£3bn school efficiency savings 'a threat to education standards'

Schools in England face an 8% real terms reduction in funding per pupil by 2019-20 because of cost pressures and there could be "significant risks" in making the necessary spending cuts, the National Audit Office (NAO) has warned.

Mainstream schools need to find savings of £3 billion by 2019-20, which the Department for Education (DfE) has said can be achieved while maintaining high standards.

But the NAO stressed the need to closely monitor the process, saying it was "uncertain" how schools would react to the budget squeeze and they could make choices which "put educational outcomes at risk".

The DfE expects that schools will need to make efficiency savings through better procurement , saving £1.3 billion, and by using their staff more efficiently, saving £1.7 billion.

The NAO said: "The department believes that schools can finance high standards by making savings and operating more efficiently. However, it has not yet completed its work to develop tools and advice to help schools secure crucial procurement and workforce savings.

"It is clearly reasonable for the department to look to schools to make efficiencies, but it is important to understand the implications of this method of doing so.

"The definite part of the department's approach is that real-terms funding per pupil will drop over the coming years; the uncertain part is how schools are able to respond based on their particular circumstances."

The watchdog added: "Until more progress is made, we cannot conclude that the department's approach to managing the risks to schools' financial sustainability is effective and providing value for money."

The department's schools budget is protected in real terms but does not provide for funding per pupil to increase in line with inflation.

The NAO report said the DfE should move faster to set out how it envisages achieving the £3 billion of savings by 2019-20 and give schools information and support to do so.

It added that officials should work with schools to gather evidence to assure MPs that spending power can be reduced at the same time as education outcomes are improved.

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

"The department 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 department judges feasible or could make spending choices that put educational outcomes at risk.

"The department, 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 NAO analysis indicates that while the financial position of primary schools has been relatively stable, there are signs of financial challenges in secondary schools.

The proportion of local authority maintained secondary schools spending more than their income increased from 34% in 2010-11 to 59% in 2014-15.

For secondary academies, the proportion spending more than their income rose from 39% in 2012/13 to 61% in 2014/15.

A DfE spokesman said: "We want schools to have the resources they need, and through our careful management of the economy we have been able to protect the core schools budget in real terms. That means that in 2016-17 schools will have more funding than ever before for children's education, totalling over £40 billion.

"We are introducing a national fair funding formula so schools are funded according to their pupils' needs, rather than by their postcode. This will give headteachers certainty over their future budgets, helping them make long-term plans and secure further efficiencies.

"We recognise the increasing cost pressures schools are facing and will continue to provide advice and support to help them use their funding in cost effective ways, and improve the way they buy goods and services, so? they get the best possible value for their pupils."

But education unions said the report showed that school budgets were being pushed too far.

Adrian Prandle, from the Association of Teachers and Lecturers, said: "Parents, pupils and politicians of all colours will be shocked to hear the Department for Education is still in special measures for its approach to public money.

"Taxpayers as well as teachers are being let down when there is not effective management of the risks to schools' financial stability nor value for money.

"The Government's core responsibilities to young people and parents are to provide enough school places for every child, and to provide enough highly qualified teachers to teach them. These fundamentals are at great risk when six in 10 secondary schools - whether an academy or not - need to spend more than the funding the Government gives them."

Russell Hobby, general secretary of school leaders' union NAHT said "budgets are being pushed beyond breaking point".

He added: "Whilst school business managers are very adept at managing tight budgets, it is clear that schools cannot make these savings without reducing their biggest cost, which is staffing. To do this puts the quality of education at risk."