The next few years will be testing times for school finances. A recent Institute for Fiscal Studies report stated1:
“Going forwards, we estimate that public spending on education in the UK will fall by 3.5% per year in real terms between 2010–11 and 2014–15. This would represent the largest cut in education spending over any four-year period since at least the 1950s.”
In 2004 Tony Blair announced his ‘Building Schools for the Future’ initiative, an ambitious £55bln programme to refurbish or rebuild every secondary school in the UK. In July 2010 it was disbanded by a Conservative government and replaced by the ‘Priority School Building Programme’ and a budget slashed to £2bln. In April 2011 state schools began a three-year budget freeze – in 2013 school staff will end their 2 year pay freeze and receive small pay rises. Staff costs account for the bulk of school expenditure (60% teaching staff/20% support staff/80% total) so the effect of these will be magnified. The Key, an online support service for senior staff, ran a poll of 667 state school head teachers which discovered that 49% of secondary schools and 33% of primary schools used buildings they regarded as not fit for purpose.
Unwelcome as the above might be, UK ‘per pupil’ spend is above the OECD average and the government is keen to see schools eke out their budgets even further. An obvious first step is to identify and correct areas of overspend. Adopting the maxim “you can’t manage what you can’t measure”, state schools must submit annual CFR (Consistent Financial Return) reports covering ‘per pupil’ spends (Academies are exempt). Intended to facilitate inter-school benchmarking, the 2010-2011 data shows national median values of:
The DoE guide to increasing efficiency in schools states the following:
“Procurement is a particularly important area for making efficiency savings in schools. Indeed, the Spending Review announcement said that schools could save as much as £1bn through smarter procurement and back office spending. Although schools spend most of their money on education staff, they collectively spend approximately £9.2bn on other areas. This covers a number of expenditure categories including learning resources, catering, back office/administration and energy.
There are four important reasons for schools to focus on reducing energy use. Energy is often one of the largest non-staff costs in a school. The average cost per school is £27,000, although secondary schools are likely to have bills of over £80,000. Schools are using more energy and have been growing their consumption for the last twenty years. English schools’ expenditure on energy doubled between 2004 and 2009 and costs are set to rise further”.
It is estimated that a good School Business Manager can save 20%-33% of a head teacher’s time. While only 30% of primary schools employ a bursar or SBM, 90% of secondary schools do. This serves to emphasise the increasing financial complexity of modern education, particularly in the Academy sector. As more schools convert, Local Authorities will even further reduce the provision of centralised advice. Many schools will struggle to commercialise without external help. Truly impartial, independent advice at a reasonable cost is rare, hence Auditel continues to expand within this sector.
1 ‘Trends in education and schools spending’, IFS Briefing Note BN121, Haroon Chowdry/Luke Sibieta