In three ways:

  • Increasing inequality
  • Cuts in government funding for school budgets (the DSG)
  • Cuts in the Education Services Grant

Increasing inequality

The austerity budget will increase poverty and widen inequality in society, which will increase social inequality among children and young people. One consequence will be schools in poorer areas more likely to fail to meet performance targets and fail Ofsted inspections.  In Birmingham overall average standards are high and the equality gap is narrowing in primary schools, but there are currently 8 schools in Special Measures and 61 Requiring Improvement, and last year the secondary equality gap widened by 2% (see TES article on Birmingham 13 November).

Cuts in government funding for school budgets (the DSG)

Schools’ per-pupil funding for five- to 16-year-olds has been frozen in cash terms for the rest of the Parliament, although many schools are facing a real-terms squeeze because of the impact of rising costs such as extra pay, pensions and National Insurance contributions. Figures published by the Institute for Fiscal Studies last month showed school spending per pupil was expected to fall by about 8 per cent in real terms between 2014-15 and 2019-20.

Cuts in the Education Services Grant

The ESG will be slashed by £600 million, on top of the £200 million cut the DfE made earlier this year. That meant a per-pupil cut from £140 to £87. Now academies will lose their share of the ESG altogether. (It is handed to academies to cover the cost of services that would otherwise be provided by local authorities.) The cut will mean a secondary school with 1000 pupils will receive £65,000 a year less. Local authorities will lose most of their share of the ESG, which is used for central support services.

What the cut in the ESG will mean for local authorities

The cut in the ESG for LAs, coupled with a reduction in their statutory duties, is intended to further reduce the role of local councils in education. It’s of a piece with the Education and Adoption Bill. The DfE’s review document states that: “The government will reduce the local authority role in running schools and remove a number of statutory duties. The government will consult on policy and funding proposals in 2016.”

The government allocates ESG money to LAs on the basis of £87 per maintained school pupil. Currently these are the areas that local authorities can spend ESG on with DfE recommended levels of spend:

  • Education welfare services   £8.65
  • School improvement £27.01
  • Asset management   £7.41
  • Statutory and regulatory duties £28.14
  • Premature retirement costs/ redundancy costs £5.82
  • Monitoring national curriculum Assessment   £0.54
  • Therapies and other health related services   £1.67
  • Central support services   £7.76

Now the total spend is going to be reduced to only about £20 per pupil. Looking at this list, it’s pretty obvious where the big cuts will come from – school improvement and regulatory duties.  What is important to recognise is that these duties are not anything to do with local authorities running schools. They are about making sure schools manage themselves well, do their best for their pupils and don’t fall foul of a massive amount of legislation and regulation.  (See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/335723/ESG_AnnexA_r for a full list.) It seems likely to mean that LAs will have much less capacity to support ‘school improvement’ unless they can find other sources of funding. (Thanks to John Bolt, Education for Everyone website, for some of the national information: http://wp.me/p2c9CH-cg)

What the cut in the ESG will mean for Birmingham LA

This is the provisional Education Services Grant Budget 2015/16: 

ESG Eligible Service Provisional Budget (including overheads) £’000


Duties for all Schools Maintained schools only


Education Welfare 409
School improvement 1,386
Asset management 600 1,058
Premature Retirement 470
Statutory & Regulatory 1,960 2,693
Home to School Transport 2,462
Early Years 2,462
Net ESG 2,969 10,531

The ESG budget for 2016/17 will be reduced from the equivalent of £87 per pupil to about £20 per pupil. This makes a reduction in this year’s total for the LA to spend on support for maintained schools from £10.5m to around £2.4m. But currently the LA already spends £4.1m on School improvement and Statutory & Regulatory Duties for maintained schools.

Will this mean a reduction in what the LA currently spends on School Improvement? According to the School Settings and Improvement Budget 2015/16 (see Education Scrutiny meeting 25 November papers Appendix 3) the total is £2.235m. Of this £637,000 goes on 8 posts, £322,000 on Professional fees (including a contract with S4E for the management of the statutory duty for EYFS, KS1 and KS2 Assessments), and £1.009m to the Birmingham Education Partnership. The LA has contracted BEP to carry out its non-statutory School Improvement functions.

The reduction in the LA’s ESG will result in any or all of the following consequences for schools:

  • Making do with fewer services
  • Transferring funding from other areas of the school’s budget
  • Buying services from other providers, including schools, chains and private commercial providers

In addition all Birmingham’s academies will lose all their individual ESG allocation, currently £87 per pupil.

The reduction in the ESG will result in any or all of the following consequences for the LA:

  • Making do with fewer services
  • Subsidising them by transferring money from elsewhere in the Council’s budget
  • Subsidising them by getting Schools Forum to de-delegate more funding
  • Relying on schools to provide services themselves or do without

The importance of the Birmingham Education Partnership

The further reduction in the ESG for the LA takes place in the context of the further £200 million of cuts that the Council has to make over the next two years. It means that the role of the BEP is even more important in arranging the support that schools ‘Requiring Improvement’ or ‘at risk’ need. The BEP only took on this new responsibility on September 1st under contract from the Council and staff and systems are only just being put into place. Estelle Morris is chairing the Board, Tim Boyes remains as chief executive, Tracy Ruddle, previously a primary head from a neighbouring authority, has been appointed to lead the commissioning of support, and District Leads are taking up their role.

The future of a Birmingham family of schools, both maintained and academies, working together for the good of the city’s children and young people, rather than a fragmented market, rests in large part with the BEP. BCASE supports it in this, though it also argues that once BEP is securely on its feet it needs to open up its structures, currently exclusively run by headteachers, to representatives of all the stakeholders in the city’s school system, especially teachers and their unions, school governors and parents. ‘School improvement’ is not the property only of headteachers, it requires the whole profession and the families and communities of Birmingham to be fully involved both at the school and at the city-wide level.



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