Schools could lose £1 billion in per-pupil funding by 2030 due to falling population numbers, research published today suggests.
The Education Policy Institute (EPI) research says more than 40 local authority areas could see per-pupil funding at the primary phase fall by 10 per cent or more by 2029-30.
Meanwhile, at secondary age, while only Lambeth is projected to see per-pupil funding fall by more than 10 per cent in the same time period, a total of 21 local authority areas could see secondary funding fall by more than 5 per cent.
“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,” said Robbie Cruikshanks, EPI researcher and author of the report.
“This could then lead to mergers to ensure that schools remain financially viable, or even school closures,” he added.
Cuts to provision
The funding shortfall is expected because while pupil numbers in state-funded primary and secondary schools peaked in 2022-23 at 7.57 million, they are projected to fall year-on-year until they reach 7.14 million in 2028-29.
As such, under the national funding formula (NFF), which allocates money to schools on a per-pupil basis, funding through the NFF’s schools block would see a corresponding drop.
The EPI has projected this means it will fall from a peak of £42.7 billion in 2024-25 to £41.6 billion in 2029-30.
Primary schools will be hardest hit over the period analysed, with total funding dropping by 5.6 per cent. Secondary schools will see their funding increasing in general until 2026-27 when it will also begin to fall.
Commenting on the report, new Association of School and College Leaders (ASCL) general secretary Pepe Di’Iasio said falls in funding “will mean further cuts to provision, resources and activities”.
“Schools must not be left to manage the huge financial risk that this change in the national picture presents,” he added.
Hardest-hit areas
London councils have already been warning about the impact of falling rolls - but the EPI research says it is the North East that is projected to see the biggest impacts, with a 12.7 per cent decline in primary pupil numbers between 2022-23 and 2028-29, leading to a 9 per cent drop in funding between 2023-24 and 2029-30.
At secondary, London, the North East and Yorkshire and the Humber are projected to see the largest falls in pupil numbers.
At local authority level, six areas are set to see pupil numbers drop at primary level by more than one-fifth. These are Lambeth, Isle of Wight, Brighton and Hove, Torbay, York and Warrington.
Further cuts would be ‘catastrophe’
At secondary, 10 local authority areas are projected to see pupil numbers fall by more than 10 per cent - Lambeth, Hartlepool, Lewisham, Camden, Brighton and Hove, Kensington and Chelsea, Newham, Redcar and Cleveland, Hammersmith and Fulham, and Westminster.
Some schools, particularly in London and other areas, are likely to see both decreases in pupils and an increase in the rate of deprivation.
For some of these areas, significant falls in funding ”risks further widening of the disadvantage gap as school budgets struggle to meet the additional needs of disadvantaged pupils”, the report says.
Paul Whiteman, general secretary of the NAHT school leaders’ union, said further cuts to funding would be a “catastrophe”.
He added that it “would be a waste to allow smaller schools to close, only for there to be a need for more places in those areas further down the line”, and called for the government to maintain current funding levels.
School costs crisis
This comes as many schools continue to struggle with costs. The Institute for Fiscal Studies said schools need £700 million more in funding for 2024-25 alone to allow them to meet expected cost rises.
Given this, Mr Di’Iasio at ASCL called for the Department for Education to improve per-pupil funding to address the situation, with a particular focus on disadvantaged pupils.
The EPI’s projections assume that per-pupil funding will be increased by 0.5 per cent each year. The report also assumes a “hard NFF”, where allocations to schools by the DfE are not changed at local authority level.
A DfE spokesperson said that “figures are speculative, funding levels beyond 2024-25 have not yet been confirmed and are subject to future Spending Reviews”, and the NFF will make sure funding is distributed fairly based on the needs of each school and their pupils.
“It is for local authorities and academy trusts to balance the supply and demand of school places, in line with changing demographics, as they have done for many years,” the department added.
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