Why rocketing energy bills are a burning issue

Suggesting schools use much-fought-for budget increases to soak up rising energy costs seems a perverse plan – not least because it is money that would be better spent on catch-up efforts, writes Dan Worth
11th February 2022, 7:00am

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Why rocketing energy bills are a burning issue

https://www.tes.com/magazine/analysis/general/why-rocketing-energy-bills-are-burning-issue
Why rocketing energy bills are a burning issue

Like all of us, I have been absorbing the news of a huge spike in energy prices with trepidation - how much will it increase by, what does that mean for monthly outgoings, what’s the optimum thermostat temperature, should I get a pet to hug to keep warm instead?

For households, this is serious stuff (whatever Ovo Energy may think) and could lead to some tough and unpleasant choices in the months ahead.

For schools, the situation is equally concerning, with eye-watering bill increases creating another major headache for headteachers, school business leaders and multi-academy trust CEOs.

For example, one school told me its bill had increased by £67,000 for the year, while another expected it to double from around £80,000 to £160,000. Perhaps most shockingly, Rob McDonough, CEO of the East Midlands Education Trust (EMET), revealed one of their schools on an emergency variable tariff saw energy costs climb by £54,000 to hit £63,000 for the month.

That’s money that could be spent on more staff, resources, tutoring, trips, upgrading buildings and so much more.

What’s making this situation even more painful is that at the very moment bills are skyrocketing, schools are also keeping windows and doors open to help mitigate against Covid - something one head said very much felt like “burning money”.

Cold comfort to schools

When I asked the Department for Education about this situation, it said the extra £4.7 billion that has been agreed for school budgets until 2024-25 would help schools to “meet wider cost pressures, including those from energy prices”.

That’s cold comfort to the schools Tes has spoken for a follow-up piece on the energy crisis, who are now looking at three-year fixed deals that have risen by 191 per cent for gas and 150 per cent for electric in the past 12 months.

What’s more, with such high prices for fixed deals, it’s giving those responsible for budgets a huge dilemma of whether they sign up to such an expensive long-term deal - only to potential see prices fall - or hold fire and move to a variable rate in the hope that fixed-tariff prices fall.

Get it wrong and you face being tied into a hugely expensive deal that sucks up money for years - or you watch prices spiral even higher and wish you’d signed that fixed deal that suddenly would not have seemed so bad after all.

This is the exact situation that McDonough told Tes he faced when he was offered a fixed deal of £30,000 a month.

He held fire hoping a better deal would materialise a few weeks later but that didn’t happen, leaving them stuck on the emergency tariff for several months - before finally alighting on a fixed deal that proved just about palatable.

It’s all very much a big gamble and, with the annual April financial budget deadline looming for local authorities and their schools, it’s one that is ever more pressing.

A tone-deaf response

Yet the government’s response to this predicament again seems lacking, with the latest DfE response noting that, percentage-wise, any rise in energy costs is nothing to be alarmed about.

“Academy trusts spent an average of 1.4 per cent of their spending on energy costs in 2019-20, while maintained schools spent an average of 1.3 per cent, which means even while costs are rising, inflation in this area would have a relatively small impact on a school’s budget overall.”

That’s a clever use of statistics - but when prices are rising by tens of thousands of pounds and drawing money away from more pressing needs, it feels ever so slightly tone-deaf.  

It wasn’t a whole lot better when education secretary Nadhim Zahawi was asked about the rising price of energy on Sky News on Thursday with direct reference to our recent story - as you can watch below.

“Part of [what] I’m doing at the moment is making sure we in the department keep our eye on the cost of energy in the education estate…We are looking and making sure we’re monitoring the cost of energy in schools and the impact on schools.”

At least it’s on the radar.

But in terms of anything practical, Zahawi also fell back on referencing the increased funding given to schools in the spending review - claiming this was something it had planned for in the deal it secured from the Treasury in October.

“We made sure in the SR [spending review] we actually got to a good funding settlement because we knew that, actually, the cost of things like energy was going to go up.”

This is not how it was sold at the time, with Zahawi then saying the boost to budgets was a “landmark investment in our skills, schools and families” that would enhance education recovery for children, “whether that’s tutoring, world-class teacher training or summer schools”.

Of course, we can’t lay all the blame on the government for this - rising prices are affecting all sectors and many major nations and it’s not a policy failure or poor ministerial decision that led to this situation.

Yet at a time when money for education is badly needed for, well, education, the fact a recent and much-needed boost to budgets is now being used to justify how schools can soak up exorbitant energy bills seems a rather lukewarm response to a burning issue.

Let’s hope for a mild spring.

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