School closures pose big risk to earnings and tax revenue

School closures during the coronavirus crisis risk the UK’s children foregoing billions of pounds in future earnings, and the government missing out on large amounts of tax revenue, according to a new report.

The Institute for Fiscal Studies, a think-tank, said on Monday the UK’s 8.7m school children could lose out on a combined £350bn in lifetime earnings after missing more than half a year of teaching in person during the Covid-19 pandemic.

The IFS said that although its figure was an estimate, it highlighted the severe risk to the public finances: the government might secure £100bn less in tax revenue to spend on public services or pay down debt.

The think-tank called for “radical” measures to help children catch up on lost schooling, highlighting how those from disadvantaged backgrounds were likely to be worst affected.

Boris Johnson ordered the closure of schools in England and a switch to online learning at the start of the month as he introduced a third lockdown for the country.

This equates to an astronomical £350bn in lost lifetime earnings across the 8.7m school children in the UK.

Last week the prime minister said schools in England would not reopen until March 8 at the earliest and, combined with more than a term of remote learning last year, it meant most children would have missed more than half a year of in-person teaching.

“Absent a substantial policy response, the long-run effects of this learning loss are likely to be slow-moving and substantial,” said Luke Sibieta, author of the IFS report.

“We will all be less productive, poorer, have less money to spend on public services, and we may be less happy and healthy as a result. We will probably also be more unequal.”

The IFS’s £350bn figure is based on an estimate that a year of schooling increases an individual’s earnings by 8 per cent per annum on average in advanced economies.

Assuming someone earns £1m over their working life, losing half a year of schooling would mean foregoing £40,000 in income, the think-tank said.

“This equates to an astronomical £350bn in lost lifetime earnings across the 8.7m school children in the UK,” said Mr Sibieta.

He added that even if schools, teachers, parents and charities managed to mitigate 75 per cent of this effect, the lost earnings would still amount to almost £90bn.

The government has so far allocated £1.5bn to schools across the UK to help children catch up — including £1bn for a national tutoring programme.

But Mr Sibieta said the figure “doesn’t even start to match the scale of the challenge”.

He said £30bn — the value of half a year of day-to-day spending on schools across the UK — was a useful benchmark for the amount needed.

“A much larger policy response would allow us to consider radical and properly resourced ways to help pupils catch-up,” he added.

While the IFS report stopped short of advocating precise measures, Mr Sibieta said the UK needed to “think big” to increase learning time.

This could involve extending the school year, lengthening the school day, and mass repetition of whole school years.

The Association of School and College Leaders, the trade union that represents headteachers, said the government needed to “put in place much more substantial catch-up funding” that schools could spend as they wished.

The Department for Education said it would work with parents, teachers and schools to develop a long-term plan to ensure pupils could make up their learning “over the course of this parliament”.

“The prime minister was clear last week that extended schools closures have had a huge impact on pupils learning, which will take more than a year to make up,” it added.