NFER blog: Pupil numbers and school finances – What do we know about how demographic change is impacting on schools?

NFER blog: Pupil numbers and school finances – What do we know about how demographic change is impacting on schools?  

England's schools are continuing to face substantial financial pressures, with almost three quarters of primary school leaders anticipating an in-year budget deficit in 2025/26.  

With declines in pupil numbers set to continue, these demographic shifts are likely to exacerbate challenges for schools' budgets and staffing in the coming years.      

A new NFER blog, authored by NFER Economist, Maria Pia Iocco, Research Manager, Lisa Kuhn, and Research Director, Jenna Julius, draws together and updates NFER's evidence on the impact of falling pupil numbers and schools' financial positions to consider the potential effects of demographic change on school finances going forward.  

Key findings show:  

• The Department for Education (DfE) forecasts primary pupil numbers will fall by seven per cent between January 2025 and 2030 - equivalent to over 1,000 average-sized primary schools.    
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• There has been an overall decline in primary pupil numbers across all regions since 2017/18. While London remains the region with the largest decline, schools in other regions are increasingly being affected.  

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•  In response to declining numbers, schools are reducing the number of classes (by 4.8 per cent nationally) and average class size (by 2.5 per cent nationally).  

• Staffing reductions, impacting classroom teachers and teaching assistants (TAs), are evident in areas most affected, suggesting schools are adapting staffing models and provision in response. Given the key role that TAs play in supporting pupils with SEND, this raises important questions about the impact that declining rolls may have been having on the quality of provision for these pupils going forward.  
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• Between January and December 2024, the 10 London Local Authorities (LAs) with the greatest pupil declines from 2017/18 to 2024/25 saw five closures and five mergers. While the 10 LAs outside of London with the highest proportion drops in enrolment saw three closures and one merger over this period. This compares, over the same period, to 1.3 primary school closures and 0.9 mergers per 10 LAs across the rest of England.    
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• In 2023/24, more than one in eight primary schools and almost one in ten secondary schools had an overall deficit balance.  
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• NFER scenario modelling shows that, if pupil numbers in primary LA maintained schools fell by two per cent and no adjustments were made to costs or revenue, the proportion of schools in deficit would rise by 4.5 percentage points, from 14.8 per cent to 19.3 per cent.  
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• There is no consistent relationship between changes in pupil numbers and school revenue balances in 2023/24, indicating that other factors also influence financial outcomes.    

Commenting on the findings, Jenna Julius, Research Director at NFER, said:  

“These findings highlight how demographic change is now having a very real and uneven impact across England's schools. As pupil numbers fall, some schools are finding it harder to balance budgets and sustain the breadth of provision they would like to offer, alongside having to adapt staffing models.  

“Falling rolls are creating new challenges for local areas. While demographic change will require significant cost-saving measures across schools, it is crucial that schools are adequately supported by local and national government to ensure the quality of education for all pupils.”