26 October 2022

Education is the cornerstone of a strong economy

Another round of austerity will lead to yet another lost generation of young people.

Following the disastrous aftermath of the mini-Budget and subsequent U-turns that meant Liz Truss became Britain’s shortest-serving prime minister, the Chancellor, Jeremy Hunt, is under pressure to fix a £40bn black fiscal hole. With each option less appealing than the last, he faces revolt over uncertainty on the pensions triple lock, aligning benefits with inflation, cuts to already-squeezed departmental budgets and tax rises.

A recession is likely on the way, but we mustn’t lose sight of the need for a long-term plan for economic growth. Our economy is stuck in a rut. We’ve had a decade of low growth, characterised by an explosion of low-paid and insecure jobs. Businesses are now being hit with rising costs and acute labour shortages.

Good educational attainment is the cornerstone of a strong economy, ensuring decent jobs and productivity growth. A new report by the Centre for Progressive Policy (CPP), the think tank I lead, examines the economic case for tackling educational inequalities between different places. Place has become a powerful predictor of educational attainment in recent decades, leading to significant disparities. There is a gap in average Attainment 8 scores, which measure the academic performance of a secondary school, of more than 12 points between the best- and worst-performing local authorities.

Reversing this trend would stimulate economic growth and boost living standards. We estimate that bridging the attainment gap between the most and least deprived areas of England could boost the economy by £14.4bn per year through increased earnings. If attainment and earnings in Blackpool, Middlesbrough and Newham matched those in Windsor, Richmond and Wokingham, the impact on local economies would be transformational.

But years of spending cuts and the Covid-19 pandemic have had a brutal impact on educational outcomes, particularly in the communities most excluded from the benefits of growth. Last year Kevan Collins resigned in protest when the government committed to a measly tenth of the funding package he advised to support pupils whose educations had been so profoundly disrupted by the pandemic. The £1.4bn offer was equivalent to just £22 on average per primary school child. He knew it was a false economy to commit so little spending to an area that has such a huge impact on the country’s productivity, as well as the wellbeing of our children. It ran counter to every ambition across the UK political spectrum to “build back better”. Flying in the face of the government’s own commitment to level struggling communities up, the decision was widely criticised at the time – and that was before the current cost-of-living crisis tightened its grip on the finances of disadvantaged families.

Levelling up hangs in the balance. Will the new PM embrace the idea? Either way, we’re in an era of fiscal restraint as the government picks up the pieces of Truss and Kwasi Kwarteng’s short-lived and reckless economic strategy. But we cannot risk losing another generation of young people, another generation that will never realise their potential. Failing to act would not only damage young people’s life chances, it would also damage our economy at a time when a long-term plan for growth has never been more critical.

CPP is calling for a substantial expansion of the Pupil Premium to support the most disadvantaged students. The payment for primary school children should be increased from £1,385 to £1,782, bringing it in line with inflation since 2016, and payments for secondary school pupils should be boosted by 80 per cent so that they match the primary equivalent. Disadvantages are no less prevalent in secondary school, and equalising these payments would provide targeted help to drive improvements in teaching quality and academic support, including tutoring. The payment should also be extended to post-16 pupils in colleges.

Our interviews with recent school leavers and teachers in deprived areas in the north-west highlighted a lack of resources in schools, and a lack of options for students wishing to progress to post-16 education because of key barriers holding back participation and attainment. Boosting this funding would make a tangible difference on both fronts.

The Chancellor has warned of “eye-watering” difficulties in the spending decisions that lie ahead. But the £2.2bn cost of these proposals would be an investment, not just in reducing inequalities, but in safeguarding another generation from the productivity stagnation and economic decline that has dogged the past decade.