In the latest Autumn Budget, the UK Government revealed a financial landscape shaped by higher-than-expected tax revenues due to inflation.

However, despite this fiscal 'windfall', as described by the Office for Budget Responsibility (OBR), the education sector was not particularly prominent in this statement. 

This analysis by Surveyors to Education (S2e) looks into the implications of the budget for education, highlighting the challenges posed by unchanged departmental spending amidst rising inflation.

Overview of the Autumn Statement

The Autumn Statement revealed higher-than-expected tax revenues, caused mainly by inflation pushing more people into higher tax thresholds, and provided the government with an unexpected 'windfall' as termed by the Office for Budget Responsibility (OBR).

The additional money received from tax revenue allowed the Chancellor to cut taxes through a reduction in National Insurance Contributions and tax write-offs for business investment, meanwhile departmental spending remained broadly unchanged. Unlike last November’s autumn statement which announced additional funding for schools, education was not particularly prominent this time but “delivering a world class education” continues to be an area of focus for the government.

What does this mean for education and capital spending?

Departmental budgets are fixed in cash terms meaning they will be subject to inflationary pressures and will be worth less in real terms. According to the OBR, to keep departmental spending in real terms by 2027/28 would require an additional £19.1bn. It also predicts that inflation is expected to remain higher for longer which will put increasing pressure on existing budgets for the education sector, and every other governmental department.

Capital spending in education has already seen the impacts of fixed budgets and rising inflation as demonstrated by the reduction in successful schools and academies in this year’s Condition Improvement Fund (CIF). CIF is an annual bidding round (and the main source of capital funding) for eligible schools and academies to address significant condition needs, to keep buildings safe and in good working order.

Last year, total funding available for CIF declined by 3%, which is in line with the reduction in CIF eligible schools, as more move into larger multi-academy trusts that receive capital funding via formulaic allocation, the school condition allocation. However, despite only a 3% drop in budget, the number of successful projects was down by 27% vs the previous year, suggesting inflation had a significant impact on how many schools and projects could be funded to address their condition needs.

Along with inflationary pressures, it will also be interesting to see what, if any, impact there is on existing capital budgets following the need to fund the costs related to mitigating and removing Reinforced Autoclaved Aerated Concrete (RAAC), which the government has committed to.

It seems now more than ever it will be important for schools and trusts to ensure their estates are managed as efficiently as possible.

For help and advice on how to prioritise estate budgets and maximise chances to receive funding please get in touch on 0116 5070130 or email enquire@s2e.org.uk.