Let's say the class size average is currently 30 (I know this may seem like luxury in some areas) and they want to reduce it to 20. That means to teach a population of 60 (i.e. 2 classes) you now need 3 teachers, and not two. Average teacher salary, we're told in the shiny new ads, is around £24K in London, £20K outside (source: http://www.tda.gov.uk/Recruit/lifeasateacher/payandbenefits.aspx ). Amortise that across the source classes and that's £10K per class.
That leaves the space requirements for the additional third class. Depending on the school building, this may be easy (i.e there are empty rooms that are perfectly serviceable, or a creative timetabler might be able to schedule outdoor events, or re-use school halls), or difficult for particularly cramped schools. The hardest solution is for a school that has *no* spare space - here you could bus in a portacabin temporarily - I can't think they'd cost £10K, although the heating bill may add up in the winter months.
On the face of it, I'm not sure I agree with the findings in full - although I agree that better teachers is always a good starting point to improving the education system. Good discipline is essential too - maybe bring back caning (suitably regulated) instead :-)