Economics lessons: How painful will things get?
21st October 2022 by Timo Hannay [link]
Update 7th November 2022: David Weston of the Teacher Development Trust (TDT) explains how and why staff development can be maintained even when budgets are tight.
Updates 21st October 2022: See also this coverage by Tes and this commentary from the TDT.
We are in straitened times: high inflation, rising borrowing costs and an uncertain outlook for the public finances. Schools, too, face an unsettling financial future. Even before the fiscal mayhem of the last few weeks, only 30% of governors responding to a National Governance Association survey reported that existing levels of funding were financially sustainable. And things look likely only to get worse.
This post provides context in the form of an overview of recent state-school spending patterns in England, with a brief deep dive into staff development spend. It has been carried out in collaboration with our friends at the Teacher Development Trust (TDT).
We find that:
- Even before recent rises in inflation and staff turnover, the proportions of school budgets accounted for by staff costs had already been rising. In 2021 these reached around 80%, up from 75% in 2014. Amidst high inflation and unfunded pay increases, this trend looks likely to not merely continue but to accelerate.
- Rising staff costs have put pressure on other important budget lines. For example, between 2014 and 2021 spending on learning resources (such as text books or online homework systems) fell from about 6% of school expenditure to about 4%; school maintenance fell from 3% to 2%; and staff development fell from 0.6% to 0.4% (not a typo). As well as faling as a proportion of budget, these lines have also declined in terms of spend per pupil and per teacher, even before allowing for inflation. Though arguably discretionary in the short term, such lines are potentially damaging to cut in the longer term.
- Per-teacher spending on staff development and training in 2021 was only 63% of 2018 levels in nominal terms; after adjusting for inflation it was below 60%. All types of schools showed major reductions in staff development spending during this period.
- Meanwhile, energy costs, which have typically accounted for around 1.5% of school budgets, look set to rise around threefold, notwithstanding the UK government's recently introduced (though partially retracted) price cap. This is likely to impact further on the budget lines mentioned above. Furthermore, these changes will be felt unequally around the country.
The analyses that follow use expenditure data for mainstream state primary and secondary schools in England. They make use of information from SchoolDash Insights, our subscriber-only dashboard, which in turn is based on raw school- and trust-level financial returns published by the Department from Education.
A people business
The vast majority of school budgets are spent on employing teachers and other staff, as shown in Figure 1. Looking across both primary and secondary schools, around half of total expenditure goes on employing teachers (dark red) and around two-thirds is used to pay for teaching staff of one kind or another (all shades of red). A bit over 10% goes on non-teaching staff such as administrators, premises workers and caterers, plus other associated costs (all shades of blue). In 2014, just over 75% of school budgets went on staff, but by 2021 this had risen to nearly 80%, driven in large part by increases in the proportion spent on teachers. This year, with an unfunded 5% pay rise already offered and the prospect of teachers striking for more, it looks almost inevitable that this proportion will rise further.
The same broad trends apply across both primary and secondary schools, though the latter tend to spend more on teachers and less on teaching support staff.
(Use the menu below to switch between all schools, primary schools and secondary schools. Click on the figure legend to turn individual expenditure lines on or off; double-click to show one on its own. Hover over the graph to see corresponding values.)
Figure 1: Proportions of mainstream state school budgets spent on staff
Any increase in staff expenditure necessarily means reductions in other spending lines. These are shown in Figure 2. Across all schools, there have been relative expenditure declines in school maintenance (2.8% to 2.0%), administrative supplies (2.6% to 2.0%), non-digital learning resources, digital learning resources (1.2% to 0.9%), energy (1.5% to 1.3%) and staff training (0.6% to 0.4%). A broad 'Other' category that includes a range of administrative, professional and financing costs also fell (from 6.3% to 5.2%).
Looking at all lines again, these trends are rather similar across both primary and secondary schools. The main differences are that secondary schools tend to spend smaller proportions of their budgets on catering supplies and higher proportions of administrative supplies. More importantly, the declines in relative spending on school maintenance, learning resources and staff development were present across both phases.
(Use the menu below to switch between all schools, primary schools and secondary schools. Click on the figure legend to turn individual expenditure lines on or off; double-click to show one on its own. Hover over the graph to see corresponding values.)
Figure 2: Proportions of mainstream state school budgets spent on non-staff costs
Pounds and pence per pupil
Schools spending high and increasing proportions of their budgets on teachers doesn't necessarily sound like a bad idea, especially if total budgets are also growing, allowing expenditure in other important areas to be maintained in absolute terms. But this has not been the case.
Figure 3 shows per-pupil spending for the same staff lines we looked at above. Across all schools, expenditure on teachers went from £2,525 per pupil in 2014 to £2,836 per pupil in 2021, a rise of just over 12% (equivalent to a compound annual growth rate of just under 1.7%). That barely kept pace with inflation even though it was low at the time. The same is broadly true of teaching support staff, administrative staff, premises staff and other staff costs. Over this period, only supply teacher costs fell in nominal per-pupil terms. (View all lines again.)
(Use the menu below to switch between all schools, primary schools and secondary schools. Click on the figure legend to turn individual expenditure lines on or off; double-click to show one on its own. Hover over the graph to see corresponding values.)
Figure 3: Staff spend per pupil at mainstream state schools
Figure 4 shows per-pupil expenditure for non-staff lines. Across all schools, spending on school maintenance, non-digital learning resources, digital learning resources and staff development have all fallen in per-pupils terms, not just as a proportion of school budgets. Note also that these are nominal figures, so the real-terms reductions after allowing for inflation would be larger. (Click here to see all lines again.) All of these trends apply across both primary and secondary schools.
The decline in expenditure on digital learning resources is perhaps the most surprising given that edtech is reputed to be a boom industry. If so then this fact has yet to be reflected in state school spending patterns in England – though there was an uptick in 2021, possibly related to the provision of distance learning during the pandemic. The amounts spent on staff development are also striking, if only because they are so small: less than £20 per pupil in 2021, which equates to 0.3-0.4% of school budgets.
(Use the menu below to switch between all schools, primary schools and secondary schools. Click on the figure legend to turn individual expenditure lines on or off; double-click to show one on its own. Hover over the graph to see corresponding values.)
Figure 4: Spend per pupil at mainstream state schools
In recent years, energy has consistently cost around £70 per pupil (though a bit less than this at primary schools and a bit more at secondary schools). However, since late 2021, energy prices have been increasing rapidly. Notwithstanding the UK government's price cap for households and organisations, including schools, it seems likely that energy bills in the coming year will be about three times those in 2020-2021. On the face of it, that would take energy spending to about 4% of school budgets, or around £200 per pupil. This increase alone is about the same amount that schools currently spend on maintenance, about half of what they spend on learning resources of all kinds, and about seven times what they spend on staff development. In short, some of these lines could be wiped out by the rising cost of energy alone.
A north wind
It is also worth reflecting on the fact that these pressures won't all be felt equally around the country. For example, as shown in Figure 5, energy expenditure per pupil tends to be about 20% higher in the north, especially the North East, (where winters are colder and darker) and in London (perhaps because of older building stock) than in the South East and South West. This is true of both primary and secondary schools. Coincidentally or otherwise, London and the North East are also the regions with the highest proportions of pupils eligible for free school meals.
(Use the menu to switch between school types. Hover over the map to see corresponding values.)
Figure 5: Annual energy spending per pupil (2014-2021)
Development deep dive
A longstanding concern of ours – and of course of our collaborators at the TDT – has been school spending on staff development. Figure 6 shows recent trends in terms of spend per teacher. As for the per-pupil spend figures seen above, these have declined even in nominal terms. This is especially true of primary schools (red line), which used to spend substantially more than secondary schools (blue line), but no longer do so. Among all schools (black line), per-teacher spending is now at 63% of the 2018 figure. Allowing for a small amount of inflation over that period brings the number down to below 60% in real terms – and this from an already low base. As we have observed before (see our 2019 and 2020 analyses), it is ironic that education, of all sectors, should spend so little in training its own staff. And yet it appears to be going ever lower.
(Click on the figure legend to turn individual lines on or off. Hover over the graph to see corresponding values.)
Figure 6: Staff development and training spend per teacher at mainstream state schools
As well as the differences between school phases (ie, primary versus secondary), staff development spending is also unevenly distributed across other school types, as shown in Figure 7. In both 2018 (red columns, corresponding to the recent high-water mark) and 2021 (blue columns, the latest year available), per-teacher spending on staff development tended to be greater in schools with high in-school disadvantage and local deprivation, as well as those with high proportions of pupils for whom English is an additional language (EAL). However, there was no clear trend by Ofsted rating.
Spending also tended to be higher at academies, large multi-academy trusts and rural schools. Some of these differences are understandable: schools with poorer pupils or located in poorer communities tend to receive more funding and to have younger teachers, who may have greater training needs; free schools may still be rampinng up, requiring greater investment in staff; and rural schools are smaller, which could lead to higher per-head training costs. But by far the most striking trend is that all types of school showed large reductions in staff development spend between 2018 and 2021.
(Use the menu below to select a school type. Hover over the columns to see corresponding values.)
Figure 7: Staff development and training spend per teacher by school type
Staff development spending is also unevenly spread around the country. Among primary schools it has been highest in the London, the South East, the East of England and the North West, but lowest in the South West. Among secondary schools, it has been highest in London and other south-eastern region, but lowest in the North West.
(Use the menu to switch between school types. Hover over the map to see corresponding values.)
Figure 8: Staff development and training spend per teacher (2014-2021)
Squeezed
Schools are not merely entering a period of financial challenge, they have already been in one for several years at least. Since 2014, increasing expenditure on staff has barely kept pace with inflation while also squeezing other budget lines, notably school maintenance, learning resource purchases and staff development. As the financial vice tightens through a combination of inflation and anticipated government spending cuts, it seems inevitable that these trends will not merely continue, but accelerate – with currently unknowable effects on pupils themselves.
Subscribers to SchoolDash Insights can explore these trends in much more detail, including benchmarking of individual schools. We also welcome your feedback: [email protected]
A new school year begins with high headteacher turnover and unfilled staff vacancies
14th October 2022 by Timo Hannay [link]
Update 14th October 2022: See also this coverage from Schools Week.
Come September, children aren't the only ones packing bags and pencil cases before heading off with mild trepidation for their first day at a new school – it's also the season for teachers and other school staff to take up new roles in unfamiliar surroundings. This post looks at what has been happening on that front in the first few weeks of the 2022 autumn term. In short, we find that:
- New headteacher appointments bounced back from their mid-pandemic lows, reaching easily the highest levels seen in recent years. This was true across both primary and secondary schools.
- Teacher recruitment activity at secondary schools has also been unusually high for this time of year. The numbers of adverts on school websites are currently about 20% above normal pre-pandemic levels, though higher than this for some subjects and lower for others.
- Vacancy adverts for school technicians are also at historic highs and are currently about 50% above normal pre-pandemic levels for this time of year.
- These results indicate ongoing disruption to school recruitment in the wake of the pandemic, probably combined with the effects of general labour-market tightness across the economy. They suggest that schools are likely to have begun the new academic year with higher-than-usual staff turnover and vacancy rates.
Walking heads
The start of the autumn term is, among other things, high season for headteachers' annual game of musical chairs. We track changes to headteacher appointments using data from the Department for Education (DfE), which publishes the names of school leaders in its daily data releases. This allows us to detect changes in the headteacher of each school, using a combination of algorithms and manual inspection to eliminate cases – such as typo corrections or new surnames – that don't correspond to an actual change in personnel. (For subscribers to our premium dashboard, SchoolDash Insights, this is same data presented in the Headteacher section.)
Figure 1 shows the numbers of headteacher changes for each month over the last four-and-a-bit academic years, up to and including Friday 30th September 2022. The annual peak is in September, with January also showing slightly raised turnover. Across all schools, headteacher turnover in September tended to drop during the pandemic years (red and purple columns), but rise in January and April. In other words, it became a bit less seasonal, but total annual turnover didn't change much. In contrast, turnover in September 2022 (black column) was much higher than in any recent year. This was true of both primary and secondary schools.
(Use the menu below to switch between all schools, primary schools and secondary schools. Click on the figure legend to hide or view individual academic years. Hover over the columns to see corresponding data values.)
Figure 1: Number of headteacher changes by month and year
Figure 2 provides a different view of the same data. Across all schools, headteacher turnover dipped only slightly during the pandemic years (2020-2021 and 2021-2022), but appointments in January (yellow) and April (dark green) tended to rise at the expense of those in September (red). By contrast, appointments in September 2022 were much higher than in previous years, especially among primary schools, but also among secondary schools.
To put these numbers in perspective, roughly 10% of state schools in England reported a new headteacher in September 2022, up from about 8% in a normal pre-pandemic September. If this sort of increase were to continue through the rest of the 2022-2023 academic year (a big 'if' – we don't know this yet) then we might expect to see around 25% of schools welcome a new headteacher, up from 20% in a typical recent year. That would imply a reduction in average headteacher tenure from about 5 years to about 4 years.
(Use the menu below to switch between all schools, primary schools and secondary schools. Click on the figure legend to hide or view individual months. Hover over the columns to see corresponding data values.)
Figure 2: Number of headteacher changes by year and month
Teacher and technician adds
Though we've already written about this a lot (including a couple of months ago), it's also worth looking at teacher recruitment activity. This, too, is unusually high – at a time of year when most schools would hope to be fully staffed. Figure 3 shows the numbers of teacher-vacancy adverts found on the websites of secondary schools, sixth-form colleges and FE colleges for each week during September and early October 2022, and compares these with similar periods in previous years, both before and during the pandemic.
Looking at weekly data, 2018 (green) and 2019 (blue) show the typical pre-pandemic pattern of a gentle rise during early September, followed by a flattening off during late September and early October. Due to the disruptions associated with COVID-19, 2020 (red) and 2021 (purple) showed lower levels of activity. In contrast, 2022 (black) has so far exceeded all those years. (See all years together again.)
The year-on-year changes can be seen even more clearly using cumulative data. Across all subjects, we found about 700 more adverts (+20%) than during the corresponding periods before the pandemic, and around 1,500 more adverts than during the pandemic years. There are differences between subject areas, with Technology, the Humanities, the Arts and Languages showing large relative increases. Science, Mathematics and English have so far merely returned to more or less pre-pandemic levels (though this may be a sign that they were in relatively high demand even before COVID-19 struck rather than reflecting any particular lack of demand now).
(Use the menus below to view weekly or cumulative data, and to select different subject areas. Click on the figure legend to hide or view individual academic years. Hover over the lines to see corresponding data values.)
Figure 3: Teacher recruitment adverts among secondary schools in England
Figure 4 shows a similar analysis for school technicians. It is clear even from the weekly data that 2022 (black line) is already running ahead of other years. (The slight dip in the second half of September, which was also apparent in the teacher data above, coincides with the national holiday for the Queen's funeral, when fewer adverts were posted.)
Looking at cumulative counts, we can see that activity dipped only slightly during the first year of the pandemic (2020, red line) compared to the pre-pandemic period (2018 and 2019, green and blue lines). By 2021 (purple line), it had already bounced back to higher-than-usual levels. So far this year (black line), it has gone even higher, especially in Technology, but also in Science and the Arts. Across all subjects, it is up almost 300 adverts (+50%) compared to pre-pandemic years, which is proportionately even higher than the increase in teacher adverts. As we have discussed before, this might be because hiring technicians involves direct competition with other sectors, not just other schools.
(Use the menus below to view weekly or cumulative data, and to select different subject areas. Click on the figure legend to hide or view individual academic years. Hover over the lines to see corresponding data values.)
Figure 4: Technician recruitment among secondary schools in England
Ephemeral or endemic?
These results indicate higher-then-usual staff turnover and ongoing disruption to recruitment in the wake of the pandemic, even as other educational activities have returned to something like normal. How important is this? A bit like inflation, a small amount of staff turnover can be a good thing: it provides opportunities for organisational change and individual advancement. But also like inflation, sustained high levels of turnover can create serious disruption. Insofar as current trends merely reflect a catching-up after the low turnover witnessed during the 2020 and 2021 lockdowns, this might be a temporary trend. But we are already well over a year down the road and all the indicators are still pointing to increased turnover and recruiting activity across a range of school positions: heads, teachers, technicians, support staff and auxiliary staff. Unless these trends begin to reverse in the coming months, at some point we will need to accept them as a new normal.
Furthermore, they are part of a bigger picture that goes well beyond education. The economy as a whole is experiencing labour shortages. Meanwhile, the outlook for public spending is highly uncertain amid rapidly rising inflation and interest rates. And all this at a time when school budgets have already been under pressure for years (more on this soon). So when schools are seen to have higher numbers of vacancies than usual at the a start of a new academic year, when they would normally expect to be fully staffed, it seems reasonable to be concerned.
Perhaps the education system will absorb these challenges and make do, as has has tended to happen in the past. Or perhaps we have found the limit of its ability to adapt and these pressures will have noticeably adverse effects on educational outcomes. Either way, we are about to find out. In the meantime, if you want to work at a school then good for you: it appears to be a seller's market. On the other hand, if you're already at a school and struggling to find new colleagues to hire then all the signs are that you're not alone.
Subscribers to SchoolDash Insights, our premium dashboard, can continue to follow these developments in real time in the Headteachers and Recruitment sections. Any non-subscribers who haven't already done so are welcome to sign up for a free trial. We also value comments and suggestions from all readers – please send them to: [email protected]
