October 26, 2011 • 3:06 pm

“We have taken difficult decisions but at the heart of it was a decision to protect the schools budget and per pupil funding and on top of that to add the pupil premium to make sure that we are looking after the less well off in our country.”

David Cameron, Prime Minister’s Questions, 26 October 2011

In the House of Commons this afternoon David Cameron claimed that despite research from the Institute for Fiscal Studies (IFS) showing significant reductions in education spending, the schools budget would be protected by the Government.

Not only this, but on top of the protected budget, there would be the extra ‘pupil premium’ funding for poorer students.

Back in 2010 Deputy Prime Minister Nick Clegg, claimed a similar thing but Full Fact demonstrated was inaccurate.

So has the PM made a similar error to his Deputy? Full Fact took a look.

Analysis

The heart of the issue is whether the pupil premium money is additional to what is required to protect the schools budget in real terms.

The 2010 Spending Review seems to suggest it is only by including this money that the budget is maintained after inflation is accounted for.

It states that “the premium will sit within a generous overall settlement for schools, with the 5 to 16s schools budget rising by 0.1 per cent in real terms each year” and “there will be real terms increases in the 5 to 16s schools budget of 0.1 per cent in each year of the Spending Review period, including a £2.5 billion pupil premium for disadvantaged children.”

In these terms, whilst the schools budget does rise from £35.4 billion to £39 billion in 2015, if the £2.5 billion of pupil premium funding is removed from this calculation, the result is a real terms fall in schools spending.

This would suggest quite clearly that David Cameron is wrong to argue that school spending will remain the same even if you do not include the pupil premium.

The IFS report Mr Cameron was commenting on sheds even more light on the issue.

The report, Trends in education and school funding, explains that non-pupil premium schools spending is only protected in cash terms.

When inflation is taken into account, the report estimates this amounts to 7.3 per cent cut in spending between 2010-11 and 2014-15. Meanwhile, spending on the Pupil Premium will rise from £625 million in 2011–12 to £2.5 billion by 2014–15

The inclusion of the pupil premium money does make the picture look rosier. But according to the that overall spending, including the pupil premium, will go down by 1.2 per in real terms. 

“At the time of the 2010 Spending Review, a small real-terms increase in schools spending was announced. Since then, forecasts for economy-wide inflation in 2011–12 have risen, leading us to now expect a 1.2% real-terms fall in 2011–12. Schools spending is then expected to be frozen in real terms between 2011–12 and 2014–15,” the analysis explains.

Assuming the IFS is correct this would suggest that even when the pupil premium is taken into account the budget may not be completely inflation-proof. However the report does point out that schools spending is “relatively protected” compared to other parts of the Department for Education budget, or other Departments.

As Luke Sibieta, co-author of the IFS report told us: “Whether this means the schools budget was “protected” depends on how you define ‘protect.’ What we do know is that total school spending is expected to fall in real-terms between 2010-11 and 2014-15.

“However, school spending will see a smaller real-terms fall than defence and a much smaller cut than higher education or housing. Indeed, the cut is smaller than the aveage cut across departments.

“However, the Department for International Development  and the Department for Energy and Climate Change are expected to see large real-terms increases.”

Conclusion

The Prime Minister’s claim, that pupil premium spending wil be additional to a protected schools budget, is highly problematic.

This is because protecting something in cash terms, as is happening with school spending, is a de facto reduction when inflation is accounted for.

The Spending Review clearly states that whilst spending will go up by 0.1 per cent each year in real terms this is including the pupil premium. Indeed the IFS analysis suggests that even this figure may have been overtaken by rising inflation.

Nevertheless it is difficult to say that the Prime Minister’s statement is wrong enough to warrant a correction at the dispatch box. After all one could just about argue that cash terms protection is a form of protection, just not as strong as real terms protection.

But since the claim can give the wrong impression about what is going on with schools spending, we do not feel that the PM should be claiming that the budget is being protected without the pupil premium.

We have contacted the DfE on the subject and hope to hear back from them soon.

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