Warning over ‘harrowing’ school cuts in Spending Review
The government is facing difficult decisions on funding for education in its Spending Review next month that could result in “harrowing” cuts for schools, experts have warned.
Chancellor Rachel Reeves is set to deliver her multi-year Spending Review on 11 June, setting out government spending between 2025-26 and 2028-29.
The government previously set out plans for overall spending across all government departments to grow by around 1.2 per cent per year over this period.
It is not clear to what extent education spending will be protected, but any “unprotected” spending would likely fall by about 1 per cent per year in real terms, once existing commitments on childcare, health and defence are factored in, the Institute for Fiscal Studies (IFS) warns in a report published today.
Julia Harnden, funding specialist at the Association of School and College Leaders, said the IFS’ analysis “will make harrowing reading for school and college leaders already faced with intense pressures on their budgets”.
“If education spending is cut - however that is done - it will represent a new period of austerity, which neither young people nor the country as a whole can afford,” she said.
The IFS report sets out the biggest education spending decisions that the government faces and how each could impact the funding settlement for schools.
1. How much DfE spending could be ‘protected’?
The departmental expenditure limit for the Department for Education in 2025-26 is around £94 billion, of which around £65 billion is made up of the core schools budget.
The IFS says that if the DfE’s budget in England is cut in line with “unprotected” areas of day-to-day government spending, it could face a 3 per cent real-terms cut to its budget over the Spending Review period - equivalent to £2.6 billion.
This cut might be spread evenly across school, college and adult education funding.
Alternatively, schools and colleges could have budgets protected, which they often have in the past, meaning large cuts to adult education and apprenticeships would be likely.
If adult education and apprenticeships were also protected, the IFS says cuts of up to 50 per cent would be needed in other areas “such as on universal infant free school meals or the physical education (PE) and sport premium, likely ending some programmes entirely”.
“Avoiding cuts to the education budget altogether would require deeper cuts to other public service spending, tax rises or extra borrowing,” said Luke Sibieta, research fellow at the IFS.
Ms Harnden called for the government to protect education spending in order to make an investment in the future of the country.
2. Should funding fall in line with pupil rolls?
Pupil numbers are set to fall by 3 per cent between January 2025 and January 2029. As the IFS has previously explained, this could provide the government with savings.
If the government chooses to protect the schools budget on a per-pupil basis, this would amount to a 3 per cent cut to school spending over the period - around £2 billion.
The IFS points out that this cut would be in line with the potential 3 per cent cut likely for all “unprotected” public spending.
However, if the government chooses to protect the overall schools budget in real terms from 2025-26 to 2028-29, this would allow for a 3 per cent increase in per-pupil funding over the period.
“Schools simply don’t have any leeway for further cuts - and a lack of fresh investment is a cut,” warned Paul Whiteman, general secretary of the NAHT school leaders’ union.
3. How will SEND spending be reduced?
Around half of the growth of school funding since 2019-20 - about £9 billion - has been taken up by the increasing costs of special educational needs and disabilities (SEND) provision, the IFS says.
And SEND spending is predicted to rise by more than £2 billion over the Spending Review period, which the IFS says will make it very difficult for schools to find any savings.
The DfE is set to lay out plans for how it will reform the SEND system later this year.
The growth in high-needs spending is mainly due to an increase in the number of pupils with education, health and care plans (EHCPs).
Dame Christine Lenehan, the DfE’s strategic adviser on SEND, revealed to Tes earlier this month that the department is considering whether EHCPs are the “right vehicle” going forward.
High-needs spending deficits of around £5 billion have also been kept off councils’ book so far by a statutory override, which is due to end in March 2026. The government may need to bail out councils if it does not extend the override, IFS says.
4. What will the 6,500 new teachers pledge cost?
The Labour government promised in its manifesto to recruit 6,500 additional teachers by the end of this parliament.
Appearing in front of the Commons Public Accounts Committee (PAC) last week, Susan Acland-Hood, the DfE’s permanent secretary, said work was underway on the target but no specific year had been set as a baseline against which to measure progress.
She added that more detail would be set out at the Spending Review.
If teacher numbers are maintained, rather than allowed to fall in line with pupil numbers, this will also make it more difficult to find savings in the schools budget, the IFS says.
The IFS adds that it is not yet clear how the 6,500 additional teachers will be split across primary schools, secondary schools and colleges.
Both the National Audit Office and the National Foundation for Educational Research have said that financial incentives, such as better pay and bursaries, are particularly effective for improving teacher recruitment and retention.
However, the IFS warns that simply raising base salaries would be expensive and subject to uncertainty. “Above-inflation pay rises could also reduce the scope for savings elsewhere in the schools budget,” the IFS adds.
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