Did schools really save money in the five-year period up to 2019-2020? The DfE has published a study showing the aim of ‘saving’ at least one billion pounds during that period was achieved. Progress in schools savings and resource management – GOV.UK (www.gov.uk)

The methodology of the study was to measure savings as the difference between actual non-staff expenditure in 2019-20 and what was estimated non-staff expenditure would have been in 2019-20 if schools had not changed their spending behaviour. This is expressed as the difference between the expenditure line and the counterfactual line as to where expenditure without saving would have been.

It is worth noting that the period covered was one where primary school rolls were generally on the increase, and for many secondary school rolls were either constant or falling. Academies and maintained schools also operate on different financial years, so that could be an additional complicating factor.

A significant proportion of the saving came in the final year 2019-2020. I am not sure whether that meant that the final third of that financial year for academies covered the first four months of the pandemic when, for instance, there would have been a significant drop in expenditure on school meals, as most children were forced to stay at home.

The target of £1 Billion pounds was set after the National Audit Office (NAO) report “Financial sustainability of schools” published in 2016 identified that schools would incur cost pressures of £3bn between then and 2019- 20. The DfE then produced analysis which compared schools with different levels of spending but similar pupil characteristics and levels of attainment.

According to the report,

 ‘the DfE estimated the impact of bringing the spending of the top 25% highest per-pupil non-staff spending schools down to the level of those at the 75th percentile. This analysis indicated that, schools could plausibly save around £1 bn on their non-staff spending and so this became the ambition of the SRM portfolio’ (Page 3)

It is not clear from the report whether that is what happened, or whether the schools better at managing their costs took more out of the system, thus widening the gap between those schools good at achieving savings and the rest of the sector. Since both primary and secondary schools were included, it would have been interesting to know how much of the saving was due to fixed costs that don’t alter with changing pupil numbers – it presumably cost a similar amount to heat and light a school even if pupil numbers fluctuate. The saving would be more impressive and longer-lasting if it was the variable costs that had been reduced. Primary schools often have higher fixed costs as a proportion of income, although many of these are staff costs.  

And, as the DfE note in the definitions on page 5 of the report.

‘“Saving” in this context does not mean a cash saving. We measure savings by comparing actual non-staff spend to where we expected non-staff spending to be had schools not changed spending behaviour – the counterfactual. We would calculate cash savings by taking away actual non-staff spend in 2019-20 from actual non-staff spending in 2015-16.’

And finally, it looks as if the special school sector was excluded if the study was only on primary and secondary schools. It would be interesting to know about cost pressures in that sector and whether similar saving was possible?