The education funding debate - not just about education

Being quick off the mark might be a successful strategy of election campaigning, but Labour rather jumped the gun with the leak of their manifesto on Wednesday. It makes for an interesting read. Skipping over the “cradle-to-grave learning” phrase – which sounds overwhelmingly sinister – there is a roughly 50:50 split between specific policy recommendations with a degree of sense, and major issues being swept under the carpet. Throughout the education section however, there is one theme which repeats itself – more money for the education system. £8.4 billion a year for basic school funding, £700-900 million a year for free school meals, and £1.7 billion a year for Higher Education maintenance grants to name but a few.

These funding boosts could be highly welcome. The Institute of Fiscal Studies (IFS) recently highlighted the cost pressures facing schools, with real terms cuts of 6.5% to their budgets between 2015-16 and 2019-20. The education press is awash with stories of how these cuts play out in schools – TES front page this week screams “The human costs of cuts – redundancies, resignations and raging sense of injustice”. Pumping more money into the system is intuitively appealing to anyone invested in the sector.

However, before whole-heartedly backing these policies to spend more on education there is an important question to ask: is this fiscally responsible?

I would love to see more money in the education system. We could provide higher remuneration for the hours and energy teachers put in, which would likely help reduce the recruitment and retention crisis. We could fund one-to-one support and specialist SEND provision for all young people who need it. A careers adviser could be funded for every school to facilitate high quality work experience and transitions to HE, FE and employment.

But education is only one part of the budget sheet which passes under the nose of the Exchequer. There is no point providing excellent education for all but having a health service on its knees, a precipitous economy, and high levels of unemployment. Young people will be sold a false vision if they are set up wonderfully through their childhood years, only to find there are few jobs to progress in to, poor healthcare and an insufficient housing market. Education of course deserves its funding, but it only deserves fair allocation against other priorities which are also vital for the health and flourishing of future generations.

So really my question is: given the current economic climate of the UK and importance of other public services which are competing priorities, should we spend more on education?

Let’s look at the numbers. World Bank data shows that in 2015, 13.7% of Government expenditure went on Education in the UK[1]. This compares to around 16% of Government expenditure which was spent on the NHS[2], or 20% which was spent on pensions[3]. Around 5% of central Government funds were spent on Defence in 2015[4]. Is 13.7% the right proportion to be spent on education, relative to these other pockets of funding? 

It’s difficult to assess the exact proportions which should be allocated, but while I’m sure a case could be made for increasing the proportion, I certainly don’t think 13.7% jumps out as a clear cut example of under-funding. To put it into international context, Germany and Finland – two high-performing education systems the UK has often aspired to replicate – spend similar proportions on education, both as proportions of Government expenditure (Germany: 11.0%, Finland: 12.4%) and as a % of GDP (Germany: 4.9%, Finland: 7.2%). 

Yes there are almost certainly efficiency savings to be made in other public service sectors (and central Government itself). Perhaps we should cut our defence spending given it is something I would like to think we won’t be using much. Maybe pensions are too generous and they should be reduced. But I don’t think the balance of spending sounds so ridiculously out that we should immediately campaign to take money away from the NHS to give to schools. Nor do I think that would be a particularly successful approach, given the emotive, and genuine, importance of other issues. Therefore I’m going to leave 13.7% alone as a proportion which seems within the realms of common-sense.

Another way the Government could spend more on education without taking money away from other services would be to raise additional funds via taxation which are ring-fenced for the education sector. This would have the effect of increasing the proportion of Government spending on education and decreasing the proportion spent on other areas, without affecting the actual sum spent on other areas. When moving money away from other public services could have negative effects, this may seem like the most logical option. And indeed, this is what the Labour party have promised: raising corporation tax incrementally from 19% at present to 26% in 2020, in order to provide additional funds to the education system.

According to the IFS, that could yield an additional £19bn in cold hard cash for the UK education system in the short-term, a pretty healthy funding boost. But this is where I would beg the education community to look beyond the education landscape, because changing incentives for UK businesses will change behaviours. Were the UK to become a less attractive place for businesses to be situated it may drive some off-shore. I’m no economist but it seems fairly intuitive that with Brexit on the horizon now is not the time to be discouraging UK investment or weakening the economy. I’m going to defer here to the IFS again: the very same thinktank who explicitly highlighted the detrimental cost pressures the education system is facing have strongly cautioned against Labour’s plans for increasing corporation tax to fix the problem.

“A higher rate will reduce the incentive for both domestic and multinational companies to invest in the UK…Were rates to be increased, the benefits of additional revenue would need to be weighed against any long-run effects on growth.”[5]

And this is why, as much as I want to see additional funding provided to education, I think the debate really needs to be framed in these broader terms about how that plays out across the UK over the longer-term. Specifically I think two things need to happen in the education funding debate.  
1) When lobbying for greater funding for education, a clear case needs to be made as to what the benefits would be, both immediate and long term. As far as possible we should link education to wider issues facing the UK and demonstrate its importance for employment rates, economic prosperity and mental health[6]. It’s not enough to shout about Jimmy losing his breakfast club or the cleaner being fired.

     2) To be successful in securing more funding, the benefits of funding need to be demonstrated as more important for the UK in the longer-term than the negative repercussions that spending more money on education could bring (whether because of re-allocation of funds away from other public services or taxation hikes, the two scenarios discussed above).

It can seem somehow wrong to quantify education – which is often looked on with nostalgia – in this way. But these are the terms of the political debate and the level at which decisions are made - because they have to be. I don’t envy Philip Hammond for many reasons, but in particular it’s no easy job deciding who gets the pounds and who doesn’t. I think there are some strong examples of how increasing funding in education can be hugely effective - perhaps to such an extent that it can skew the balance in education’s favour and outweigh any negative impacts of spending more. But until that case is water-tight, the jury is still out for me on whether more money for the education system is a fiscally responsible policy. 

All comments whole-heartedly welcome. No trolling. Be nice.

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[1] http://wdi.worldbank.org/table/2.7

[2] https://fullfact.org/health/spending-english-nhs/

[3] http://www.ukpublicspending.co.uk/government_expenditure.html

[4] http://wdi.worldbank.org/table/5.7

[5] https://www.ifs.org.uk/publications/9206

[6] There is good evidence that education has positive effects on all of these. I will happily find sources for those who want.