Philip Hammond to set aside £320m in budget for expansion of government’s free school programme, with schools free to offer selective education

Theresa May will pave the way for a new generation of grammar schools on Wednesday, as her chancellor uses the budget to push ahead with a controversial policy that is seen as a key priority for the prime minister.

Philip Hammond will plough £320m into expanding the government’s free school programme, creating 70,000 places in 140 schools, which will be free to offer selective education after the government passes legislation.

May’s pledge to end the ban on grammars during this parliament means that many of the new schools, which are largely due to open after 2020, could opt to choose pupils based on academic merit.

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The chancellor will underline the government’s focus on selective education by also extending free public transport for the poorest children to grammar schools, covering those within two to 15 miles of their homes.

The news triggered an immediate backlash from groups representing teachers, asking why the money wasn’t going to existing state schools. They claimed that a funding crisis meant children faced being taught in bigger class sizes, with limited resources and fewer teachers.

Labour accused the government of “throwing more good money after bad” while the Liberal Democrats described it as an unbelievable decision in the face of “devastating cuts to school budgets”.

The policy comes alongside plans, expected to be announced on Wednesday, to put aside rising tax revenues to help build up a £60bn reserve to deal with Brexit-related uncertainty.

Hammond is also likely to react to a Conservative backlash over the government’s business rates reforms by offering more transitional relief to companies and to put money towards plugging a massive funding gap for social care.

But the decision to place the possibility of more grammar schools at the heart of a budget that will be seen as the chancellor’s chance to steady the ship before article 50 is triggered underlines a determination to drive forward what many consider May’s flagship education reform.

The prime minister insisted that the proposals would guarantee more choice for parents. “For too many children, a good school place remains out of reach with their options determined by where they live or how much money their parents have,” she said. “Over the last six years, we have overseen a revolution in our schools system and we have raised standards and opportunity, but there is much more to do.”

Hammond insisted that the core schools budget – which stands at more than £40bn a year – would be protected and that the policy would help to ensure that children could access quality education whatever their background.

“Investing in education and skills is the single most important thing that we can do to equip our children for the future,” he said.

The policy will also see £216m of investment into school infrastructure to help rebuild and refurbish existing schools, which the Treasury said would be on top of £10bn to be spent on the condition of schools. It said that 1.8m more pupils were being taught in good or outstanding schools – now making up 89% of the total – but argued that more than 1m were still in under-performing institutions.

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The new schools will come on top of 500 free schools already in train for 2020, with 110 of the 140 expected after the next election. Examples of successful free schools provided by the Treasury included Tauheedul Islam boys’ high school in Blackburn, Exeter mathematics school and the London Academy of Excellence.

While not all the new schools will choose to become grammars, officials made clear that the new money was to support the proposals in the green paper called Schools that Work for Everyone in which the notion of expanding selective education was key.

Dr Mary Bousted, the general secretary of the Association of Teachers and Lecturers, said teachers and heads would be dismayed to see Hammond throwing money at free schools and grammar schools when others were facing big real terms funding cuts.

“These spending pledges are totally insufficient to tackle the funding crisis the government is inflicting on schools by forcing them to make over £3bn of savings by 2020. Bigger class sizes, fewer learning resources and fewer teachers with greater workloads are the likely consequences,” she said.

She argued that “funding the expansion of selective education is a mistake that will result in a small minority benefitting at the expense of the vast majority of the country’s young people”.

The shadow education secretary, Angela Rayner, said free schools were being opened in areas where they were not needed. “This is now throwing more good money after bad. It will do nothing to address the shortage of available school places,” she said, pointing to £3bn of funding cuts.

The Lib Dem education spokesman, John Pugh, said: “This is unbelievable. Two weeks ago, the free schools programme was shown to have overspent to the tune of £9bn, at the same time as existing schools struggle to pay for books, cut teachers and their buildings decay around them.”

But Toby Young, director of the New Schools Network said: “I’m delighted that the government has renewed its commitment to free schools. It’s a recognition that free schools are the most cost-effective way of providing much-needed new places, as well as popular with parents and more likely to be ranked ‘outstanding’ by Ofsted than any other type of school.”

The policy comes as Hammond is being urged to scrap cuts to inheritance, corporation and income tax in order to plough money into benefits, as figures reveal the extent to which living standards are going to be squeezed by rising inflation.



Analysis by the Resolution Foundation shows a “double whammy” for lower-income working families who the government has said it wants to target.

It finds that real wages could start falling by the end of the year while the government’s welfare freeze will inflict far more pain than has been predicted, taking £3.6bn more than expected from some of the poorest people in the country by 2020.

Torsten Bell, the thinktank’s director, warned that the pattern of external forecasts since November suggested that the Office for Budget Responsibility could revise up its inflation forecast to 2.6% this year and next. He said the impact on wages could be catastrophic.

Hammond will respond to concern over the deterioration of social care in England by announcing a £1.3bn emergency boost for those services, Whitehall sources say. The money will be made available over the next two financial years, starting next month, but is unlikely to appease critics such as the Local Government Association and Age UK, who claim the sector needs at least £2bn a year more giving rising costs and the growing elderly population.

Hammond is expected to say that the money should directly benefit the NHS by reducing the number of patients who end up stuck in hospital despite being medically fit to leave because social care in their area is unavailable.

It is likely to be directed at schemes that aim to tackle what the NHS calls delayed transfers of care, or bedblocking, and the risk of mainly older patients being admitted or readmitted to hospital.

However, Hammond is set to face down demands from Labour, the British Medical Association and many NHS bodies by refusing to increase the health service’s budget beyond the sums already agreed.

The BMA has called for an extra £10bn a year for the NHS, while Labour has demanded £12bn for health and social care.

But he is expected to make an extra £200m available for NHS capital projects in 2017-18, after warnings from NHS England chief Simon Stevens that his planned “transformation” of the health service in England would struggle unless local NHS bodies had more money to spend building and repairing premises.

Jeremy Hunt, the health secretary, controversially moved more than £1bn from the NHS’s capital budget to its revenue budget in an attempt to give hospitals more money to spend amid an unprecedented financial squeeze.

Lib Dem MP Norman Lamb has organised a cross-party group of 28 MPs who have met the prime minister to urge action on the issue. They are calling for £2bn for social care over 2017-18, £1.5bn for the NHS focused on out of hospital care and £500m dedicated to mental health.