The Labour government has announced core school funding will increase by £2.3 billion a year, including an extra £1 billion for special educational needs and disabilities (SEND).
The plans were set out by chancellor Rachel Reeves in her first Budget today, and will help support the government’s pledge to hire “thousands of new teachers”, she said.
Documents published by the Treasury state that the per-pupil funding amounts to a real-terms increase.
The £1 billion increase for SEND and alternative provision (AP) is “an important step in realising the government’s vision to reform England’s SEND provision to improve outcomes and return the system to financial sustainability”, the Treasury documents state.
The Treasury predicts it is likely that local authorities (LAs) will use additional funding to reduce in-year deficits. This is predicted to eradicate around £865 million from councils’ SEND deficits next year.
‘Long-term SEND plan needed’
The £2.3 billion increase to core school funding will quickly get “swallowed up by ongoing cost pressures”, said Luke Sibieta, research fellow at the Institute for Fiscal Studies.
After the £1 billion for SEND is considered, as well as the £450 million needed to make up the full cost of this year’s teacher pay rise, only around £850 million will be left for other cost pressures, he added.
The DfE has said the remaining funding will be used to increase the mainstream schools National Funding Formula (NFF), the pupil premium and “other elements of core funding”.
Final NFF allocations are expected to be published by the end of November. The DfE said it will provide more information on the NFF for 2025-26 before this, “if possible”.
The Association of School and College Leaders welcomed the additional funding for SEND and AP but said the government now needs to work on a long-term plan to address local authority deficits.
“Much of what we have heard represents relatively small spending commitments which do not match the level of investment that the education system requires,” said funding specialist Julia Harnden.
The £1 billion represents only a quarter of the LA high-needs deficits identified by the National Audit Office, according to Jon Andrews, head of analysis at the Education Policy Institute.
He added: “Given the perilous state of local authority budgets, clarity on how that funding will be allocated or what it is intended for is now urgently required. If the situation for local authorities has not been fundamentally changed, then we still risk services for our most vulnerable being cut.”
Confederation of School Trusts chief executive Leora Cruddas welcomed the £1 billion but said that the entire approach to SEND must be reformed - including making funding fairer.
Dr Nic Crossley, CEO of Liberty Academy Trust, which has three special schools, said that special schools need details of where the extra SEND funding will be allocated - in mainstream, place funding or through the high-needs block.
School-based nurseries
Ms Reeves further announced that funding for free breakfast clubs would be tripled to give children the “best start in life” and the “best start to the school day”.
The Department for Education has previously announced the launch of the first round of funding for school-based nurseries.
Today’s Budget confirmed £15 million to create 3,000 new or expanded nurseries.
Schools to receive funding for NI rise
As expected, the chancellor also announced an increase in National Insurance (NI) contributions for employers. The rate will be increased by 1.2 percentage points from April 2025.
The National Foundation for Educational Research (NFER) had estimated that adding 1 per cent to employer NI contributions would cost school budgets £175-200 million over the next year. This would have risen to £350-400 million if NI contributions were increased by 2 per cent.
The Treasury has confirmed to Tes that additional funding will be provided to public sector bodies - including schools - for the increased employer NI contributions.
Further detail on this is expected to be set out in phase two of the Spending Review in the spring.
Extra capital funding for crumbling school buildings
Ms Reeves also confirmed there would be more money for crumbling school buildings. The DfE will get £6.7 billion in capital funding next year.
Of this, £1.4 billion is to deliver on the existing School Rebuilding Programme, which was announced in 2020 and aims to rebuild or refurbish about 500 schools in a decade.
This extra cash also includes £2.1 billion for school maintenance - an increase of £300 million compared with this year.
Teaching unions have warned that, while extra capital investment is welcome, the rebuilding plan is “woefully unambitious” and the money is not enough to restore the school estate to an acceptable condition.
Academy capital funding consultant Tim Warneford welcomed the £300 million increase in maintenance funding.
“It would be ideal if this is targeted at the Condition Improvement Fund pot, as this has remained static over the past several years and the number of projects funded has been going down,” he added.
VAT on private school fees to raise £1.7bn a year
The chancellor also confirmed the government’s plans to add 20 per cent VAT to private school fees from 1 January 2025.
This is expected to raise more than £1.7 billion a year by 2029-30, the Treasury’s policy costings state. Additionally, removing private school eligibility for charitable rate relief is expected to raise £90 million a year by 2029-30.
Funding for ‘creative careers’ and holocaust education
Other spending commitments include £3 million to expand the Creative Careers Programme, which will help school children learn more about creative career routes, the Treasury said.
Next year will also see £2 million spent on Holocaust remembrance and education, and £300 million for further education.
This Budget covers spending plans for 2025-26 before the multi-year Spending Review in the spring.
In total, the Department for Education will have a resource expenditure limit of £93 billion in 2025-26, up from £88.8 billion in 2024-25. Within this, funding for core schools will rise to £63.9 billion in 2025-26.
The DfE’s capital expenditure limit will be £6.7 billion in 2025-26 - an increase from £5.5 billion this year.
‘Missed opportunity’ on disadvantage
The Sutton Trust charity added that the Budget missed an opportunity to “genuinely break down barriers to opportunity” by funding schools in disadvantaged areas or setting out a plan to tackle the attainment gap.
Meanwhile, Daniel Kebede, general secretary of the NEU teaching union, said that the £1.3 billion increase in funding for mainstream schools will be “insufficient” to tackle the scale of the teacher recruitment and retention crisis and low pay of support staff.
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