Education standards across England face "significant risks" because of government plans to ensure state schools save £3bn by 2019-2020, the National Audit Office (NAO) has warned.

Schools in England face an 8% real terms reduction in funding per pupil by 2019-20 because of cost pressures, the NAO said.

The Department for Education (DfE) wants schools to make efficiency savings through better procurement , saving £1.3 billion, and by using their staff more efficiently, saving £1.7 billion.

But the NAO wants the cost-cutting process to be closely monitored, saying it was "uncertain" how schools would react to the budget squeeze and they could make choices which "put educational outcomes at risk".

The NAO also wants the DfE to move faster to set out how it envisages achieving the savings and give schools more information and support.

The department believes that schools can finance high standards by making savings and operating more efficiently. However, it has not yet completed its work to develop tools and advice to help schools secure crucial procurement and workforce savings. It is clearly reasonable for the department to look to schools to make efficiencies, but it is important to understand the implications of this method of doing so. The definite part of the department's approach is that real-terms funding per pupil will drop over the coming years; the uncertain part is how schools are able to respond based on their particular circumstances. >

National Audit Office
Justine Greening will announce more details on school funding later. Credit: Ben Birchall / PA

The NAO analysis found that while the financial position of primary schools has been relatively stable, there are signs of financial challenges in secondary schools.

A DfE spokesman said the government was "introducing a national fair funding formula so schools are funded according to their pupils' needs, rather than by their postcode."

Education Secretary Justine Greening is expected to announce later how the different funding rules will be applied.

But education unions said the report showed that school budgets were being pushed too far.

Russell Hobby, general secretary of school leaders' union NAHT said "budgets are being pushed beyond breaking point".

He added: "Whilst school business managers are very adept at managing tight budgets, it is clear that schools cannot make these savings without reducing their biggest cost, which is staffing. To do this puts the quality of education at risk."