The Coalition has cut education not welfare

Henry Stewart's picture
 2
If I was to ask whether the Coalition government has cut more from education or welfare, most people would assume it was welfare. Education is, with health and overseas aid, one of the three "protected" budgets, whereas the Conservatives boast of having saved £21 billion of welfare spend.

However government statistics show otherwise:


  • ** Spending on welfare (even excluding pensioner benefits) was, in 2014/15, £1.7 billion more in real terms than the level it inherited in 2010/11 (using 2014/15 prices)

  • ** Education spending, again in real terms, fell from £93.4 billion in 2010/11 to £86.5 billion in 2012/13, a cut of £6.9 billion and in 2014/15 was still an estimated £2 billion below the level the Coalition inherited in 2010/11.



The £21 billion: a "saving" but not a reduction



This may come as a surprise. David Cameron has repeatedly justified the proposed £12 billion benefit cut on the basis that the Coalition achieved savings of £21 billion on the welfare budget. This is based on calculations from the Office for Budget Responsibility (OBR) which does indeed calculate savings from changes to welfare at a projected £21 billion figure for 2015/16.

The Institute for Fiscal Studies (IFS) has studied the claim and comes to a slightly lower figure, finding "changes to the benefit system that mean spending in 2015–16 will be £16.7 billion (7%) lower than it would otherwise have been". However note the wording. It is a saving compared to what "it would otherwise have been". It is not an actual reduction. The IFS goes on to note that "real terms benefit spending, however, is forecast to be almost exactly the same in 2015–16 as it was in 2010–11".

So the benefit changes have reduced spending from what it might have been but have not reduced the actual spending level. It is hard, therefore, to see how this "saving" - which did not lead to a reduction in spending - can be used to justify a claim of an actual reduction of £12 billion in the future welfare spend.

Education: billions of pounds of spending reduction



Only the current school funding for 5 to 16 year olds is protected and this does appear to have risen in line with inflation. However, according to a House of Commons report published last december, overall education spending has fallen significantly.



Cameron's promise was only to maintain current per-pupil funding, and only for 5 to 16 year olds. Substantial cuts could be made, and were made, in capital funding, in the post-16 budget and university funding. While none of this is news, the scale of it is considerable:



The total education spend fell from £93.4 billion in 2010/11 to £86.5 billion in 2012/13, a fall of £6.9 billion in just two years.

Education Cuts to Come: At least £13.3 billion



The Conservatives have promised to increase per-pupil funding in cash terms, but not to increase it in line with inflation. as I've noted elsewhere this will mean - on current Bank of England inflation forecasts - a real-term cut in funding of £4.4 billion by 2020 (before taking account of NI and pensions changes). If we add up the savings across the five years of the coalition, the total is a "saving" or cut of £13.3 billion. This is purely the effective cut in the protected schools budget. Greater reductions can be expected in pre-school, post-16 and university funding. This makes it likely that the next government, if Conservative, would cut a similar amount, in the region of 20 billion, to that of the current government.

Sadly the effect of the Labour commitment, to maintain the schools budget in real terms, but not to increase it in line with pupil numbers, amounts to a very similar level of cuts. However Labour have promised to protect pre-school and post-16 funding, which are not included in the Conservative promise.

Date Notes



The calculation of increased welfare spending is taken from the government's Government Expenditure & Caseload tables. The £1.7 billion increase is based on the figures for GB benefits and tax credits for "people of working age and children" in real terms using 2014/15 prices (sheet "GB Benefits and Tax Credits", row 12). After removing Council Tax Benefit, which was in 2013/14 transferred to the local government budget, the total spend rose from £91.9 billion in 2010/11 to £93.6 billion in 2014/15. My thanks to Tony Travers for clarifying the change in Council Tax benefit funding.

The House of Commons document does not include figures for 2014/15. To estimate the education spend for 2014/15, I have used the AoC forecast increase of 3.5% for the schools budget (from £51.7 billion in 13/14 to £53.5 billion in 14/15). If anything the increase in the total education budget is likely to be less, as the £53.5 billion includes the protected areas. If the 3.5% is applied to the entire education budget, this produces a figure of £91.4 billion for 2013/14, which is still £2 billion below the level of 2010/11.

 
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Janet Downs's picture
Wed, 22/04/2015 - 07:32

Henry - Full Fact looked at the education spending commitments made by the Tories, Labour and LibDems. It found the IFS said:

'... combined with plans for 2015-16, each of these commitments could imply real-terms cuts to school spending per head of 7% between 2015-16 and 2019-20. That increases to 9% if you account for increases to National Insurance and pension contributions, and to 12% if you account for the Office for Budget Responsibility’s assumptions for growth in public sector earnings.'

Full Fact also pointed out that spending for 16-19 education had been cut during the Coalition. And yet the participation age rose and students are supposed to carry on studying Maths and English (and retake GCSEs in these subjects until students get a C).
At the same time the Coalition bunged millions to the UTC programme (14-19) - two UTCs are already set to close after only two years.

The Full Fact summary is at the bottom of their article about SATs here.

… with inflation. But this was only true of 5-16 education, with funding for 16-18 education being cut back, leading to those secondary schools with an in-house sixth form having to redirect funding from …


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