Labour’s plan to impose 20 per cent VAT on private schools may not be enough to avoid school budget cuts, leading economists have told i.
The party’s manifesto, due to be released on Thursday, will include its “Robin Hood-style” tax raid on independent schools, estimated to raise an extra £1.3-1.5bn for the beleaguered state sector.
Labour leader Sir Keir Starmer said the manifesto will set out a “serious, practical plan for the country”.
But policy researchers have told i that the party’s education offering is unlikely to be enough to avoid cuts to the overall schools budget in real terms.
Maxwell Marlow, director of research at the right-leaning free market Adam Smith Institute (ASI), said there is “no money left” and questioned where Labour would find additional funds to “maintain current standards or per pupil funding and index it to inflation”.
He said he was “highly sceptical” about whether Labour’s VAT policy would raise enough money to recruit 6,500 teachers and equip every school with a mental health counsellor, citing his ASI report published in March.
Luke Sibieta, leading economist at the Institute for Fiscal Studies (IFS), said if Labour wants to “implement a more generous settlement, they’d have to find cuts elsewhere”.
He said: “Because of the fiscal rules and the rules they’ve signed up to – and the deficit going forward – it will be hard to find that much extra money for schools.”
It comes after the Conservative manifesto, released on Tuesday, proposed a real-term budget cut of £3.5bn – the largest since the mid-1970s, according to Mr Sibieta.
The Tories committed to pegging school funding to the current per pupil funding arrangement. However, pupil numbers are set to fall by 400,000 in the next parliamentary term, according to projections from the Department for Education (DfE), leading to an overall cut in funding.
Mr Sibieta said this would imply a £3.5bn or 6 per cent real-terms fall in total school spending, and could lead to school closures and staff cuts.
Asked whether Labour might have to slash the overall schools budget over the next parliamentary term to avoid the same, Mr Marlow, of the ASI, said: “They could do, yes.”
“It all comes down to where they’re getting the money from,” he added. “Unfortunately, there’s no money left.”
Mr Sibieta also suggested that Labour may be unable to avoid real-terms budget cuts. “Given the state of the public finances, it would be surprising if there were lots of significant commitments without additional revenues from somewhere,” he said.
It remains to be seen how Labour decides to “increase all levels of public spending” in its manifesto, but the IFS analyst said that the “fiscal rules they’ve signed up to are heavily constraining”.
He added it would be “hard to deliver a very significant increase in school funding” given the state of the country’s finances.
Robbie Cruikshanks, school performance researcher at the Education Policy Institute (EPI), said that the incoming government must increase per pupil funding if it wants to improve conditions across the country’s state schools.
“Increases in school funding in recent years have been disproportionately targeted towards schools serving more affluent communities and we have seen a real terms fall in the value of the pupil premium,” he said.
“As well as considering the overall level of funding, any government needs to consider how it is targeting that money to help address the long-standing attainment gap between low-income pupils and their peers which grew significantly worse over the course of the pandemic.”
Union leaders have told i that state schools are in dire need of funding and would buckle under the pressure of more cuts.
Daniel Kebede, general secretary of the National Education Union (NEU), said the idea education could endure more cuts – let alone the £3.5bn outlined in the Tory manifesto – is “preposterous”.
He said it would lead to pay cuts, which would deepen the recruitment and retention crisis, eventually leading to a loss of qualified teachers and creating the risk of class sizes of up to 60 pupils.
“What that means on the ground is an end to young pupils having access to qualified teachers or subject specialists and it would see a continuation of the growth in class sizes,” he claimed.
“We already have a million children being taught in class sizes of 31 or more. Our class sizes in secondary schools – already the largest in Europe – would see a continuation of that growth.
“Even with a declining birth rate, that level of cuts in education would mean widescale school closures in which classes were merged.
“On the ground, you’re looking at class sizes in excess of 40, approaching 60. It’s horrific.”
Julia Harnden, funding specialist at the Association of School and College Leaders, said many schools are already struggling financially and cannot sustain more cuts due to falling pupil numbers.
“At the very least this will likely necessitate increased class sizes, a reduced curriculum offer and less pastoral support for pupils,” she said, adding: “This cannot be allowed to happen.”
Patrick Roach, general secretary of teaching union NASUWT, said cuts to education budgets would be “extremely damaging” and harm children’s future prospects.
He said: “You lose teachers; you cut the curriculum. That’s not going to be helpful to children’s education. That’s my overriding concern here.”
Mr Roach called on a new government to invest in “the fabric of our schools and colleges” and engage in the workforce to “tackle the deep-seated problems that the system is facing”.
Labour has been contacted for comment but a spokesperson previously said: “Labour will invest in delivering a brilliant state education for children in every state school by recruiting over 6,500 new teachers, funded by ending tax breaks for private schools”.
They added: “Independent schools have raised fees above inflation for well over a decade and do not have to pass Labour’s proposed change onto parents.”
Election 2024
The general election campaign has finished and polling day has seen the Labour Party romp to an impressive win over Rishi Sunak‘s Tories.
Sir Keir Starmer and other party leaders have battled to win votes over six weeks, and i‘s election live blog covered every result as it happened. Tory big beasts from Penny Mordaunt to Grant Shapps saw big losses, while Jeremy Corbyn secured the win in Islington North.
Nigel Farage’s Reform UK also outdid expectations with four MPs elected.
But what happens next as Labour win? Follow the i‘s coverage of Starmer’s next moves as the new Prime Minister.