Vast majority of schools to face funding cuts next year - new research by the School Cuts Coalition shows

New research released today by the School Cuts coalition shows that the vast majority of schools – 76% of primary schools and 94% of secondary schools – will not be able to afford their costs next year. This follows the Government's remit letter to the School Teachers' Review Body (STRB) which recommended a 2.8% rise in teacher pay for 2025/26 but provided no new funding to cover this.

The government have admitted that most schools will not be able to cover the cost of staff pay rises next year but expect schools to make efficiencies. However, this research lays bare the scale of the problem with the majority of schools needing to make further cuts to balance their budgets.

Schools' costs are expected to rise by 3.4% next year, but mainstream funding will increase by just 2.2%. This leaves a gap of £700million that the Government would need to increase school funding by to fully fund staff pay awards.

This cut in funding will see overall per pupil funding drop to the lowest levels in England in real terms for at least 15 years. Every local authority in the country will see a reduction in real terms per pupil funding, with an average cut of 1.2%.

The situation is particularly worrying given the current financial position of schools. In December 2024, the government published the accounts of local authority maintained schools for the financial year 2023-24. This showed that 1 in 7 schools are currently in deficit. This is an increase on the year before and the highest rate since at least 2010.

The School Cuts website is run by education unions National Education Union, Association of School and College Leaders and National Association of Head Teachers and supported by Parentkind and National Governance Association.  

Pepe Di'Iasio, general secretary of the Association of School and College Leaders, said:

“We cannot keep putting schools and colleges in a position where they are left with no choice but to make further cuts to provision. Schools, colleges and their staff are central to the government's ambition of improving opportunities for young people, but it is difficult to see how this can be achieved if they cannot afford the cost of pay awards without having to make cuts. The government must recognise that improved investment in education is an urgent priority.”

Paul Whiteman, general secretary, National Association of Head Teachers, said:

“It is becoming increasingly clear that school funding will not keep pace with growing costs next year. This has been independently verified by the Institute for Fiscal Studies, and this data serves to underscore the scale of the issue. Schools have already had to make repeated cuts after more than a decade of austerity under the previous government and many parents will be well aware of the relentless budget pressures that their children's schools have faced. School leaders simply can't make any more cuts without directly harming pupils' education. While we recognise the incredibly difficult financial inheritance this government is dealing with, children and young people's education should not suffer as a result.”  

Daniel Kebede, general secretary of the National Education Union, said: 

“At the last election, people voted in the new Labour Government on a promise of change. It is time for the government to deliver on that promise and that must start with prioritising school funding. 

“Schools and colleges simply do not have the capacity to fund pay increases. Fourteen years of funding cuts have left budgets stripped to the bone, impacting on the education of every child. We cannot see another generation of children and young people failed. Urgent investment in our schools and colleges must be a priority for this Government.”

Emma Balchin, NGA chief executive, said:

"For many years, governors and trustees have been telling us that balancing the budget is their biggest challenge, with more and more using reserves to keep their school or trust functioning. Over a third of respondents to our annual survey described their organisation as financially unsustainable. We therefore welcomed the education funding announcements in the budget, while cautioning that resolving the financial challenges facing the sector will require consistent investment throughout the parliament.

“Given this financial context, it is essential that this year's pay rise for teachers is fully funded. If not, it is likely that costs will outstrip funding rises for most schools and trusts, forcing further cutbacks in a system which is already on the brink. Our members are clear that many schools and trusts simply cannot afford further cuts, and it is pupils who will ultimately pay the price."

Jason Elsom, chief executive of Parentkind, said:

“As the UK's largest federated parent's charity, Parentkind supports over 23,500 Schools, Parent Teacher Associations, and Parent Councils. With a greater reach into schools than any other charity, we know that what happens in the classroom really matters to parents.

“Parents tell us that they are worried about how the historic cuts to school budgets has impacted their children's education, and this is why we support this campaign with the backing of parents across the country.”

Editor's Note  

Our terminology of ‘mainstream school' includes all state funded schools. It does not include nursery schools, special schools, pupil referral units, alternative provision (AP), sixth form colleges, further education colleges, and hospital schools. 

Schools' costs are composed of three distinct categories: teachers' pay, non-teaching staff pay and non-staff costs. Teachers' pay accounts for 52% of school expenditure, non-teaching staff pay for 30% and non-staff costs account for 18%.

Teachers' pay rises are made for the academic year, but school funding covers the financial year. To calculate the average increase in teaching staff costs for 2025-26, we take 5 months of the increase for 2024-25 and 7 months for 2025-26.

In 2024-25, teachers received a pay rise of 5.5% (April 2025 to August 2025). In addition, there was a little pay drift that increased average costs by 0.2%. Combining this with a pay award of 2.8% for academic year 2025-26 (September 2025 to March 2026), gives an average pay rise of 4% for the financial year 2025-26 (April 2025 to March 2026).

The government intend to increase all public sector workers pay by 2.8% and so we assume this will also apply to non-teaching staff.

We assume that non-staff costs will rise in line inflation and we have used the GDP Deflator, which the Office for Budgetary Responsibility predict will rise by 2.4%.

The Pupil Premium provides additional funding for pupils who have received free school meals at some point in the last 6 years (FSM6). The funding rates have yet to be published. We have assumed the rates will increase by 2.4% slightly more than the increase in the NFF rates - £1,515 for primary FSM6 pupils and £1,075 for secondary FSM6 pupils. We have taken the proportion of schools' FSM6 pupils and calculated the indicative number of eligible pupils and added this to the indicative NFF allocations to calculate schools' total core funding allocations.