The chancellor will deliver this Labour government’s first Budget on 30 October, where she will set out spending plans for the year ahead.
This Budget will cover spending plans, including for schools, for 2025-26 - before a multi-year spending review takes place in the spring.
This means each department, including the Department for Education, will have an expenditure limit set for both resource spending and capital spending in 2025-26.
Chancellor Rachel Reeves has warned the government is facing a £22 billion “black hole” that will affect tax and spending plans.
It has been reported that the chancellor is looking to make tax rises and spending cuts to the value of £40 billion in the Budget. However, she has also said the Budget will pledge investment into public infrastructure.
It has also been suggested she may announce a raise in National Insurance (NI) on employers and increase the rate of Capital Gains Tax.
Meanwhile, schools have been calling for more funding across the board - for revenue, buildings, special educational needs and disabilities (SEND), and more.
Here are some of the things that could be addressed in the Budget around education:
Falling rolls
Pupil numbers at primary are set to drop by 4.5 per cent between 2024 and 2028. This creates an opportunity for savings on per-pupil spending by freezing per-pupil spending in real terms.
However, several experts have warned the pressures facing schools would likely mean them having to cut staff or even close if per-pupil spending is frozen.
The National Foundation for Education Research (NFER) said increasing per-pupil funding faster than inflation would help offset the financial blow for schools of falling rolls - but this would “cost a huge amount”, where pupil numbers are falling more than 10 per cent over the next few years.
Minimum per-pupil funding levels for 2024-25 were set at £4,610 at primary and £5,995 at secondary by the previous government. The Labour government announced additional money through the core schools budget grant to support the teacher pay award.
Capital funding
Rachel Reeves has announced the sector will receive £1.4 billion to rebuild crumbling schools as part of the Budget.
That £1.4 billion will “ensure the delivery” of the School Rebuilding Programme (SRP), which aims to rebuild around 500 schools in a decade. It is understood to be a further £550 million investment on last year to support the programme.
Education secretary Bridget Phillipson had already announced the DfE will review 44 mainstream free school projects. In a statement, Ms Phillipson said some of the funding “could have been put to better use improving the deteriorating condition of our existing schools and colleges”.
However, unions have previously warned that restoring the school estate will cost at least £4.4 billion extra in capital funding a year.
Institute for Fiscal Studies (IFS) researcher Christine Farquharson said £1.4 billion will be enough to keep the SRP going in the sixth year of a 10-year programme, and largely reflects “decisions to continue” programmes.
Unions warned the funding announcement would leave a shortfall on what was needed and the target of building 50 schools a year is “woefully unambitious”.
Oak National Academy
Tes revealed earlier this month that education secretary Bridget Phillipson had said in a letter she “can commit” to Oak National Academy’s funding “being lower” than current levels in spending reviews for both 2025-26 and 2026-29.
Oak was promised £43 million in government funding over three years in 2022. It was awarded an additional £2 million last year to build artificial intelligence tools.
National insurance
It has been suggested the chancellor may increase NI contributions for employers.
NEU teaching union general secretary Daniel Kebede said: “Employer NI contributions increase school costs, so it is incumbent on the chancellor to protect schools and other public services from a further wave of cuts.
“Rachel Reeves should reimburse public sector employers for additional costs, and at the same time use money raised from the private sector to increase funding for public services.”
NFER has estimated that adding 1 per cent to employer NI contributions would cost school budgets £175 to £200 million over the next year. This would increase to £350 to £400 million if NI contributions are increased by 2 per cent.
NFER chief executive Carole Willis said the government must consider funding schools to pay for any rise in NI or “further exacerbate” funding issues schools are facing.
VAT on private schools
It has already been announced the 20 per cent VAT rate will be added to private school fees from 1 January 2025.
Private schools will also no longer get charitable business rates relief from April 2025.
The government has said it will confirm the introduction of the tax policy changes in the Budget. The Office for Budget Responsibility (OBR) will also certify the government’s costings and analysis of the impact of the changes.
The VAT changes will be legislated for within the Finance Bill - to be introduced following the Budget. The business rates change will be in a Local Government Finance Bill also set to be introduced following the Budget.
Tes revealed earlier this month the Independent Schools Council (ISC) has said official guidance from HM Revenues and Customs (HMRC) on charging VAT on private schools is “not fit for purpose”.
Recruiting 6,500 teachers, breakfast clubs and nurseries
A technical note published by the government in July states it will set out more detail on delivering other Labour manifesto pledges “at the next spending review”.
The pledges it lists in the technical note include opening 3,000 new nurseries, breakfast clubs for primary schools, recruiting 6,500 new teachers and improving training for teachers and leaders.
The DfE has already launched the first round of funding for school-based nurseries. Schools can currently bid for a share of £15 million of funding. The chancellor also previously announced £7 million to begin the rollout of breakfast clubs.
The chancellor has since announced investment in free breakfast clubs will triple in the Budget to £30 million.
SEND
Schools and local authorities are also facing huge shortfalls in funding for SEND. Previous analysis has suggested an extra £4.6 billion per annum is needed to meet the growing demand for high-needs support.
A report by the National Audit Office has said that the government needs to produce plans to ensure councils can be financially sustainable as “a matter of urgency”.
It warned that more than two-fifths of councils face effectively declaring bankruptcy in 18 months due to deficits driven partly by SEND spending, and it said that the government had not yet identified a solution to this.
Council deficits are currently being kept off their books by a statutory override which is due to expire in March 2026. Ministers have been urged by headteachers’ leaders to write off councils’ high-needs deficits to ensure public funding is going to young people with SEND.
Breaking down barriers to opportunity
The DfE has consistently said it intends to “break down the barriers to opportunity” faced by many young people.
There will be a £15 million expansion of the attendance mentor pilot programme next year. The DfE announced this would be in 10 Priority Education Investment Areas (PEIAs) earlier this month.
Funding for PEIAs to spend on key stage 2 and 4 attainment interventions came through the local needs fund under the previous government. Up to £42 million was set for use until March 2025.
Academy trust growth
Trusts that applied for grants for growth and increasing capacity have yet to hear back about success in the latest round of funding.
The DfE has not confirmed how much money is left from the £86 million pot originally set out for the Trust Capacity Fund (TCaF), and much of the money appears to have already been allocated.
Under the previous government, money for these funding pots for trusts was put aside for up to 2025.
The department has said the outcome for the latest round of TCaF will be announced in due course.
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