Education spending in UK predicted to reach a 50 year low in 2018

The Office of Budget Responsibility (OBR)'s long term public spending forecast published on 10 July predicts that UK government spending on education will fall from 5.1% of Gross Domestic Product in 2013-14 to 4.3% by 2018-19. The forecast is on Page 80 of the Long-term fiscal sustainablility report http://budgetresponsibility.org.uk/fiscal-sustainability-report-july-2014/ An Institute of Fiscal Studies (IFS) paper on long term public spending trends published in 2009 reports that education spending generally fluctuates around 5% of GDP but reached 6% of GDP in 1976 and 2009 (http://www.ifs.org.uk/bns/bn43.pdf, Page 29). The last time it was as low as 4.3% of GDP was 1965 which was a time when only 30% of 16 year olds were in full-time education. The figures in this chart combined the historic spending figures published by HM Treasury with forecast spending figures published by the Office of Budget Responsibillity education spending over 100 years.png OBR makes an annual prediction so that it can work out the long-term sustainability of the UK public finances. The forecast for education spending between 2013-14 and 2018-19 is made on the assumption that the government formed after in 2015 will keep to the spending plans set out by the Treasury in the latest budget (for March 2014). Over the last 12 months, the Chancellor of the Exchequer has made significant reductions in plans for future public expenditure. As a result, OBR's forecast for education expenditure for 2018-19 has been revised downwards from the 4.6% of GDP figure reported a year ago to 4.3% in this week's report. With UK GDP forecast to exceed £2,000 billion in 2018-19, this downward revision is equivalent to £6 billion. OBR bases its longer-term forecasts for education spending mainly on demography (ie pupil numbers). An AoC paper produced earlier this summer suggests that demographic pressures will put upward pressure on the education budget because there will be more pupils of secondary age in England and this is where government spending is currently highest (about 40% higher than spending on primary pupils). OBR presents its forecast in terms of share of GDP. The official forecast of GDP is currently that there will be 24% rise in total GDP between 2013-14 and 2018-19. OBR's forecast that spending as percentage of GDP will fall from 5.1% to 4.3% represents an assumption that total UK spending will move from £87.1 billion in the year just finished to £87.8 billion in four years time. TThis figure includes spending in the DFE and BIS budget in England and in the education departments in the three devolved administrations. Translating these figures into policies, the assumption is that there will be no additional cash to deal with the rise in the number of secondary age pupils, plans to expand early years education, increasing pension contributions, higher national insurance, plans to or the expectations that the 1+ million people working in education have that they will get pay increases If OBR's forecasts turn out to be right, Treasury sticks to current public spending plans and the education share of spending does not shift, then the next few years will see continuing pay restraint, job cuts and course closures. AoC's report on the black hole in the DFE budget suggests that action to minimise the impact on the core school budget may lead to further unacceptable cuts to 16 to 18 year old spending. AoC paper on the DfE budget May 2014_0.pdf AoC paper on the DfE budget May 2014_0.pdf (PDF,616.97 KB)