30% of pandemic spending on education is not new money, IFS finds

New IFS briefing note on Covid-related spending on education in England reveals the DfE due to receive only about £3 billion in additional funding from HM Treasury

The Institute for Fiscal Studies (IFS) has found that 30% of Covid-related spending on education in England is not new money – but is due to come from existing budgets.

In its new briefing note, funded by the Nuffield Foundation, the IFS concludes that about £1.3 billion of the £4.3 billion the government has committed to spend on education in England in response to the pandemic across 2020–21 and 2021–22 is currently due to be funded from underspending or from existing budgets.

The roughly £4.3 billion funding covers higher education, further education, schools and early years and represents an increase of just 2% on total education spending over the two years.

Higher education spending

£370 million is allocated for higher education providers and students. £300 million has been earmarked for expected restructuring relief, or emergency funding, for providers at risk of of collapse – however, the IFS points out, “no applications were made up to April 2021, suggesting actual spending might turn out to be quite low”. The remaining £70 million is for a student hardship fund.

In addition, the Department for Business, Energy and Industrial Strategy (BEIS) has made available £280 million in extra research funding (£80 million of which was to come from underspend due to Covid-19 restrictions).

It has also set aside £32 million in available loans and grants for universities to cover losses from lower international student enrolments this year. However, the IFS points out, as these come with restrictive conditions, and international student recruitment for the 2020–21 academic year seems to have been stronger than expected, “take-up is likely to be very low”.

Universities have also been eligible for the government’s general Covid-19 support schemes for businesses, including business loan schemes.

Today’s briefing note – ‘Covid-related spending on education in England’, by Christine Farquharson, Luke Sibieta and Ben Waltmann – suggests the apprenticeship budget “is one area where an underspend is highly likely due to falling numbers, though this could only fund the additional incentives to hire new apprentices.”

Tackling both the short- and longer-term effects of the pandemic on all stages of education will require considerable additional funding – Josh Hillman, Nuffield Foundation

“With pupils having missed over half a year of normal schooling and already two to three months behind in their educational progress by last autumn, this is likely to be insufficient to meet the scale of the challenge,” said Dr Luke Sibieta, research fellow and an author of the briefing note.

“Meeting the Prime Minister’s pledge to ensure ‘no child will be left behind’ as a result of the pandemic is likely to require spending in the tens of billions.

“The government is widely expected to publish a long-run plan for education recovery in the coming weeks. This seems likely to place extra responsibilities and expectations on schools and other providers. It will therefore be crucial to understand how much extra funding is attached, as well as the underlying state of school and college finances. As we move back to normal, it will be harder to fund new funding commitments from existing budgets.”

Josh Hillman, director of education at the Nuffield Foundation, said:

“The government has directed considerable amounts of contingency funding towards tackling the short-term effects of COVID on education, particularly for children and young people from disadvantaged backgrounds. However, as this research shows, tackling both the short- and longer-term effects of the pandemic on all stages of education will require considerable additional funding.

“To address learning loss and prevent the disadvantage gap widening further, the government’s forthcoming long-term plan for education recovery, led by Sir Kevan Collins, must be ambitious, with generous funding commitments for both immediate and post-pandemic education spending.”

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