School costs set to outstrip funding increases

New estimates by the Institute for Fiscal Studies (IFS) indicate that schools’ costs are likely to outstrip any funding increases they receive. In their Annual report on education spending in England: 2024-25, the IFS calculate that mainstream school funding per pupil in England in 2025/26 will increase by 2.8 per cent in cash terms, but that school costs are estimated to go up by 3.6 per cent.  As a result, while overall pupil numbers in the system are expected to fall by 2 per cent over the next two years, this is unlikely to lead to any reduction in the overall schools budget unless per pupil funding is cut in real terms.

In particular, the IFS points to rapid rises in the cost of special educational needs (SEN) provision as a significant driver of school costs. There was an 11 per cent real-terms growth in school spending per pupil between 2019 and 2024, however according to the report more than half of that rise has been absorbed by rising costs of SEN provision, with the trend set to continue. Government projections are that high needs spending will grow by £2.3 billion between now and 2027 without reforms to the system.

Luke Sibieta, IFS Research Fellow and an author of the report 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.’

Paul Whiteman, general secretary at school leaders’ union NAHT, commented: ‘There is no doubt that school budgets remain under tremendous pressure. We know that some schools are facing real difficulties in making budgets add up and many school leaders - who have already cut operations to the bone - remain worried about the outlook for next year.’ He added: ‘We need to see real-terms growth in core funding, further investment in and reform of the broken special educational needs system, and a commitment to ensuring this year’s pay rise is above inflation and fully-funded amid a severe recruitment and retention crisis fuelled by years of real-terms cuts to salaries.’

A Department for Education spokesperson said: ‘We are determined to fix the foundations of the education system that we inherited and will work with schools and local authorities to ensure there is a fair education funding system that directs public money to where it is needed to help children achieve and thrive.’

Full report: https://tinyurl.com/ydh2v6md

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