Schools to face a £630 million cut in funding next year says School Cuts coalition

New research released today by the School Cuts coalition shows that cuts to education funding next year would be the equivalent of salaries for 12,400 school staff – 5,700 teachers and 6,700 support staff. This follows the publication of the School Teachers' Review Body (STRB) report and the announcement of a 4 per cent pay award for teachers next year, which will only be funded to 3 per cent.

School costs will increase by 4.1 per cent for 2025/26 but school funding will only rise by 3.4 per cent leaving a significant gap in funding. In total there will be a £630 million real terms cut to school funding. This puts at risk the Government's commitment to recruit 6,500 more teachers.

The gap in funding will mean that the vast majority of schools - 75 per cent of primary schools and 92 per cent of secondary schools - will be forced to make cuts next year. The average primary school will see a cut in spending power of 1.1 per cent and the average secondary school will see a cut of 1.2 per cent.

This is the fourth year in a row that schools have had their spending power cut and it takes school spending power, a measure of real terms funding for schools, to its lowest level since at least 2010. Every local authority in the country will see a reduction in real terms per pupil funding, with the worst hit local authority, Hammersmith and Fulham, seeing a cut of 1.9 per cent.

After 14 years of austerity, the majority of schools are currently not able to absorb increased costs. 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.

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

“Schools have been battered by over a decade of declining budgets, they simply cannot take more cuts. Education is meant to be one of the key priorities for the Government, but this move risks scuppering their ambition to recruit more teachers. Austerity will only be ended by deeds not words. The Chancellor must change course at the upcoming spending review and give schools the funding they need.”

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

“Education funding is simply not at a level sufficient to meet the costs faced by schools and colleges. The stark reality is that it just isn't possible to make the savings this situation necessitates without having to make cuts to provision. The government must recognise that funding schools and colleges properly is an essential investment in the future of children and of the country.”

Paul Whiteman, general secretary of school leaders' union NAHT, said:

“We are hearing strongly from our members that they are having no choice but to make redundancies and reduce staff in order to try and balance their budgets. Ultimately, this cannot help but negatively impact the education and support schools are able to provide for pupils. The Treasury must not underestimate the urgency of the case for fresh investment into education while making its decisions for the upcoming Spending Review.”

Jason Elsom, chief executive of Parentkind, said:

“Parents rightly want schools to be properly funded and this new research shows just how far schools have fallen behind. This is a major concern for parents who have seen significant real-term budget cuts to their children's schools in recent years and the impact it is having on their child's education. Parentkind has repeatedly asked parents about their views on school funding and over and over again parents tell us they want more spending on schools when the Chancellor announces her spending plans.”

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. Our latest annual governance survey revealed a stark reality: over a third of respondents believe their school or trust is financially unsustainable on current projections.

We are therefore deeply concerned that costs will outstrip funding rises for most schools and trusts again next year, 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 young people who will ultimately pay the price. We are therefore calling on the government to prioritise investment in schools at next week's spending review.”

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 per cent of school expenditure, non-teaching staff pay for 30 per cent and non-staff costs account for 18 per cent.

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 per cent (April 2025 to August 2025). In addition, there was a little pay drift that increased average costs by 0.3 per cent. Combining this with a pay award of 4 per cent plus pay drift of 0.3 per cent for academic year 2025-26 (September 2025 to March 2026), gives an average pay rise of 4.9 per cent for the financial year 2025-26 (April 2025 to March 2026).

Local government employers have offered support staff a pay rise of 3.2 per cent. We assume 3.2 per cent represents the minimum pay rise.

We assume that non-staff costs will rise in line inflation and we have used CPI, which the Office for Budgetary Responsibility predict will rise by 3.2 per cent.

When these costs are combined, we estimate that schools' costs will increase by 4.1 per cent in 2025-26.

The average cost to employ a teacher, inclusive of employer national insurance and pension contributions and all other associated costs has been calculated as £72,000. For support staff we have calculated this at £33,000. If schools were to make cuts to staff in line with expenditure, then this would result in the loss of 12,400 school staff – 5,700 teachers and 6,700 support staff.