Class of Covid face tough financial lessons as school doors reopen

Disruption to education may harm skills and the future wage potential of pupils

Back to school in the age of coronavirus illustration
This year's closures will be felt in the pay packets of the Covid-19 school generation for years to come

Face masks, social distancing and “class bubbles” will usher in a school term like no other for England’s 8.9m pupils this week as the majority return to the classroom for the first time since March.

Apart from the children of key workers – and the 2m pupils in reception, year one and year six who returned in June – most have sacrificed nearly half a year of learning as schools differ wildly in their provision of remote teaching.

The performance of schools compares badly with international rivals like Germany, which reopened them by early May, as well as France, which returned on June 22. The UK’s extended educational loss has prompted Boris Johnson, the Prime Minister, to talk of a “moral duty” to reopen schools as Covid-19 threatens to entrench inequalities.

But as the nation faces up to a potentially nightmarish autumn of unemployment, the economic imperative is just as urgent, as millions of the UK’s 33m workers have been forced into temporary childcare and teaching.

According to the latest Office for National Statistics figures, at the end of 2019 there were more than one in five households – 4.6m – with children under 16 where both parents worked; in just under half of those cases, both worked full-time.

Schooling moreover remains one of the biggest barriers to slipping the economic handbrake for companies, according to business groups. Adam Marshall, the British Chambers of Commerce’s director-general, said: “It is hugely important because we have said for a long time now that actually for most employers and employees, the issue is not whether the workplace is safe to return to. The big issues have been around public transport, schools and childcare. There’s a big barrier to a return to normalcy until that happens, so opening schools safely is really important.”

Judging both the impact of school closures and the likely growth fillip from their reopening is hugely difficult, but the Centre for Economics and Business Research suggests a “substantial” economic bounce of around £70bn a year, or 3.3pc of GDP. The bald statistics show that schools account for 6pc of GDP but with output still a third down on pre-Covid levels in June, mathematically growth should rise by around 2pc on reopening.

The quirks of the ONS’s seasonal adjustment process mean that despite schools being closed in August – as they would be in a typical year – educational “output” will actually rise in that month.

Harder to judge is the wider indirect impact of freed-up parents able to concentrate fully on the day job – or head back to the office if unable to work remotely. The CEBR estimates some 6.9m households with children of school age, while the ONS’s surveys suggest that around 61pc of parents with dependent children say their ability to work has been affected.

Doug McWilliams, chief executive, says: “It does appear that most of the impact on work has been shifting of working patterns – time use data indicates that actual reduction in working hours during lockdown as a result of home schooling for those doing jobs has been about 5pc.”

Working those extra hours adds another 0.8pc to GDP, he says. The consultant’s previous research also indicates around half of those working at home would prefer to return to the workplace. Applying this to the parents affected by home schooling suggests another 5pc return of workers overall, providing an extra 0.3pc fillip in terms of hospitality spending. But while reopening schools will give a much-needed lift to the economy, academics have warned that keeping them all open may be more difficult as infection rates rise, involving growth-sapping trade-offs.

The Royal Society’s recent report, “Balancing the Risks of Pupils Returning to Schools”, has called for older children to wear masks and for specific plans to be put in place to deal with local outbreaks. The study has been regularly cited by the PM as evidence schools are “safe”, but Anna Vignoles, a University of Cambridge professor and co-author of the report, puts the emphasis on “safer”.

Whereas shops, pubs and even zoos were open for weeks while schools remained shut, the educational damage to children and the impact on their mental and physical health means that in future, keeping schools open should be “front and centre”. That would “sometimes mean you close down bits of activity proactively”, she argues.

She says: “We have already seen areas where infections have risen, action has been taken and infections start to fall, and that is going to happen in many areas of the country over the next year. In managing those increases we need to be very proactive about keeping levels as low as we can, partly so we can keep sending our kids and young people to school.

“You can imagine a scenario where the kids are going to school and we shut the pubs for example. I suspect we will have to shut schools as well in some bits of the country at some points during the year. If you get a cluster of infections in a particular school, action will need to be taken.”

But being ready with a “whack-a-mole” strategy to handle outbreaks as they happen is likely to incur a lower cost than the damage already done to the nation’s skills base and its impact on growth.

The Royal Society’s report warns: “The magnitudes are not trivial: 13 cohorts of students have been affected by the lockdown, so from the mid-2030s for the 50 years following that, around a quarter of the entire workforce will have lower skills, with a consequently lower growth rate. The present value of such a fall in the growth rate is measured in billions not millions.”

The blanket closures will also be felt in the pay packets of the Covid-19 school generation for years to come, as the report draws on a raft of evidence demonstrating the link between lower skills and lower pay.

Missing a third of the school year could deliver a 3pc-a-year permanent hit to potential earnings, or around £900 based on average wages. That falls disproportionately on lower-ability pupils, who are already five times as likely to slip into poverty than their more highly educated peers, significantly shortening life expectancy.

That spells bad news for the commitments of a prime minister to “level up” the country, which helped sweep him to an 80-seat majority last December.

Stephen Machin, an LSE professor and head of the Centre for Economic Performance, says: “One of the things we do know is that if educational inequalities go up, and if income inequality goes up – and both of those things have happened in the lockdown – then that doesn’t have very good prospects for future social mobility.”

Vignoles in particular is concerned about the cohorts – “my own children included” – set to leave education in the next two to three years and lacking the time to make up for the learning lost. And even as schools reopen, there are hundreds of thousands of pupils who “left” in March entering the worst jobs market since the financial crisis, with the prospect of permanently scarred earnings.

“What happens is that companies just move to the next cohort. When the economy picks up, the companies start hiring the new school leavers. These effects are going to be a lifetime’s effects.” Covid-19’s schoolchildren are set to learn a tough, lingering lesson.