A gathering funding storm is due to crash down on schools this year as budgets are squeezed by several headwinds.
Ministers this week admitted there is not enough headroom in school budgets to cover staff pay rises next year, meaning leaders face the prospect of making more cuts.
Meanwhile, although the government will provide £1 billion to cover schools’ increased national insurance contributions, some say the grant falls short by as much as 35 per cent.
Pupil premium next year will also not keep pace with rising costs.
The triple funding whammy comes after Schools Week revealed last week how leaders receiving funding letters had been surprised to see budgets would grow by just 0.5 per cent next year, once the effect of previous pay and pensions rises is taken into account.
“No one expected austerity in education to exist under a Labour government,” Daniel Kebede, the National Education Union leader, said. “But schools are facing a crisis in funding.
“We hope the chancellor changes course, otherwise they will be the first Labour government to cut education since Callaghan – and it didn’t end very well for them.”
Underfunding will hit inclusion drive
Many have also pointed out how the funding squeeze runs counter to the aim of ministers to make mainstream schools more inclusive.
Stephen Morales, chief executive of the Institute of School Business Leadership, said: “Schools usually cut back-office costs first, but teaching assistants second.
“If the policy intention is to be more inclusive, to narrow the gap between the most advantaged and the most disadvantaged – and you’re potentially decimating the support staff element because of the cost pressures – then it’s difficult to see how that’s going to work.”
Last year it emerged that three-quarters of primary schools had been forced to cut teaching assistant numbers, despite the continued rise in pupils with special educational needs.
The government’s school costs technical note, published this week, stated that schools will only be able to afford a staff pay rise of about 1.3 per cent next year. Ministers have recommended a teacher pay rise of 2.8 per cent.
It also revealed that schools were actually under-funded in the current financial year. Funding for mainstream schools rose by 7.1 per cent – which included funding to cover the 5.5 per cent pay rise. But nationally costs rose by 7.7 per cent.
Shortfalls of ‘up to 35 per cent’
Meanwhile, the government will provide just over £1 billion in a grant to cover the rise in national insurance contributions from 13.8 per cent to 15 per cent in April. The funding is based on the number of pupils of different characteristics that a school has.
The Department for Education provided a calculator tool so leaders could work out how much NICs funding they would receive.
But Julia Harnden, funding specialist at the ASCL leaders’ union, said “early indications suggest shortfalls ranging from around 10 to 35 per cent.
“This represents large sums of money that schools must now account for and only adds to the financial pressure that they are already under.”
The problem with allocating funding based on pupil numbers is that it won’t always match up with actual staff spending, said shadow education minister Neil O’Brien.
“It all just makes the existing issues about funding growing more slowly than costs more severe,” he added.
Jon Coles, the CEO of United Learning, England’s largest trust, posted on X that “he grant to ‘compensate’ us for the increased employer national insurance contributions is 20 per cent short of meeting our costs.
“This seems to be in line with a large number of other employers. Doesn’t feel like a serious attempt to meet the ‘cost neutral’ promise.”
‘Toughest challenge in 10 years’
Benedicte Yue, chief financial officer at River Learning Trust, posted on LinkedIn that “this piecemeal approach to funding is too reactive and does not help with long-term planning [or] budget stability”.
Jake Richardson, chief financial officer at ONE Academy Trust, pointed out that trusts would have to start paying the increased contributions next month, but would not receive funding until September. “This on top of the shortfall in funding is absolutely devastating for the sector,” he posted.
Gavin Bailey, head of finance at Swale Academies Trust, posted that “our backs are against the wall.
“Reserves can only be spent once and, based on the national benchmarking reports, most of us have already eaten into those in the past couple of years.”
He said people would “lose their jobs, and those that are left will feel more overworked and undervalued. Student outcomes will suffer.”
Jonathan Georgy, chief operating officer at the Education Partnership Trust, posted that the “challenge of balancing the budget for 2025-26 is the toughest one yet in 10 years of education”.
The DfE has also confirmed that pupil premium funding for schools will rise by around 2.3 per cent next year. But schools’ costs are due to rise by 3.6 per cent.
A government spokesperson said they “recognise the challenges individual schools are facing, but the dire fiscal situation we inherited means that tough decisions are needed”.
