A sobering analysis from the Institute for Fiscal Studies (IFS) says that while school per-pupil funding for 2025/26 is to grow by 2.8% in cash terms, this is set to be swallowed by a rise in costs of 3.6%.
Pupil numbers are due to fall by 2% between now and 2027 offering potential for savings, however “rapid rises” in the cost of SEND provision “seem likely to wipe out any opportunities for savings, even if core per-pupil funding is kept constant in real terms”.
The report states: “Looking to the 2025 spending review … if the government chose to freeze school spending per-pupil in real-terms, it could make savings of £1.2bn by 2027. However, the government also projects that high needs spending will grow by £2.3bn between now and 2027/28. This severely reduces the chances of making savings in the schools budget.”
The analysis considers the full effects of the 5.5% pay rise this year and the government’s recommended 2.8% pay rise for September 2025.
In the autumn budget, the government increased school spending by £2.3bn, including £1bn for high needs. The IFS says this equates to a 2.8% increase in cash terms, slightly higher than inflation which stands at 2.4%.
Between 2019 and 2024, total school spending in England grew by about £8bn which equates, the IFS says, to an 11% real-terms growth in school spending per-pupil and fully reversed the cuts since 2010.
However, more than half of this rise in school funding has been absorbed by rising costs of SEND. After accounting for planned spending on high needs (a statutory requirement), the IFS estimates that mainstream school funding per-pupil actually grew by 5% in real terms between 2019 and 2024.
The report states: “This pattern of seemingly large rises in total school spending per pupil being swallowed up by large increases in high needs funding is a familiar one. About half of the increase in total school spending per-pupil between 2015/16 and 2024/25 can be accounted for by rises in high needs funding.”
Luke Sibieta, IFS research fellow and co-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 SEND provision seem likely to wipe out any opportunities for savings in the schools budget from falling pupil numbers.”
Commenting on the report, school leaders said the analysis shows the reality still facing the sector.
Julie McCulloch, director of policy at the Association of School and College Leaders, said this reality would result in “yet another round of cutbacks”.
She continued: “It will inevitably mean further reductions to pastoral support, curriculum options and classroom resources. It is also likely that in many cases class sizes will increase. Schools and colleges have been expected to absorb relentless financial pressures over the past 15 years, and they have done an incredible job in minimising the impact on students. But we cannot go on like this. It is death by a thousand cuts. The government must recognise the importance of improved investment in education.”
Paul Whiteman, general secretary at the National Association of Head Teachers, added: “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.
“It’s vital that this is recognised and addressed in the spending review if schools are to be spared further unpalatable decisions like cutting staff and curriculum resources.
“We need to see real-terms growth in core funding, further investment in and reform of the broken SEND 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.”
- Drayton et al: Annual report on education spending in England: 2024–25, IFS, January 2025: https://ifs.org.uk/publications/annual-report-education-spending-england-2024-25