New EPI school funding model shows that schools could lose over £1 billion in funding by 2030 due to falling pupil numbers

Real terms increases in per pupil funding over the remainder of the decade could still result in cuts to school budgets, due to significant falls in pupil numbers.

Under a scenario where per pupil funding is increased by 0.5 per cent in real terms each year, total school funding would fall by £1 billion between 2024-25 to 2029-30.

London and the North East are projected to experience the largest falls in funding, across both primary and secondary phases. 

Primary schools are set to be the hardest hit, with total funding projected to fall by 5.6 per cent between 2023-24 and 2029-30. Over the same time period, total funding for secondary schools will increase until 2026-27, before it also begins to fall.

New analysis by the Education Policy Institute (EPI) has revealed the significant impact that projected falls in pupil numbers could have on school funding across England, showing the challenges that these demographic changes will present to the financial health of schools.  

The report is the first to use EPI's new school funding model, which replicates the Department for Education's own national funding formula (NFF) and allows us to analyse the impact of potential funding policy decisions on individual schools and areas of the country.  

Using this model, researchers project that overall funding for primary and secondary maintained schools will fall to £41.6 billion by 2029/30, down from a peak of £42.7 billion in 2024/25 even if pupil-led per-pupil funding is increased in real terms. As we do not know the overall schools budget for all of the projection period, we use a central estimate of a 0.5% real terms increase in pupil-led per-pupil funding, per year.  

With the projected changes to pupil numbers varying throughout the country, the report also examines how school funding will be impacted across different geographic areas.  

Falling pupil rolls are one of the key challenges facing any government over the next decade. With over half of all schools now academies, local authorities are in a difficult position of being responsible for place planning, but unable to direct academies to adjust their admissions numbers.  

Key Findings: 

• Total pupil numbers in state-funded primary and secondary schools are projected to fall from a peak of 7.57 million in 2022-23, and then decrease at an average rate of 1.0 per cent each year until they reach 7.14 million in 2028-29.  
• This means that even under a scenario where per-pupil funding is increased by 0.5 per cent per year, overall funding would still fall by £1 billion by 2029-2030. Total funding would peak in 2024-25 at £42.7 billion but would then decrease by a yearly average of 0.5 per cent until 2029-30, where it would fall to £41.6 billion – 2.6 per cent lower than its peak in 2024-25. 
• Primary funding will be overtaken by secondary funding in 2026-27. In 2023-24, total funding for primary schools was 5.9 per cent higher than total funding for secondary schools. Primary funding will decrease until it is overtaken by secondary funding in 2026-27, when both funding totals begin a downward trend. By 2029-30, secondary funding will be 1.2 per cent higher than primary funding. 
• All regions will experience a decrease in primary school funding between 2023-24 and 2029-30, with the North East projected the largest decrease of 9.0 per cent. The East of England is projected the smallest decrease with just a 1.2 per cent drop in funding. 
• In secondary schools, all regions with the exceptions of Yorkshire and the Humber, the North East, and London are projected to experience an increase in funding between 2023-24 and 2029-30. The East of England is projected the largest increase at 4.9 per cent. 
• For local authorities, Lambeth is projected the largest decrease in funding with 21.2 per cent at primary and 15.7 per cent at secondary. The largest increase in funding between 2023-24 and 2029-30 is projected to occur in Central Bedfordshire with a rise of 13.1 per cent at primary and 17.8 per cent at secondary.  
• If changes in pupil numbers in parliamentary constituencies are consistent with those in their constituent local authorities, the largest drop in funding is projected in Streatham, decreasing by 21.3 per cent at primary and 15.8 per cent at secondary. South West Bedfordshire is projected the largest increase, 13.4 per cent at primary and 17.8 per cent at secondary. 
• If decreases in funding due to falling pupil numbers were ‘reinvested' and funding was maintained at peak levels of 2024-25, funding could be increased by a further £148 for primary pupils, and £164 for secondary pupils by 2030. 

In future work, EPI plans to investigate how funding could be weighted more heavily towards schools with greater numbers of disadvantaged pupils, to help tackle the widening attainments gaps that these pupils face.  

Robbie Cruikshanks, Researcher at the Education Policy Institute (EPI), said:

“The scale of change projected in the pupil population presents major policy challenges to future governments.  

"Most school funding is allocated on a per-pupil basis. As a result, falling pupil numbers can mean lower budgets for schools whilst not lowering costs in the same way, given these are largely fixed.

“Managing this fall in pupil numbers means that, in many areas of the country, the number of pupils that are admitted to schools will inevitably fall. This could then lead to mergers to ensure that schools remain financially viable or even school closures. One of the key challenges facing the system is that pupil place planning remains the responsibility of local authorities, but ultimately they have no statutory levers to direct academies to adjust admissions numbers.

“Policymakers must carefully consider the impacts of changes to the national funding formula on schools that are most affected by falling pupil numbers and how best to redistribute any savings created by these falls.”  

ENDS  

You can access an embargoed copy of the report, 'School funding model: Effect of falling school rolls', here.

Background and Methodology

This report uses data from the Department for Education's pupil projections and our own school funding model to investigate the potential impacts on school funding through the national funding formula up to 2030.  

Our model replicates the national funding formula to estimate the funding individual state-funded mainstream primary and secondary schools will receive through the schools block each year. 

The national funding formula is the mechanism used by the government to allocate funding for schools using a method that takes into account pupil numbers and characteristics, school characteristics, historic funding amounts and geographic variation in costs. 

Appendix – Local authority and constituency projections 

These tables show the largest changes in total pupils and total funding between the start and end of our projections. Note that our model assumes parliamentary constituencies experience the same rate of change in pupil numbers as the local authority or authorities that they are in. 

Our modelling is based on local authority projections of pupil numbers released by the Department for Education in March 2023 and do not reflect any revisions made in the March 2024 release. The relative position of some authorities may change if this new data were to be applied, though in most cases the differences from one year to the next are modest. 

You can also find full tables detailing to projected changes in pupil numbers and funding for each local authority here and for each parliamentary constituency here. 

Local authorities: largest decreases primary 

Local authorities: largest decreases secondary 

Local authorities: largest increases primary 

Local authorities: largest increases secondary 

Parliamentary constituencies: largest decreases primary 

Parliamentary constituencies: largest decreases secondary 

Parliamentary constituencies: largest increases primary 

Parliamentary constituencies: largest increases secondary