The school funding crisis will worsen if Philip Hammond keeps lowballing the education sector

If the economy keeps growing, more public funds will gradually become available. And those funds should go to schools

Sunday’s televised clash between Andrew Marr and Philip Hammond highlighted the tension over the direction of public spending now that the fiscal deficit is broadly under control.

The chancellor spoke about the funds the government was putting into education, while Marr challenged him about schools having to close early and, in one case, a headteacher cleaning toilets to save money. This echoes claims made after the Autumn Budget that the chancellor was being condescending towards schools when he said that the one-off £400m bonus he announced then would help them “buy the little extras they need”.

The problem for schools, of course, is not that they need little extras but that their core funding has been squeezed during the past decade of fiscal consolidation. The UK is pretty much middle of the pack when it comes to public spending on education – less than the Scandinavian countries, about the same as France, and more than Germany and the US. But given the importance of education, there is certainly a strong argument that the UK should spend more.

This is one part of a national debate than needs to take place in the coming months. The brakes on public spending can be eased a little. The fiscal deficit has come down from nearly 10 per cent of GDP to little more than 1 per cent. The government is running a current surplus, borrowing only for investment.

Tax receipts are strong, stronger than the Office for Budget Responsibility expected even back last October. And while the government would be wise to assume that global growth will slow in the next couple of years and prepare accordingly, the country is now in a position to discuss how the additional resources should be allocated.

Resources are by definition scarce in the sense that funds allocated to one type of spending are unavailable for another. There is an inevitable and proper political debate about the total level of government borrowing that is acceptable, and another about the appropriate level of tax revenue that can or should be raised.

As far as borrowing is concerned, the key issue is that public finances should be transparent. Many public services, including schools, are being hit by service charges left over from the private finance initiative (PFI), now ended by Hammond. The PFI helped rebuild many schools, but the costs will have to be met by future taxpayers.

As for overall taxation levels, government revenues as a percentage of GDP are at the top end of the range for this century. So anyone arguing that they should be higher, perhaps as a response to the growing needs of older people, has to be transparent about the rising tax burden. Again, transparency is the key.

In the autumn, there will have to be another long-term spending review. We are promised one by the present chancellor, though it may well end up being presented by his successor. But changes in the cabinet, or indeed a change of government, would not change the maths.

If the economy keeps growing, more public funds will gradually become available. But that will still mean there are hard choices ahead to make sure that additional spending is targeted where it is most needed. One area that should be high on the list of priorities is our schools.