Education spending: what are the parties planning to protect? IFS research observation

The Institute for Fiscal Studies (IFS) is publishing an Observation article today by IFS researcher Luke Sibieta on the Liberal Democrats’ commitment in their manifesto to protect education spending per pupil in England for 2–19 year-olds in real terms.

Today, the Liberal Democrats launch their manifesto and have highlighted a commitment to protect education spending per pupil in England for 2-19 year olds in real-terms. Labour and the Conservatives have also announced protections for education spending in England. What are the implications of these different protections for how schools and education spending will evolve over the next parliament?

As we set out in our recent Election Briefing Note, the Conservatives have committed to protecting cash spending per 5–16 year-old pupil between 2015–16 and 2019–20. Since pupil numbers are forecast to grow by 7.0% between 2015–16 and 2019–20, that implies a 7% cash increase in spending on this group. Their manifesto also states that their commitments allow for a real-terms protection in schools spending over the next parliament.

Labour have committed to increasing the entire education budget in England at least in line with inflation. If both parties just meet these commitments and Labour increase all areas of education spending by equal percentage amounts, then these two pledges both imply a real-terms freeze in schools spending. However, Labour would additionally protect non-schools spending in real terms (mostly the early years budget and 16–19 education spending), which the Conservatives have not pledged to protect.

Today, the Liberal Democrats have announced that they would protect the 2–19 education budget in real terms up until 2017–18 (which would mean increasing nominal spending at least in line with inflation). After 2018–19, they would increase it in line with economic growth. Together, this makes for a 12.8% nominal increase in 2–19 education spending between 2015–16 and 2019–20, or a 4.8% real-terms increase. However, most of this increase is back loaded to after 2017–18.

How does this compare with the protections announced by the Conservatives and Labour?

Overall, Labour and the Liberal Democrats are committed to protecting a larger part of education spending than are the Conservatives. In addition, the Liberal Democrats are committed to a faster increase in spending than the Conservatives in the period after 2017–18.

Compared with Labour, the Liberal Democrats have only committed to protecting the 2–19 education budget (which they say is currently £49.2bn). Labour have instead committed to protecting the entire Department for Education resource budget (which was £54.2bn in 2014–15 in 2015–16 prices). However, Labour have committed to protecting the education budget in real-terms, whilst the Liberal Democrat commitment currently implies increasing 2–19 education spending by 4.8% in real terms.

Therefore, the Liberal Democrats are protecting a slightly smaller definition of education spending than Labour, but have committed to increasing this by more.

The Liberal Democrats say that their commitment allows them to protect 2–19 education spending per pupil in real terms. This is true as their commitment implies a 4.8% real-terms increase in 2–19 education spending between 2015–16 and 2019–20 and the number of pupils aged between 2 and 19 is expected to grow by at a similar rate. However, it is worth noting that the number of school-age pupils (ages 5–16) is expected to grow by more – by 7% between January 2016 and January 2020. If the Liberal Democrats increase all areas of education spending in equal percentage amounts, then their commitment still implies a 2.1% real-terms fall in current school spending per pupil. This though is still more generous than what is implied by the Labour and Conservative commitments, which could both imply a 6.6% real-terms fall in current school spending per pupil between 2015–16 and 2019–20.

The Liberal Democrats (and Labour) could choose to increase schools spending by more than other areas of education spending, which might be the more natural thing to do if school-age pupils are expected to grow by the most.

 

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