The latest report from the Institute for Fiscal Studies (IFS) on education spending in England outlines a challenging outlook for schools and colleges in the coming years, with rising costs and increasing pressure on funding. Despite a small rise in per-pupil school funding, anticipated cost increases—particularly in special educational needs (SEN)—are expected to outpace funding growth, leaving the sector struggling to balance its budget.
Rising Costs and Tight Budgets for Schools
The IFS forecasts that mainstream school funding per pupil in England will increase by 2.8% in cash terms for 2025–26, which, while positive, will not be enough to cover the anticipated 3.6% rise in school costs. This rise in costs reflects the 5.5% teacher pay increase set for September 2024, followed by another 2.8% increase in 2025. Even with a projected 2% decline in pupil numbers, the overall school budget is unlikely to see a reduction due to the rapid escalation in SEN costs, which will absorb much of the additional funding.
Limited Scope for Savings
While falling pupil numbers could offer potential savings, these are outweighed by the expected increase in high-needs spending, which is projected to grow by £2.3 billion by 2027. Without significant reforms to SEN provision, the government faces limited options for reducing school expenditure, even if core funding per pupil remains steady in real terms.
Funding Challenges in Colleges and Sixth Forms
Colleges and sixth forms are facing their own set of financial struggles. Despite recent increases, funding per student aged 16–18 remains 11% below 2010 levels, and for school sixth forms, it is 23% lower. The number of students in further education is expected to grow by over 60,000 between 2024 and 2028, putting additional strain on college budgets, already stretched by a high proportion of institutions operating at a deficit. If funding is to keep pace with inflation and rising student numbers, an additional £200 million will be needed in 2027–28.
Early Years and Universities
On a brighter note, the early years sector is set for a significant funding boost. From September 2025, all children in working families will be entitled to 30 hours of funded childcare per week, pushing the free entitlement funding to £8.5 billion by 2026–27. However, university finances remain under pressure, with tuition fee increases offering limited relief. Rising staff costs, particularly from higher employer national insurance contributions, combined with a potential dip in international student numbers, further strain university budgets. Additionally, the poorest students will face reduced maintenance loans, effectively decreasing their financial support.
Conclusion
The IFS report highlights the complex financial challenges facing the education sector in England. While schools may struggle to balance their budgets due to rising SEN costs, colleges and sixth forms also face funding shortfalls as student numbers grow. Early years education is set for a significant investment boost, but universities may continue to face financial strain. The government’s upcoming spending review will need to address these pressures while navigating a difficult fiscal landscape.
Sources:
- Institute for Fiscal Studies (IFS)
- Nuffield Foundation
- Public Sector Executive
