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Long-term and short-term trends in education spending in Scotland: who’s right?

June 30, 2017

There was some debate at First Minister’s Questions this week about trends in school spending.  This post looks at the claims made (labelled below for ease of reference).

In brief, the increase claimed by the FM for last year relies on ignoring inflation (and rising pupil numbers). Her claim of a real terms budgeted increase for the year just started depends on including in the calculation the new additional activity required under the terms of the Pupil Equity Fund: like-for-like spending will see a real terms fall.

The Labour leader’s claim of a fall in spending of 7% since 2010 if anything appears to slightly understate the position.  The claim of £1.23 billion fall needs more definition to be able to make sense of.

What was said

According to the First Minister:

I think that I am correct in saying that the outturn figures for local government spending will show that spending on education has gone up (A).

 Data published on 27 June shows that councils are planning to spend £144 million more on education this year than they planned to spend last year—that is 3 per cent in cash terms and 1.3 per cent in real terms (B). Of course, that includes the planned spend on the pupil equity fund of £120 million that I spoke about.

According to Kezia Dugdale:

Her own Government’s figures show that, this year, spending on education is going down again in real terms (C).

The SNP has cut spending by hundreds of pounds on every single pupil, and it has cut spending on each secondary school pupil by more than £1,000. That is a 7 per cent cut by this SNP Government since 2010 (D).

I have come to the chamber time and time again to tell the First Minister that her Government has taken £1 billion from our schools. I was wrong. New figures show us that it is at least £230 million more than that—£1.23 billion has been taken out of schools on the SNP’s watch (E).
Sources

 

The First Minister’s comments are based on this news release, which draws on financial information routinely collected from councils, usually issued at this time of year as only a statistical news release. The decision this year to have an accompanying ministerial quote is unusual and therefore worth noting: it has been used as a hook to publicise the SG’s planned school reforms. The year on year change in education spending was actually slightly better last year, when there was no ministerial comment.

The first substantive point in this year’s statistical news release is that “Scotland’s local authorities’ provisional outturn total net revenue expenditure is £11.875 billion. This is a decrease of £0.119 billion (-1.0%) compared with 2015-16.”  I don’t think this was reported anywhere. The highlighting of the education number appears to have distracted from the wider picture on local government finance.

Kezia Dugdale’s figures come mainly from research from SPICe, which doesn’t appear to have been published, but more detail has been released to the press, as reported by The Herald.  Some of the  Labout numbers can however be checked using the same data series as  was drawn on by the FM.

A

“Outturn” – what councils actually spent on education – rose between 2015-16 and 2016-17. The increase was £86m, or 1.76% in cash terms.  The Treasury GDP deflator for year on year change between 2015-16 and the FY2016-17 was 1.98%, implying that the cash increase last year was a little below inflation. Pupil numbers in publicly-funded schools rose by 0.6%.

Taking all these figures together the implication is that cash spending on education rose in 2016-17, but that spending per pupil in real terms fell by 0.8%. So claim A is correct, but less impressive than it sounds.

B

Planned spend is what councils budget to spend at the start of the year. The press release states that education budgets for 2017-18 are “£4.970 billion, an increase of £0.144 billion (+3.0%) from that budgeted in 2016-17”. The FM’s analysis of the change as 1.3% in real terms is correct: the Treasury inflation estimate for the year ahead is 1.63%. Compared to a 2.89% cash increase (the change in more detail) that gives 1.26% in real terms.

A further 0.6% rise in pupils numbers is projected. Real terms funding per pupil is therefore due to rise by 0.7%.

However, as the FM notes, the Pupil Equity Fund accounts for almost the whole rise (£120m out of £144m). This matters, because although the PEF is undoubtedly money for schools, it comes with clear guidance on its use: it is intended for new activity. As the SG’s operational guidance puts it (emphasis added by me):

The Pupil Equity Funding must enable schools to deliver activities, interventions or
resources which are clearly additional to those which were already planned

So the like-for-like change in budgeted spend – what schools can spend on what they were already doing – is low: just £24m. That is 0.5% in cash terms, or a real terms fall of 1.2%.  If I factor in the projected rise in pupils numbers, the real terms fall in like-for-like spending per pupil in the coming year is nearer 1.7%.

For claim B, a lot therefore hangs on the inclusion of the PEF in the year-on-year comparison.

C

Kezia Dugdale’s claim that education spending is going down this year therefore holds if looking at like-for-like, but not when including the money for additional PEF activity.  It holds for last year unambiguously for real-terms spending, though not for cash.

D

Labour hasn’t (as far as I can see) published from the Scottish Parliament Information Centre (SPICe) analysis on which Kezia Dugdale’s further figures are based.  However, the same outturn figures used above are published by the SG going back to 2008-09 and can be used to look at longer-term trends. Here’s what they look like, pulled together:

Untitled

So I get a real-terms fall in total spending over the period covered of nearer 8% rather than 7%. Taking the figures just from the high-point of 2009-10, as Labour seems likely to have done, gives me an 8.7% real terms fall.  It may be however that SPICe has picked up a nuance in the figures which affects the detailed calculation – the broad picture is similar.

I’ve included funding per pupil, as pupil numbers have increased slightly over the period: the percentage fall per pupil in real terms across the whole period above is 8.3%.

Labour have provided more detailed figures  to the press . The Herald  quotes a real terms fall per secondary pupil from £8,033 in 20101-11 to £6,892 in 2016-17 –  a 14% drop, at the same time as the exam system was being bumpily overhauled.  That might explain why secondary teachers have been particularly vocal in recent years about the pressure they feel under. The Herald reports that the funding per head in primary over the same period stayed steady in real terms, at £4,826.

E

All the figures above are for revenue (current) spending only. I make the reduction between 2010-11 and 2016-17 in revenue spending to be around £0.5 billion a year in real terms.  So I can’t make sense of the Labour figure of a £1.23 billion drop since 2010-11, unless

  • it includes capital, which these figures don’t cover, or
  • it is using the now-common device of adding up how much extra would have been spent over the whole period up to 2016-17, if the real terms figure in 2010-11 had been maintained. But in that case I get a cumulative “gap” figure closer to £2 billion.

I haven’t yet managed to find a more detailed explanation of this figure that’s available to the public, so I am at this point stuck.

 

Conclusion

Numbers will always get thrown around at FMQs and the FM is hardly the first politician to look for the most positive story. What matters more is that whatever they say in public, ministers understand in private what the reality is – and it is clearly of a non-trivial fall in education spending over the first part of the decade, a modest recovery in 2015, and then a continuing smaller underlying real terms fall, even still, on existing activities, as the graph below shows.

Education spending

It looks to me as though the Opposition could, if anything, have gone harder on the real terms fall in revenue spending, but there may be reasons for being more cautious than the figures above suggest.  It would however be easier to make sense of their claims if they showed more of their workings.

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