupils.

Whilst this is great news, it will of course take time for this investment to result in schools ready for occupation. What he didn’t say, but is confirmed in the Spring Budget 2024 full narrative, is that per pupil funding for 5-16 year olds is at its highest ever level in real terms in 2024-25 – and represents a cash increase in average funding per pupil from £5,920 in 2019-20 to £7,690 in 2024-25 (School funding statistics).

There is some good news in that inflation is forecast to be 2% in Q2 2024. This should help Trusts with overhead cost control, but as overheads only represent around 29 % of costs, according to our Kreston UK Academies Benchmark Report 2024 it will only scratch the surface of total cost control.

Looking at the job market, due to the level of investment in technology related industries, the Chancellor claims we are on track to be the next Silicon Valley. This raises the game to another level, and Trusts therefore need to forward plan to ensure they are equipping pupils with the right skills and qualifications for these future jobs.

But we must not forget the creative industries and there are more tax breaks announced in this sector, so it is important that these subjects are not overlooked by trusts when planning their future curriculum.

Will the announcement of investment in other public services impact on the delivery of education at all? Whilst the budget speech itself was silent on revenue funding for the education sector, there was a focus on the NHS. It must be good news that a significant investment has been announced for the NHS, with £3.4 Billion for the technological and digital transformation, thereby funding the NHS productivity plan in full. Trusts should engage with their local health boards to capitalise on the resulting efficiencies in the NHS to support the delivery of health-related services within the education system e.g. mental health support.

The Chancellor also confirmed an additional £500 million of new funding for councils to support the provision of adult and children’s social care, announced on 24 January 2024. Again, this should have a positive impact on the work currently undertaken by schools where it overlaps with social care teams.

There was also specific mention of schools in the supporting documentation relating to the £75 Million committed to the Violence Reduction Unit model, which will enable schools to work with health boards and police leaders to coordinate a joint strategy to tackle serious violence among young people.

As part of the levelling up investment, Hunt announced a funding package of £5 Million to support local village halls to remain at the heart of their communities. Trusts must undertake to work with other public services to ensure the impact of this funding is maximised to help families and pupils in their local communities.

Regarding childcare provision, Hunt expanded on the Spring Budget 2023 expansion to 30 hours a week of free childcare for 38 weeks a year, for children aged nine months to three years, to eligible parents. He announced the first stage of this offer is being rolled out in April 2024, when eligible working parents of two year olds will be entitled to 15 hours of childcare a week. He also plans to end the unfairness for single earner families by April 2026.

For childcare providers, there was confirmation that the hourly rate providers are paid to deliver the free hours for children aged 9 months to 4 years will increase in line with the metric used at Spring Budget 2023 for the next two years. This will give childcare providers the confidence to expand and will assist Trusts with their budgeting process.

So in summary, no major funding announcements for schools, but a lot of opportunities that Trusts can explore with other public sector services both to improve and expand some of the activities that schools are now undertaking. Plus some guidance over setting budget assumptions for overheads and early years.