PRESS RELEASE : Department for Education spending review 2010

The press release issued by the Department for Education on 20 October 2010.

The schools budget will increase in real terms in each year of the Spending Review period. But economies in other areas mean that there will be a total real reduction in Departmental resource spending of 3% by 2014-15. Following on from the decision to halt Building Schools for the Future (BSF), capital spending will be reduced by 60% in real terms by 2014-15. The average annual capital budget over the period will be higher than the average annual capital budget in the 1997-98 to 2004-05 period.

This will be supported through the following measures:

• We will increase funding for the schools budget by £3.6 billion in cash terms by the end of the Spending Review period – this is a 0.1% increase in real terms in each year. Along with greater freedoms and flexibility for teachers and schools, this will ensure schools can meet the demographic pressures they face, and deliver a £2.5 billion pupil premium. This will support the educational development of disadvantaged pupils, and provide incentives for good schools to take on pupils from poorer backgrounds.
• Because the Government recognises that a good early years education is critical to later achievement, we will be maintaining 15 hours of free childcare a week for all 3 and 4 year olds, and extending it to all disadvantaged 2 year olds. It’s also why Sure Start will be protected in cash terms including investment in Sure Start health visitors.

There will be a 60% reduction in real terms in capital spending over the Spending Review period. Following the decision to end the wasteful BSF programme there will be enough funding to meet demographic pressures and to address maintenance needs. The independent review of education capital will ensure that the Department for Education’s capital budget is allocated in the most cost-effective way and targeted where there is most need. Over the Spending Review period there will be a total of £15.8 billion of capital spending. The average annual capital budget will be higher than the average annual capital budget in the 1997-98 to 2004-05 period.

We have had to prioritise in order to ensure that funding is maintained on frontline services that are critical to helping us build a world-class education system, and we are determined to protect the most vulnerable children and young people in society. We are therefore streamlining our funding grants to generate better value for money but ensuring that targeted support remains available to those who need it most. For instance, we are:

• Ending Education Maintenance Allowances, which have deadweight costs of around 90%, saving £0.5 billion, and replacing them with targeted support for those who face genuine financial barriers to participation;
• As we move towards full participation by 2015 we will secure reduction in individual unit costs;
• Within the schools budget, procurement and back office savings will allow at least £1.0 billion to be invested directly on frontline teaching while the public sector pay freeze will free up an additional £1.1 billion;
• Ending and rationalising a range of centrally directed programmes and instead streamlining funding for the most vulnerable children and families in a new Early Intervention Grant to ensure local authorities have greater flexibility.
• To ensure funds are rightly prioritised on frontline education and children’s services, we are committed to making a 33% reduction in real terms by 2014-15 from the Department’s administrative budget. This will be achieved by closing NDPBs, reducing headcount, reducing the costs of the DfE estate and cutting non-essential expenditure.

In addition, the Department for Education will be adopting ideas suggested through the Spending Challenge process to improve efficiency across Whitehall. These include selling surplus Government equipment through an online e-auction site, and working with the Efficiency and Reform Group to cut costs by centralising the Department’s procurement of commonly used goods and services.

The Department has a number of next steps in order to set out how the school system and children’s services will be reformed and how the education spending settlement will be spent. These include a Schools’ White Paper, a Special Educational Needs and Disability Green paper, further announcements about allocating voluntary sector grants, and confirmation of LA allocations for schools and early years provision. We will announce further programmes and further bureaucracy we intend to end in the next three months.

Secretary of State, Michael Gove said:

The size of the deficit means we have had to make tough decisions. There will be many savings across the Department but the Coalition Government is committed to improving education for all. That’s why we’re protecting the frontline, handing power to teachers and introducing a pupil premium for the poorest.