Schools in England have not faced the same financial pressures as many other parts of the public sector. Per-pupil spending has risen in real terms in most years since 2009/10, while the cap on pay increases for teachers has kept the wage bill down. However, new pressure to make efficiencies has emerged particularly over the past two years, as per-pupil spending has started to fall and schools have taken on new responsibilities.
There are some signs that an increase in workload is putting pressure on the workforce and that schools are finding it harder to recruit and retain enough teachers. But overall, schools have become more productive: there are more pupils per teacher, and pupil attainment has been on an upward trend – particularly at primary school level.
There are almost 17,000 state primary schools in England, and over 3,000 state secondary schools. Most secondary schools (72%) and just over a quarter of primary schools (27%) are ‘academies’ – state schools which operate independently. The rest are local authority ‘maintained’ schools, whose funding is channelled through local councils. As of January 2018, they educated 6.63 million (m) pupils aged 5–15 – 540,000 more than in 2010.*
* These figures do not include the 115,315 children in state special schools (which provide education to children with special educational needs), 16,730 children in pupil referral units (largely attended by students who have been excluded from mainstream schools or cannot attend mainstream schools for another reason) and 581,875 children in independent schools. They also do not include young people in 16–18 education, including school sixth forms.
Spending by schools has risen in real terms since 2009/10
In 2017/18 day-to-day spending by schools in England was £39.4 billion (bn), according to analysis by the Institute for Fiscal Studies. This follows a slight (3%) real-terms fall in spending since 2015/16, although spending last year was still higher in real terms than in 2009/10.
It is difficult to say exactly how much higher, because the Department for Education does not hold good-quality data on spending by academy schools before 2011/12. There were only 203 academy schools in 2010 (out of a total of 20,301 state-funded primary and secondary schools) so the difference between spending on non-academy schools (shown in Figure 2.7) and total schools spending may not be vast. But this data gap means that our 2009/10 and 2010/11 numbers underestimate overall spending to some extent – and therefore overstate the overall increase in spending that has occurred since 2010/11.
Between 2011/12 and 2017/18 – the period for which more consistent data is available – spending by schools rose by 4% in real terms. This would have been lower, were it not for the injection of an extra £1.3bn (over two years) into the schools budget in July 2017. This was in response to public concern about schools that were set to lose money because of a new formula for determining how the overall schools budget is distributed.
There are two areas of school spending which are not included in these numbers. The first is spending on school sixth forms – which has fallen much more over this period (by 24%, or £80, per pupil). We exclude this from our analysis because our focus is on core school activity up to the age of 16. But within an individual secondary school, a squeeze on sixth form funding will also have a wider impact, as resources such as staff and buildings are shared across the age groups.
The second area not included is spending by local authorities on services for schools, such as sessions with educational psychologists, and transport. This has also fallen sharply over this period (by 55% in real per-pupil terms, to £534 last year) and may be resulting in new financial pressures for schools, as they take on responsibility for services that were previously provided for them by local authorities.
Demand: the growth in primary pupil numbers is starting to feed through into secondary schools
The number of pupils in mainstream state primary and secondary schools was 9% higher in 2017/18 (6.630m) than in 2009/10 (6.095m), reflecting a small baby boom in the mid-2000s. Most of that increase has so far affected primary schools – the number of primary pupils was 17% higher in 2017/18 than in 2009/10. But it is now starting to feed into secondary schools: secondary pupil numbers are currently 1% lower than in 2009/10, but have been rising slowly since 2014/15 (from 2.732m to 2.837m).*
Throughout most of this period, this increase in pupil numbers was broadly matched by rising spending. However, since 2014/15 the growth in pupil numbers has outpaced spending growth, and per-pupil spending has fallen by around 4%, in both primary and secondary schools.
* These numbers do not include the over-16s in school sixth forms, as their funding is dealt with separately. Primary figures include secondary-school-age children in primary school; secondary figures include 5- to 10-year-olds in secondary school.
Input: teacher numbers have risen more slowly than pupil numbers...
The majority of schools’ spending – around 78% in 2016/17 – is on staff costs. Most of that – around 65% of total spend – goes on education staff (teachers, supply teachers, teaching assistants) with the rest going on administrative and premises staff. This picture is consistent across primary and secondary schools, academies and local authority schools – although secondary schools spend more on teachers, while primary schools spend more on teaching assistants.
The total number of teachers employed in schools has risen by 2% since 2010/11 (the earliest year for which we have comparable data). But the pattern at primary and secondary schools has been very different.
The number of primary teachers has risen broadly in line with pupil numbers and is now 13% higher than in 2010/11. However, in the past year, teacher numbers have fallen while pupil numbers have continued to rise, leading to a very slight increase in the pupil:teacher ratio (20.9 in 2017/18, up from 20.5 in 2011/12, the earliest year for which comparable data is available).
Teacher numbers have fallen in secondary schools. The number of teachers fell slightly less quickly than the number of pupils between 2010/11 and 2014/15. But since then, pupil numbers have started to rise, while teacher numbers have continued to fall. There are currently around the same number of secondary pupils in schools as there were in 2010/11, but almost 14,800 fewer secondary school teachers – a 7% decrease.
The number of hours the average teacher works has risen. Research from the National Foundation for Educational Research suggests that the number of hours worked annually by each teacher (including work during school holidays) has risen by 4% between 2009/10 and 2015/16.
The mixture of staff being deployed by schools – beyond classroom teachers – has also changed in recent years, particularly at primary school level. There was a 29% increase in the number of teaching assistants in primary schools between November 2011 and November 2017, and a 9% drop in numbers in secondary schools over the same period. If we knew exactly how these teaching assistants were being used – to provide targeted support to students with particular needs, or simply to stand in for more expensive teachers – we would be able to judge whether or not this represented an efficient use of resources. Without this information, we cannot interpret what these changes mean for schools.
The public sector pay cap has helped to limit the growth of spending on staff in schools – which has risen just 3% in real terms over this period, according to estimates published by the Department for Education. This is a slightly faster increase than teacher numbers – which may be explained by increases in other staff costs: in 2015/16 employer contributions to the teachers’ pension scheme rose from 14.1% to 16.4%, while national insurance contributions rose across the public sector in 2016/17.
... and there are signs of recruitment and retention problems
The vacancy rate in schools is low – particularly at primary level. In 2017/18 there were only 370 recorded vacancies in primary and nursery schools, and 1,470 temporarily filled posts – just 0.7% of the number of teachers. In secondary schools, the overall vacancy rate (including posts filled for less than a year) has more than doubled since 2010/11 – but it remains at only 1.1%.,* However, there are signs of problems with both recruitment and retention – particularly in secondary schools – which underpin that growing shortfall and could lead to greater problems later on.
The number of people training for a teaching qualification is falling: from 39,010 in 2009/10 to 32,710 in 2017/18. This has left trainee numbers short of government targets. The Department for Education produces an annual estimate for the number of postgraduate trainee teachers that need to be recruited onto training courses to meet future needs. That overall target has not been met since 2012/13.
In 2017/18 the overall number of trainee teachers recruited was 10% (2,952) short of the target. That overall number masks a higher, underlying shortfall, as it counts over-recruitment in some subjects as making up for under-recruitment in others. In total, 3,881 targeted trainee places were not filled in 2017/18.
This refl cts a shortfall in secondary school trainees.** There were just two secondary subjects in which the target was met in 2017/18: history and physical education. English fell 10% (251 trainees) short of its target; maths fell 21% (652 trainees) short; and computing fell 34% (248 trainees) short. The target for science subjects was missed by 676 trainees, with a particularly acute shortage (335 trainees, or 32%) in physics.
These figures do not tell us anything about the quality of new recruits coming into teaching – something that government has made concerted efforts to increase. In 2013/14 numeracy and literacy tests were introduced as a prerequisite for entering teacher training, lifting the bar for entry into the profession. New bursaries have been introduced to attract more high-achieving graduates in certain subjects, although the evidence base to suggest that this will positively affect recruitment is weak.
At the other end of the pipeline, teachers are leaving the profession at an increasing rate: the equivalent of 9.9% of the workforce (42,830 people) left between November 2016 and November 2017, up from 9.2% in the year up to November 2011. Up to 2016, the number of teachers leaving was consistently lower than the number entering the profession. In the year to November 2017, however, the number leaving was very slightly higher (by 400 teachers).
Since 2011, the proportion of leaving teachers who went ‘out of service’ (that is, who left the teaching profession but did not retire) has risen from 63% to 84%. The retention rate among the newest teachers has been falling. Every cohort of newly qualified teachers*** since 2010 has seen lower retention rates than the one before. For example, 73% of teachers who entered the profession in 2014/15 were still there three years later, compared with 77% who entered in 2010/11.
While these figures point to retention problems, it is worth noting that they represent an improvement on the Department for Education’s expectations: in 2016, the department estimated that around 48,000 teachers would leave the profession annually up to 2026/27.
* The published figures, taken from a snapshot in November, may underestimate the underlying vacancy rates. Contributors to a 2017 Education Select Committee inquiry into the school workforce reported that, by the time this snapshot is taken in November, headteachers may have found alternative ways to plug gaps, such as covering lessons with non-subject specialist teachers. See House of Commons Education Committee, Recruitment and Retention of Teachers: Fifth report of session 2016–17 (HC 199), The Stationery Office, 2017.
** In 2017/18, primary school trainees were over-recruited by 784, although the primary school target was missed between 2011/12 and 2014/15, and in 2016/17.
*** Specifically: teachers who gained their Qualified Teacher Status, took on a teaching post in the same year and was still in that post in November of that year.
Output: exam results have been improving, and schools have been doing more
Exam results (or ‘assessment’ results in the case of primary schools) are one of the best output measures for schools that we have, even though they do not capture everything that schools do. National standardised assessments take place at the end of primary school. At the end of secondary school, 16-year-olds sit GCSEs (General Certificates of Secondary Education).
Here we can see improvements, particularly at primary school level. The proportion of children achieving at least ‘level 4’ (the national expected standard) in reading, writing and maths at the end of primary school* rose from 64% in 2009/10 to 80% in 2014/15. Between 2009/10 and 2012/13, the proportion of pupils achieving grades A* to C in English and maths GCSEs rose from 56% to 61%, and then remained at 59% between 2013/14 and 2015/16.** The first assessments using the new 0–9 grading scheme for GCSEs show 64% of pupils reaching the expected standard of ‘4’.
However, there are discontinuities in the data, which make it difficult to form an overall judgement about what has happened to pupil attainment over the past eight years. Before 2013/14, resit grades were included in the headline GCSE figures; since then, only the grades from the first time each exam is taken have been counted. More recently, there have been major changes to assessment practices at primary (in 2015/16) and secondary levels (starting in 2016/17), which include totally new grading schemes.
The Organisation for Economic Co-operation and Development’s PISA (Programme for International Student Assessment) scores – an international test of pupil attainment conducted in 72 countries,*** which runs every three years – may provide a more consistent picture of trends in pupil attainment. They suggest that school quality has remained broadly constant in England. In the PISA survey, between 2009 and 2015, science scores for England fell from 515 to 512, maths remained at 493 and reading rose from 495 to 500. This is a notable level of consistency compared with other countries in the survey.
These figures suggest that the quality of schools in performing their core activity – teaching children – has at least been maintained, and has probably improved. But schools undertake other activities beyond teaching children the skills and knowledge needed to pass tests and exams – such as looking after their wellbeing or providing extra-curricular activities. A range of broader changes in education policy and spending since 2010 are likely to have increased the amount of work that schools are having to do, although they are harder to observe in the data.
For example, 2012 saw the introduction of a new statutory requirement on schools to provide careers advice. A new national curriculum was announced in 2014. And new GCSE specifications began to be introduced in 2015.**** Changes such as these may account for teachers’ increasing working hours, despite only small increases in pupil:teacher ratios.
The sharp fall in local authority spending on services for schools – such as educational psychology, or extra support for students with special educational needs – also means that schools are now likely to be paying for some services out of their own budgets that were previously provided for them (or that those services are no longer being made available). This will have increased financial pressures on schools – although we cannot clearly assess how deep or widespread those pressures are.
Teachers and other school staff spend time dealing with pupils’ pastoral needs: from meeting parents, to visiting pupils’ homes, to contacting and co-ordinating with other agencies involved in serving young people. Between 2009/10 and 2016/17 the permanent exclusion rate in secondary schools rose from 0.15% to 0.20%. Meanwhile, the number of referrals from schools to children’s social care rose by 34% between 2013/14 and 2016/17. These trends could point to a growing workload for schools in dealing with pastoral issues.
Ofsted inspection results suggest that the quality of schools is getting better overall. Between August 2010 and March 2018 the proportion of schools rated as ‘outstanding’ or ‘good’ at their last inspection rose from 64% to 76% at secondary school level, and from 67% to 87% at primary school level. There may be some lag to these figures, however, as schools can go several years between inspections, during which time their performance could change.
* More precisely, at the end of Key Stage 2.
** As a measure of the quality of school output, raw attainment measures are inferior to contextual metrics, which identify the progress that pupils have made, as they do not account for underlying differences between different cohorts of students. The Government has recently introduced a complex new progress metric for Key Stage 4 – ‘Progress 8’. But this is a relative metric and so cannot be used to judge overall change over time – only the difference between schools. A national number for absolute progress has not been published since 2010.
*** Or, in a few cases, parts of countries.
**** This disruption should be temporary: Secretary of State for Education, Damian Hinds, has pledged no further curriculum changes in this Parliament (that is, up to 2022, assuming there is no early election). See Hinds, D, ‘There are no great schools without great teachers’, speech at the Association of School and College Leaders’ conference, 10 March 2018, retrieved 19 September 2018, www.gov.uk/government/speeches/damian-hinds-there-are-no-great-schools-without-great-teachers
Have schools become more efficient and can that be maintained?
Spending on schools has risen in real terms since 2009/10, broadly matching the increase in pupil numbers up to 2015/16. As a result, schools were not under the same pressure as other services covered in this report to operate more efficiently across most of this period. The cap on public sector pay increases has also helped to control costs over this period. However, per-pupil spending has fallen by 4% since 2015/16, meaning that the pressure to find more efficient ways of working has increased over the past couple of years.
There are clear signs of some productivity improvements at both primary and secondary levels. Pupil:teacher ratios have risen slightly in primary schools, and more notably in secondary schools, suggesting that the average teacher is doing more. At the same time, the evidence we have suggests that the quality of schools has been rising: pupil attainment (where we have consistent data) has been on an upward trend across this period.
At the same time, there is evidence that schools have taken on more work in areas which we do not directly observe in the data: such as the support services for students with special educational needs that would previously have been paid for by local authorities, and creating new resources to fit the new curricula. If we were able to take into account the rise in those activities, these productivity improvements would appear even greater.
However, the workforce data raises questions about the sustainability of these increases in school efficiency. Recruitment targets are being missed, and growing numbers of working-age teachers are choosing to leave the profession.
In July, the Government announced the end of the 1% pay cap for teachers, which may have some impact on teacher morale, recruitment and retention. From 2018/19, teachers on the lower pay bands (who make up around 40% of teachers) will receive a 3.5% pay increase, with smaller increases of between 1.5% and 2% for more senior colleagues. This should not feed through into significant extra net costs for individual schools as the Department for Education has instituted a teachers’ pay grant, which is designed to make up the difference in schools’ budgets between these newly announced pay increases and the 1% pay rise they were previously expecting to implement.
However, for the most part, the evidence does not point to pay as the key cause of – or solution to – recruitment and retention issues. Research from the National Foundation for Educational Research has found that people leaving teaching are not moving for higher pay – indeed, it found an average 10% pay cut. It also found that 79% of teachers were satisfied with their pay.
An exception are science, technology and maths teachers, whose qualifications allow them to command much higher salaries elsewhere. Analysis from the Gatsby Foundation and Education Policy Institute suggests that further financial incentives may well be a necessary part of retaining an effective workforce in these shortage subjects.
But overall it is issues around working life – workload and flexibility – that emerge as the key sticking points. Research by the National Foundation for Educational Research suggests that teachers work an average of 45 hours a week over the year (including an estimate of hours worked over the holidays) – higher than both police officers (44 hours) and nurses (38 hours). A National Audit Office survey of school leaders found that workload was most often considered the key barrier to retaining teachers (67% of respondents). Challenges around part-time working in schools also appear to be a factor: a 2017 study from the National Foundation for Educational Research found a 20 percentage-point increase in part-time working among people who left teaching for other jobs.
This suggests that initiatives to change working practices would be needed if schools wanted to further limit staff costs – which make up the vast majority of their spending – without exacerbating recruitment and retention issues.
Have efficiencies been enough to meet demand?
Every child has a statutory right to a place at school. Unless there is major legislative change, or a large increase in the popularity of independent education, school output – in quantity, if not quality – will always rise in line with demand.* The quality of schools’ work can be suppressed, but the quantity will closely mirror the number of children in the population. As a result, and unlike the other services examined in this report, we are highly unlikely to see the rationing or queuing of mainstream schooling in response to service pressures.
However, schools can run up deficits if they find themselves unable to bridge the gap between their income and their costs through efficiencies. There is evidence that this has been happening. Research by the Education Policy Institute found that 61% of local-authority-maintained primary schools and 68% of local-authority-maintained secondary schools (that is, not academies) spent more than their income in 2016/17, compared with 33% and 30% respectively in 2010/11. During the same period, the average secondary school deficit rose from £293,000 to £375,000. The National Audit Office has reported that deficits in secondary academies also increased between 2012/13 and 2014/15, with the proportion of secondary academies spending more than their income rising from 40% to 60%.
These figures pose a challenge for government. Schools have not had the same pressure to find efficiencies as the other services examined in this report, which may suggest that there are still some to be found. But that does not mean that schools will easily be able to make them – as demonstrated by the failure to make the planned £1bn of savings on non-staff spending in the 2010–15 Parliament. Schools may lack the skills to manage their finances diff rently, for example, or be constrained from changing the way they deploy staff and students by the size and structure of their buildings. According to the National Audit Office, the Department for Education’s estimates of efficiencies that schools could theoretically achieve have not been matched with a thorough understanding of how, and at what pace, they could be realised in practice. The figures for school deficits in recent years suggest that schools are struggling to use their financial resources in the way that the department expects.
* The past eight years have seen no discernible flight of children into independent schools: since 2009/10, the number of pupils at independent schools has risen 1%. Department for Education, Schools, Pupils and their Characteristics, GOV.UK, 2018, retrieved 19 September 2018, www.gov.uk/government/statistics/schools-pupils-and-their-characteristics-january-2018, Table 2a