Like a yearly display of economic gymnastics, January’s Annual Report on Education Spending from the Institute of Fiscal Studies has become a familiar fixture in the policy calendar. The seventh in the series, covering 2024/25, is full of the kind of concise, factual analysis we have come to expect.
The report shows that this year there are clear winners. Spending on Early Years and Childcare is set to double by 2027/28 – a huge boost to a sector which does so much to improve the prospects for children from disadvantaged backgrounds. Spending on Schools is also rising across the board, including an unprecedented rise in special needs (SEND) funding; although there is a background anxiety that the rising cost of teachers’ pay awards will outstrip the rise in funding.
Which leaves Adult Education, FE, and HE as the losers – a relatively new experience for an HE sector which became used to the influx in funding caused by the tripling of the student loan fee cap a decade ago, but a depressingly familiar one for FE and Adult Education. The report notes that HE up-front real-terms funding is now set to fall back to the levels of the early 1990s, while FE funding remains 11% lower than 2010, sixth-form funding 23% lower, and adult education funding 40% lower. Universities and colleges face an uncertain financial future, with institutional deficits rising on all sides, while the adult education budgets now set to be devolved to local authorities are rather like the shrinkflating products we see on supermarket shelves – at the same price but delivering less.
As in previous years, there is no doubt the IfS report will greatly assist informed debate about education funding policies and priorities. But let’s for a moment helicopter above the fog of fiscal conflict that will shroud the forthcoming three-year Spending Review, and consider what the overall shape of education spending should be if we are to achieve a world-class lifelong education and skills system. What vision for the future should we be pursuing? There is of course no easy answer to this question, but the LEI believes there are clear guiding principles we should follow.
Firstly, we should make sure there is always sufficient funding available to support good quality universal education for all up to the age of eighteen. The twin challenge here will be to find a better way of addressing the surge in young people presenting with special needs and mental health issues, and to ensure better educational outcomes for the 60% of school leavers who don’t go to university.
Secondly, we should provide some level of public subsidy to support all citizens at all stages of lifelong learning, from childhood through to old age. The sharp decline in adult education spending over the past fifteen years needs to be pushed back.
Thirdly, we should always try to reduce social inequalities through the design and distribution of educational spending. While the current system attempts to do this in a variety of ways, social disparities in educational outcomes remain stubbornly entrenched, and in the words of Alun Francis, Chair of the Social Mobility Commission (and former Principal of an LEI member college), “policymakers must think differently”.
Fourthly, there needs to be a fair sharing of costs between the individual, the employer, and the state, particularly in post-18 education and training. This should reflect the fact that all three benefit from investment in education: the individual through enhanced career and earning prospects, the employer through having access to a healthy reservoir of skilled and talented workers, and the government through developing productive citizens who generate economic growth and pay taxes.
There is already broad public consensus around these four principles – universal education, lifelong learning, fair access, and cost-sharing. Can we develop a consensus around what they should mean for the design and distribution of public funding across the education system?
Over the coming months, the LEI will be asking a range of experts and practitioners to share their thoughts on how education spending – especially post-16 - should evolve in the future.
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