Schools And Colleges Facing Another Round Of Belt Tightening In This Year's Spending Review

9th January 2025

New work looks at funding for education in England in 2025-26.

An earlier report sets out the Scottish position at the bottom of this page.

New estimates by the Institute for Fiscal Studies (IFS) find that growth in mainstream school funding per pupil in England in 2025-26 (2.8% in cash terms) won't be sufficient to cover the expected increase in school costs (3.6%). Growth in school costs reflects the full effects of the 5.5% rise in teacher pay from September 2024, and the recommended pay offer of 2.8% for September 2025.

While pupil numbers are expected to fall by around 2% over the next two years, this is unlikely to allow for a cut in the overall schools budget. Rapid rises in the cost of special educational needs (SEN) provision seem likely to wipe out any opportunities for savings, evenif core per-pupil funding is kept constant in real terms.

These are the main conclusions of the new ‘Annual report on education spending in England: 2024-25' by researchers at the IFS, published today, and funded by the Nuffield Foundation. All figures are in 2024-25 prices and represent new IFS estimates of spending per pupil across different stages of education in England.

Also on schools

Reversal of past cuts. Between 2019 and 2024, total school spending in England grew by about £8 billion. This led to 11% real-terms growth in school spending per pupil and fully reverses cuts since 2010.
Over half of the rise in school funding has been absorbed by rising costs of SEN. After accounting for planned spending on high needs (which is a statutory requirement), we estimate that mainstream school funding per pupil grew by 5% in real terms between 2019 and 2024, rather than the 11% total increase.
Potential savings from falling pupil numbers outweighed by rising costs of SEN provision. With pupil numbers expected to fall by 2% between 2025 and 2027, the government could make annual savings of up to £1.2 billion by freezing spending per pupil in real terms. However, the government also projects high needs spending will grow by £2.3 billion between now and 2027 without reforms. This makes finding savings in the schools budget impossible without cutting mainstream per-pupil spending in real terms.
Looking at other sectors

Early years is set for the biggest ever increasing in funding. From September 2025, all children in working families will be entitled to up to 30 hours of funded childcare a week from nine months old. As a result, spending on the free entitlement will rise to £8.5 billion in 2026-27 from £4.2 billion in 2023-24 and £2.2 billion in 2010-11.
Spending on colleges and sixth forms remains well below 2010 levels, and pressures are growing. Even with recent funding increases, we estimate that college funding per student aged 16-18 in 2025 will still be about 11% below 2010 levels, and about 23% lower for school sixth forms. About 37% of colleges were operating deficits at the latest count (2022-23). Average college teacher pay is expected to be about 18% lower than pay for school teachers in 2025, contributing to the high exit rates amongst college teachers (with 16% leaving their jobs each year). Meanwhile the number of young people in colleges and sixth forms is expected to grow by 5% or over 60,000 between 2024 and 2028. The government would need to increase annual funding by £200 million in 2027-28 in today's prices to maintain spending per student in real terms.
Increasing tuition fees in line with inflation will provide only slight reprieve for university finances after more than a decade of cash-terms freezes.International student numbers are likely to have fallen in 2024-25, and the rise in employer national insurance contributions will increase staff costs from April 2025. Unlike schools and colleges, universities are not being compensated for this increase. Meanwhile, in 2025 the poorest students will be entitled to borrow 10% less in real terms than in 2020 to cover their maintenance costs.
Luke Sibieta, IFS Research Fellow and author said: ‘This year's spending review will bring a lot of difficult choices on education funding in England. A very tight picture on the public finances means that most departments, including education, will probably need to make savings. Working out exactly how and where is much easier said than done. Spiralling costs of special educational needs provision seem likely to wipe out any opportunities for savings in the schools budget from falling pupil numbers. College and sixth form budgets are already stretched, and will need to cover the cost of rising student numbers. The inflation-linked rise in tuition fees only provided a brief reprieve for university finances, and further tuition fee rises seem likely.'

Josh Hillman, Director of Education at the Nuffield Foundation said: ‘Amidst a tough fiscal climate and competing priorities, the IFS's annual report delivers essential, independent analysis of the winners and losers in education spending. The analysis outlines the complex web of factors influencing the government's decision-making on funding for the early years, school pupils, and further and higher education students. It highlights a range of challenges suggesting that the spending squeeze for schools and colleges will continue, but some gains for the under-5s.'

Read the full report HERE

Scotland
IFS report 21 April2023
Growing gap in school spending per pupil between Scotland and the rest of the UK
In the most recent year (2022-23), school spending per pupil in Scotland was over £8,500. This is over 18% or £1,300 higher than the level seen in England, Wales and Northern Ireland, all around £7,200 per pupil. School spending per pupil in Scotland was already 6% higher than in England in 2010. Since then, the gap with the rest of the UK has significantly grown.

Policymakers in Scotland have taken advantage of relatively low growth in pupil numbers to deliver a large real-terms increase in spending per pupil. In England and Northern Ireland, total spending had to keep pace with rapid rises in pupil numbers. In Wales, pupil numbers have barely changed at all since 2010, but policymakers did not use this as an opportunity to increase spending per pupil.

These are some of the key findings of a new report, ‘How does school spending per pupil differ across the UK?', by researchers at the Institute for Fiscal Studies, published today and funded by the Nuffield Foundation. All figures are in 2022-23 prices and relate to total day-to-day school spending on children aged 3-19 by schools, local authorities and funding agencies.

Other key findings include:

Larger increases in Scotland. Spending per pupil in Scotland grew by 13% in real terms between 2009-10 and 2022-23. This partly reflects funding to cover higher teacher pay offers, such as the 7% salary rises in both 2019–20 and 2022–23. In Wales, spending per pupil in 2022–23 is only about 3% higher than in 2009–10, and it is about 2% higher in Northern Ireland than our earliest point of comparison in 2011–12. In England, spending per pupil is expected to get back to 2010 levels by next year.
Higher pressures from pupil numbers in England and Northern Ireland. Pupil numbers have grown by 13% in England since 2009–10 and by 8% in Northern Ireland since 2011–12. This meant that large rises in total spending were needed in England (12%) and Northern Ireland (10%) as part of efforts to keep pace with rising pupil numbers.
Smaller pressures from pupil numbers in Scotland and Wales. In Scotland, pupil numbers have only grown by 2% since 2009–10. This meant that growth in total spending in Scotland (15%) only had to be a bit higher than in England to deliver a much larger rise in spending per pupil in Scotland. In Wales, pupil numbers have barely changed at all since 2010. However, unlike Scotland, policymakers in Wales have not used this as an opportunity to deliver a big rise in spending per pupil. Instead, total spending and spending per pupil in Wales have both only grown by 3% in real terms since 2009–10.
Pupil numbers expected to drop across all nations. Forecasts for pupil numbers imply falls of about 6–8% across all four nations over the next five years, with further falls after that. On one level, this might make it easier to deliver real-terms increases in spending per pupil at a national level. However, falling pupil numbers can create headaches for individual schools. Funding for individual schools is likely to fall with pupil numbers, but costs might be mostly fixed in the short run.
Luke Sibieta, IFS Research Fellow and author, said: ‘School spending per pupil in Scotland is now over 18% higher than in the rest of the UK. This big gap mostly reflects less pressure from pupil numbers and relatively recent spending rises. It would be too soon to expect much of an effect on educational outcomes. However, spending per pupil in Scotland has been higher than in the rest of the UK for a long period and educational outcomes have continued to disappoint over the last decade.

‘In Northern Ireland, recent increases in school spending have just about reversed past cuts. However, there has been no agreement reached on teacher pay levels stretching back to 2021 and there are strong signals of budget cuts for next year.

‘In Wales, total spending and spending per pupil are only about 3% higher than in 2010. Unlike Scotland, policymakers in Wales did not use stable pupil numbers as an opportunity to deliver larger increases in spending per pupil. The vast majority of schools in Wales will now be experiencing falling pupil rolls, which may create budgetary headaches for individual schools as costs are unlikely to fall as quickly as pupil numbers.

‘In England, recent increases in spending per pupil should allow spending per pupil to get back to 2010 levels by 2024. However, higher pay settlements for teachers and other school staff are likely to place greater pressures on school budgets. Most schools should just about be able to afford expected pay rises from proposed budgets, but the situation is tight and this certainly won't be the case for all schools.'

Josh Hillman, Director of Education at the Nuffield Foundation, said: ‘These new figures show a wide and growing disparity in funding for pupils between Scotland and the other three nations of the UK, but it's yet to be seen if the 18% of higher spend on Scottish students is effective in helping to narrow the gap in inequalities or improve the life chances of young people.'

See https://ifs.org.uk/news/growing-gap-school-spending-pupil-between-scotland-and-rest-uk

Teacher Shortages in Highland
There is a teacher shortage in the Highland region of Scotland, and it's a challenge across the country:

Education vacancy rate: The Highland Council has the highest education vacancy rate in Scotland.

Supply teachers: The Highland Council is experiencing a shortage of supply teachers to cover absences.

Secondary teaching: It's more difficult to recruit for secondary teaching vacancies.

Gaelic teacher recruitment: There is a warning of a crisis in Gaelic teacher recruitment.

Housing shortages: Housing shortages are contributing to the teacher shortage in Scotland.

Rural areas: Rural areas, including the Highland, are target areas for staff shortages, especially in secondary subjects.

Parents' concerns: Parents in Highland schools are concerned that the teacher shortage is putting their schools and communities at risk.

Teach in Scotland
Teaching in a rural school provides a great opportunity for teachers to gain valuable experience. Those who are new to the profession might find that this environment allows them to take on greater responsibility, and get involved in a close-knit and thriving local community.
And it's not just the teaching opportunities that are attractive. Many rural schools are in some of Scotland’s most beautiful locations.