Scottish Government

EXPENDITURE OPTIONS

Current and projected education expenditure

1. Before exploring how future resources might best be spent, consideration should firstly be given to how Scotland's current expenditure on education might be affected in future years given the projected decline in pupil numbers.

Current education expenditure

2. In 2005-06, Local Authorities spent a total of £4.4 billion on education, an increase of 3.5 per cent in real terms on the previous year. Table 3.1 illustrates how overall gross revenue expenditure on education by Local Authorities has risen in real terms ¹⁵ ( i.e. above inflation) over the past six years.

Table 3.1: Total gross revenue expenditure on education by local authorities, in real terms

3. Gross revenue expenditure on primary education was £1.6 billion in 2005-06, a 3.3 per cent rise in real terms on the previous year. For secondary education, gross revenue expenditure was £1.8 billion in 2005-06, a rise of 3.6 per cent in real terms on the previous year. Figure 3.1 illustrates how gross revenue expenditure has continued to rise in real terms for primary and secondary education in recent years.

Figure 3.1: Gross revenue expenditure for primary and secondary education, in real terms

Source: Expenditure on School Education in Scotland, 2007

4. Gross revenue expenditure per pupil for 2005-06 was £4,138 per primary pupil and £5,771 per secondary pupil. This represented an increase of 5.4 per cent and 4.4 per cent in real terms per primary and secondary pupil respectively compared to the previous year. Expenditure per primary and secondary pupil has continued to rise in real terms in recent years. (See Figure 3.2, below.)

Figure, 3.2: Gross revenue expenditure per primary and secondary pupil, in real terms

Source: Expenditure on School Education in Scotland, 2007

5. The largest element of education expenditure in 2005-06 was on teachers, accounting for over 50 per cent of total gross revenue expenditure. Operating Costs (which includes PPP revenue payments), followed by Other Employees, represent the second and third largest elements of education expenditure. (See Figure 3.3, below.)

Figure 3.3: Breakdown of education gross revenue expenditure 2005-06

Source: Expenditure on School Education in Scotland, 2007

Projected education expenditure

6. One of the main determinants of future expenditure on education could be the projected change in pupil numbers. This could have a direct impact on costs which depend on the number of pupils ( e.g. school meals provided) and also an indirect impact on certain costs ( e.g. operating costs and the number of teachers employed).

7. Using the population projections from GROS, adjusting to take account of the participation rate ¹⁶, Figure 3.4 illustrates the projected pupil profiles for future years. This chart clearly shows that not only is there a projected fall in the total number of pupils (25 per cent by 2044), but also that the age profile for school-aged children participating in school is likely to flatten as we move towards 2044.

Figure 3.4: Projected pupil profile

8. It is unlikely that total expenditure on education will decline at the same rate as the projected number of pupils. This is because although we might expect a change in pupil numbers to result in a reduction in some costs, this might not happen for a number of years. For example, it will take a number of years before the fall in pupil numbers forces a school to close or merge with a neighbouring school. Furthermore, in rural areas the local school plays a central role in the community and therefore other factors need to be taken into account in addition to the fall in pupil numbers.

9. In order to provide a realistic estimate of the possible impact changes in pupil numbers could have on education expenditure, we have broken down the expenditure lines and identified those which are likely to vary directly as a result of changes in pupil numbers and those which are likely to vary indirectly through changes in the size of the school estate. The later is based on the forecast size of the school estate in Scotland which has been modelled on the historic relationship between the change in pupil numbers and the size of the school estate.

10. For expenditure on teachers (which represents the largest area of expenditure), we have estimated the number of teachers based on the assumption that the pupil-teacher ratios estimated in 2007 with the 53,000 teachers will be held broadly constant for future years. This is the base assumption used for Teacher Workforce Planning purposes. We have also assumed that the average cost per teacher will rise by 0.5 per cent in real terms per annum.

11. Overall, it is estimated that total expenditure on education in real terms could fall from £4,704m in 2005-06 (includes Capital Expenditure) to £4,507m by 2015-16, a decline of around £200m or 4.2 per cent. This is significantly less than the projected decline in pupil numbers of around 10 per cent over this period.

12. Of course, in practice the actual expenditure will depend on the future decisions of successive Scottish Cabinets. In particular, decisions over the number of teachers employed and future salary increases will have a significant impact on future expenditure. For example, if the average cost of a teacher increased by 1 per cent in real terms per year as opposed to the assumed 0.5 per cent real terms increase used in the above estimates, this would result in an estimated increase of expenditure of around £90m per annum by 2015-16 over and above the £4,507m currently estimated.

Summary

• Gross revenue expenditure on education was £4.4 billion (excluding Capital Expenditure) in 2005-06, representing a rise of 3.5 per cent in real terms over the previous year.
• The projected decline in pupil numbers could have an impact on total education expenditure in future years. For example, our initial estimates suggest that this could lead to a reduction in future expenditure of 4.2 per cent (or £200m) in real terms by 2015-16.
• Teachers represent the largest element of education expenditure and therefore decisions over the number of teachers and the salary levels for these teachers will have a significant impact on overall education expenditure in future years.

Expenditure Options

9. The use of resources, whether existing or additional, to enhance the educational experience can take many forms. At one level, they could be targeted directly at pupils through improved facilities or additional materials such as books or IT equipment. These options are not considered in this report. Alternatively, resources could be used to employ more teachers. The purpose of this could be either to reduce class sizes or to enable additional flexible and targeted deployment of, for example, learning support teachers or peripatetic specialist teachers of subjects such as science, technology and expressive arts in primary schools. Further possibilities would be to enhance the quality of teaching through enhanced initial teacher education or more professional development of the existing teacher workforce. Account needs also to be taken of the potential need to find resources to cover the implications for teachers' time of acting as lead professionals in line with the Getting it Right for Every Child proposals. Beyond that, the deployment of other professional and para-professional staff such as home visitors, educational psychologists, social workers, social work assistants, or nursery nurses would support partnership working with children and families, particularly of lower-attaining pupils. Additional support staff, either in classrooms or deployed elsewhere in schools, would also be options.

10. The Working Group looked at a number of possible options involving additional teaching or support staff and an estimate of the corresponding resources required.

Employing Additional Teachers

This section of the report focuses on options for reducing class sizes. However, as noted in the section above, there are a number of other options for deploying additional teachers in flexible and targeted ways. There is no clear research evidence on the relative effectiveness of these choices.

Pro

• Apart from reductions in rolls, which tend not to be spread uniformly throughout the country, employing additional teachers is the only way to reduce PTRs. Evidence suggests that teachers believe that class size affects their teaching practices, in particular the way they organise within-class groups and the amount of time they can devote to children. Research also indicates that teachers feel less stressed and more able to cope with their workload in smaller classes. There is little if any research on the impact of team teaching on pupils' attainment which would be one alternative to class size reduction.

Con

• It is clear from Professor Peter Blatchford's work (covered in Chapter 2) that there is little evidence that a blanket reduction of class sizes would increase educational attainment above P3.
• If applied to generalised class size reductions, there is very limited research evidence to suggest attainment benefits accrue, aside from the first years in Primary, and although instinctively most commentators would expect to see broader benefits for achievement, these outcomes have not been evident from published studies.

Costs (at 2007 salary costs)

While salaries are of course the largest cost associated with employing additional numbers of teachers, there are also consequential increases in costs such as NI, pension and other costs, as well as cost for pre-service and in-service training (perhaps an initial £35,000 per teacher up to the stage of full registration, and a total of 20-30% of the salary bill for ongoing non-salary costs). The following illustration is based solely on the PGDE route. In the Smarter Scotland debate on 20 June 2007 it was announced that BEd numbers would rise to meet the class size and early years commitments of the new Scottish Government.

In more detail, the unit costs are:

Training

• Cost per student of PGDE £9.3k
• Cost of training 100 teachers £0.93m

Probation

• Probationer Teachers £27k
• 100 Probationers £2.7m

Cost of 100 fully qualified teachers £3.63m

Salary costs of 100 teachers

• At Point 1 of Pay Scale £2.9m
• At Point 6 of Pay Scale £3.8m

There are also likely to be opportunity costs and catchment area implications, as irrespective of falling school rolls, some schools may require additional classrooms. This is potentially a major cost. School rolls will fall unevenly throughout the country and will not therefore of themselves deliver uniform reductions in class size. Capital costs are likely to be incurred in some areas. The impact of placing requests may exacerbate the position and lead to requirements for additional teachers and capital costs in particular areas.

Classroom Assistants

In 2006 there were over 4200 classroom assistants in primary schools sufficient to give each on average 6 hours a week contact with a classroom assistant if this were to be increased to 10 hours contact a week it would take an additional 2,600 classroom assistants.

Pro

• Since the introduction of the Classroom Assistants Initiative in 1998, Classroom Assistants have been highly valued by schools, teachers and parents. Their role can vary depending upon the responsibility attached to the post, but principally they contribute to the raising of pupil attainment by freeing teachers' time to teach, assisting in the supervision of pupils and providing support for learning under the direction and supervision of teachers.

Con

• An alternative to employing Classroom Assistants might be to employ other support staff to benefit wider school activities, or the purchase of IT equipment. There is very little research evidence in relation to the benefits for children and young people of Classroom Assistants, and no research which has yet established a link to improved attainment or achievement.

Cost

2,600 classroom assistants would cost approximately £39m a year.

Nursery nurses

In 2006 there were approximately 1500 classes with P1-P3 pupils. If each class was to have contact with a nursery nurse for 5 hours a week around 300 nursery nurses would be required.

Pro

The employment of nursery nurses would help ease the transition from pre-school to primary.

Con

Nursery nurses salaries can be around those of an unpromoted teacher near the bottom of the salary scale. Arguably it would be more advantageous to increase the number of teachers.

Cost

300 nursery nurses would cost in the region of £7m a year

Reducing P2 to 25

Pro

• This would bring P2 into line with P1 from 2007 and research suggests that this could lead to improved attainment amongst a proportion of children in the early years of primary school. This would allow standards of literacy and numeracy to improve further at a point where there is research evidence supporting smaller classes.

Con

• Having become used to being in a class of 25 for their first two years of primary, children would then have to adjust to a class with a maximum of 30 and then 33 in P4. Children may find it more difficult to concentrate and keep on task in the larger class.

Costs (at 2007 salary costs)

• It has been estimated that reducing P1 to 25 will require 417 fte primary teachers. As a rough guide P2 is therefore likely to require a similar number. No capital costs for extra classrooms and equipment are included but are likely to be incurred particularly in schools where rolls are not falling or which are single stream.

Training Cost £4m

Probationer Year £12m

Salary cost at point 1 £12m

Salary costs at point 6 £16m

11. Reducing P1-P7 to 20

12. Any estimate of the number of teachers required to meet any class target will depend on a variety of factors, including the number of pupils and demographic trends. The following example was included in the Group's interim report. However population projections have since been altered considerably and since May this year the Government has been committed to specific class size reductions different than those modelled in 2005.

Pro

• This would eliminate the two tier class size structure in primary and ensure that all primary children are taught in classes of the same size. In classes of 20, teachers may be able to give each child more individual attention and may have more time for lesson preparation and correction.

Con

• The cost of implementing this is substantial and available evidence suggests that levels of literacy, numeracy and attainment may not increase enough, particularly in the later years of primary, to justify the expenditure. There is also likely to be significant capital costs in cases where existing schools need to be extended to accommodate the extra classrooms required.

Costs (at 2007 salary costs)

• It is estimated that it would require over 4,000 additional teachers to reduce P1-P3 to 20. A very rough estimate for P1-P7 would be in the region of 8,000 additional teachers.

Training cost £84m

Probation Year £213m

Salary cost at point 1 £233m

Salary cost at point 6 £309m

Providing more Professional Development

Pro

• Some research suggests that the biggest opportunity to improve children's learning is through improving the quality of teaching. By increasing the level of professional development, a stronger focus is placed on the quality of the teacher in delivering effective teaching, and in turn the quality of learning should improve. Also, A Curriculum for Excellence encourages teachers to work in new and innovative ways and to engage differently with colleagues and children. More professional development could help teachers embrace the new culture change demanded. This option carries no physical or accommodation costs. It could occur both through fundamental changes to the delivery of Initial Teacher Education, and provision of post-qualification professional development:
• More use of four-year BEd routes
• extension of the PGDE course from the current 36 weeks
• extension of the induction period
• additional post-qualification professional development, e.g. an increase in the current 35 hours CPD in teachers' contracts

Con

• Increasing the amount of professional development teachers are entitled to (currently 35 hours per year) at the cost of teaching time could generate timetabling and supply issues for schools and authorities. Finding cover for this additional professional development time could be problematic and the capacity of the current system to deliver increased professional development would need to be examined. In addition to the extra funding needed for the increase in actual professional development activities (currently £14.2m is split between Local Authorities), more resources for travel and supply would be required.

Costs

• If each teacher in Scotland received an additional 5 days' CPD per annum, and in all cases costs were incurred, the annual cost would be around £50 million.

Summary

Clearly, resources are limited and in order to ensure that best value is obtained, a balance will need to be struck between investment and the scale of return.