RAAC Scandal: Sunak handed tax cuts to big banks but left schools to crumble

EMBARGO: Immediate Release

Liberal Democrat Leader Ed Davey has accused Rishi Sunak of putting “tax cuts for big banks over children’s safety" after analysis by the party shows that Sunak rejected pleas by officials for an extra £900 million a year for school funding in the 2021 Spending Review.

Officials in the Department for Education asked the Treasury for an average of £4 billion a year over five years for new buildings and school repairs. They did so despite this being less than the £5.3 billion they estimated was needed to “mitigate the most serious risks of building failure.”

Then-Chancellor Rishi Sunak turned down their request, allocating just £3.1 billion a year on average.

In the same Spending Review, he announced tax cuts for big banks worth more than £1.1bn a year, slashing the Bank Surcharge from 8% to 3%. This would have been more than enough to offset the shortfall in funding that civil servants had asked for.

Liberal Democrat Leader Ed Davey said: 

“Rishi Sunak shamefully chose tax cuts for the big banks over children’s safety. 

“It is staggering that in the very same Budget in which he slashed taxes for the banks, Sunak couldn’t find the cash needed to urgently repair crumbling schools.

“Rishi Sunak must apologise to all the children and parents facing the consequences of his disastrous decision. His refusal to take responsibility for his role in this crisis has been totally tin-eared and just shows how out of touch he is.”

ENDS 

Notes to Editor

In the Autumn 2021 Budget and Spending Review, the Chancellor confirmed a reduction in the Bank Surcharge rate from 8 to 3 percent with effect from 1 April 2023. According to the latest available figures from the Office for Budget Responsibility (March 2023 EFO, p. 148, table A.5), the tax cut will result in a reduction in tax revenue from £2.3bn in 2021-22, to £1.2bn in 2023-24 and £0.9bn in 2024-25 through 2027-28.

The National Audit Office’s report on the condition of school buildings, available here, says that (Executive Summary, paragraph 6):

In recent years, funding for school buildings has not matched the amount DfE estimates it needs, contributing to the estate’s deterioration… In its Spending Review 2020 case, drawing on external estimates, DfE reported that £7 billion could represent the best-practice level of annual capital funding. It recommended £5.3 billion a year as the capital funding required to maintain schools and mitigate the most serious risks of building failure once it had expanded its School Rebuilding Programme. Since it would take time to achieve this expansion, DfE requested an average of £4 billion a year for 2021 to 2025. HM Treasury subsequently [in the 2021 Spending Review] allocated an average of £3.1 billion a year. 

Given limited funding, responsible bodies are more likely to prioritise elements of school buildings in the worst condition leaving less to spend on effectively maintaining the other buildings and enhancing or developing their estate. Stakeholders told us that current funding levels mean responsible bodies may delay carrying out remedial work, leading to poor longer-term value for money.