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DfE raids capital coffers for £250m towards pay grant

The Department for Education has been accused of “robbing Peter to pay Paul” after it emerged that ministers raided capital coffers for £250 million to cover part of this year’s teacher pay grant.

Last summer, the government announced that it had approved a 6.5 per cent pay rise for all teachers and leaders. Schools were handed a grant of £482.5 million this financial year and are due to receive £827.5 million next year to fund part of the increase.

But no new money was provided by the Treasury, leaving the DfE to find the funds from its existing budgets.

Schools Week can reveal that £250 million for this year’s grant came from the department’s capital budget, most of which is used for school rebuilds and maintenance.

It is understood at least part of the underspend resulted from a slower-than-anticipated start to the school rebuilding programme, whose end date has now been pushed back two years to 2032 after its launch was impacted by Covid.

Of the remaining £232.5 million, some has come from an estimated £240 million underspend on the National Tutoring Programme and some is from a £345 million underspend on the 16 to 19 education budget resulting from lower-than-expected pupil numbers.

However, the DfE repeatedly refused to tell Schools Week how much had been drawn from each pot.

‘Storing up problems for the future’

Luke Sibieta, a research fellow at the Institute Fiscal Studies, said: “If there are underspends and delays on capital projects, it can often be tempting to use the money to pay for day-to-day spending. However, this almost always stores up problems for the future.”

He said school rebuilding was a “multi-year programme” and reducing spending to fund teacher pay “implies a scaling back of school rebuilding plans and maintenance budgets now and in the future”.

Luke Sibieta

The £250 million transfer from capital to revenue funding was revealed in supplementary estimates – a document published by the Treasury which details last-minute adjustments to departmental spending plans at the end of the financial year.

But the documents also reveal hundreds of millions of pounds of transfers between different parts of the DfE’s budget without any explanation. The department refused to explain the transfers when approached by Schools Week.

Instead the department said the estimates “unite a variety of programme lines under each budget – many movements reflect a combination of changes to forecasts driven by take up, delivery, reprioritisations through the year which are not connected to pay”.

The DfE also refused to explain a £7.3 million “movement” of school resource management budgets and a £6.4 million “decrease” to resource management “deployments”.

Neither could it explain £11.5 million in “decreases” to the school water strategy or a “reallocation” of £8 million from the budget for full fibre broadband in schools. A “general surrender” of £30 million back to the Treasury also went unexplained.

‘Robbing Peter to pay Paul’

The DfE had even refused to provide detailed figures for where the money for the pay grant came from under freedom of information on the basis that the detail would be revealed in the estimates. But no detail was included.

Paul Whiteman, general secretary of school leaders’ union NAHT, said the government “must fund competitive pay for teachers and leaders, but that should not be to the detriment of the school infrastructure”.

“We have been raising the alarm for years over the state of disrepair when it comes to the school estate,” he said.

“That investment really can’t be put off either, lest we hit another emergency like the crumbly concrete crisis. It’s hard to think of a clearer example of robbing Peter to pay Paul.”

A DfE spokesperson insisted that “no capital projects or programmes have been reduced or stopped to fund the teacher pay deal”.

Capital programmes at ‘same scale’

Underspends “across the whole department” helped it to fund the pay grant, including “demand-driven underspends on the National Tutoring Programme and capital underspends driven by challenging construction sector market conditions”.

The spokesperson added: “All capital programmes will be delivered at the same scale and, as we have always made clear, no frontline services in schools or colleges will be affected.”

The 10-year school rebuilding scheme launched in 2020. The DfE previously said it would build 500 schools over the course of “this decade”. It has said in comments that it will finish in 2030.

But, in a letter last May to Jane Balderstone, the senior responsible officer for the programme, DfE permanent secretary Susan Acland-Hood said the scheme was now “scheduled to run until 2032”.

The DfE insisted the programme had “not been pushed back or cut, and neither has any other capital programme”.

The rebuilding scheme was “set up with the aim of entering 50 projects a year – on average – into delivery over 10 years. The department is on track to deliver that”.

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