Schools

The core schools budget in England has risen by 10% in real terms from £52.6 billion in 2019–20 to £57.6 billion in 2023–24, and is due to further rise by another 2% to reach £58.6 billion in 2024–25 (all in 2023–24 prices). As pupil numbers have been relatively stable over this period, total spending per pupil is expected to grow by 10% in real terms between 2019–20 and 2024–25. However, rising inflation has eroded the purchasing power of these funding increases, and large cash-terms increases in staff pay have led to schools facing faster increases in costs than overall inflation. 

The following analysis of school spending focuses on day-to-day or current spending on schools in England. This is primarily for data availability reasons. We have also provided analysis comparing school spending per pupil across the four nations of the UK, which indicates higher levels of school spending per pupil in Scotland in particular. In light of the safety concerns over school buildings, we have published separate analysis of trends in school capital spending. This shows that school capital spending in England is currently about 26% lower than in the late 2000s (comparing the three-year average up to 2023–24 with that up to 2008–09).

We focus on public spending on education. This is due to a lack of reliable data on total private spending on each stage of education over time. For schools, we have produced additional analysis comparing state school spending per pupil and private school fees over time, including the likely effects of Labour’s proposals to remove tax exemptions from private schools. 

For further details on the methods used to analyse school spending, see https://ifs.org.uk/education-spending/methods-and-data. 
 

Total school spending per pupil

Figure 3.1 shows total school spending per pupil aged 3–19 between 2003–04 and 2023–24 broken down into four different components:

• Funding allocated to schools. This includes funding directly allocated to schools and early years providers. Early years funding is included in primary school budgets for past years. We cannot exclude this for all years, so we include early years funding for all years to maintain consistency. This also includes funding for special schools and alternative provision. 
• Local authority spending. This includes central spending on a range of services for pupils with special educational needs, admissions, transport and other services. 
• Sixth-form funding. This is funding provided to schools for pupils aged 16–19. We include this given that it is often included within total secondary school expenditure figures.
• Extra funding for employer pension contributions. From September 2019, schools received about £1.5 billion in extra funding to meet the cost of higher employer pension contributions. We often present numbers with and without these figures for comparisons over time as the funding was directly intended to compensate schools for higher costs. Employer pension contributions are to rise by a further 5 percentage points from April 2024. The government has committed to compensating state-funded schools and colleges for the extra costs of this change in 2024–25, with future years considered in the next spending review.
   

Combining all these factors, we calculate total school spending as £65.5 billion in 2023–24. This is higher than the core schools budget for England presented by the government, £57.6 billion in 2023–24. This can be mostly explained by the fact that we include £3.1 billion in post-16 funding and nearly £3.5 billion in early years funding, as well as additional services provided by local authorities that are funded through the wider local government settlement. 

In 2003–04 (the earliest year for which we can produce this consistent set of figures), total school spending stood at about £6,300 per pupil in 2023–24 prices. This rose by 23% in real terms up to 2009–10, reaching a high point of £7,800 per pupil. After 2009–10, spending per pupil fell by 9% in real terms to reach £7,100 in 2019–20, taking spending per pupil back to around the level last seen in about 2006. 

Up to 2009–10, each of the components rose by similar amounts. After 2009–10, the different components evolved very differently. Per-pupil funding provided to schools rose by around 4% in real terms between 2009–10 and 2019–20. In contrast, local authority spending on services fell by 57% over the same period. A large part of this contrasting pattern is mechanical, reflecting a transfer of funding and responsibilities from local authorities to both academies and maintained schools. There was also a big drop in sixth-form funding. As we show in our analysis of further education and sixth form spending, school sixth-form funding per student fell 24% over this period. 

These figures represent our best estimates of the change in total public spending available for school services in England over this period. They include the effect of cuts to local authority services, many of which schools will have had to fund from their existing budgets, and cuts to school sixth-form funding, which will have put pressure on secondary school budgets. If we exclude sixth-form funding, school spending per pupil aged under 16 fell by 8% in real terms between 2009–10 and 2019–20. However, if we were able to exclude early years funding for all years, this cut would become larger as early years funding grew in real terms over this period.

Interestingly, a large amount of the real-terms fall in spending per pupil since 2009–10 can be accounted for by the fact that total spending has not kept pace with fast growth in pupil numbers. Total spending on schools (as calculated for Figure 3.1) rose by about 1–2% in real terms between 2009–10 and 2019–20, whilst pupil numbers grew by 11% over the same period. The net result is the 9% real-terms fall in spending per pupil that we observe. 

Since 2019–20, school spending per pupil has begun to grow again in real terms, reflecting extra funding provided in the 2019 and 2021 spending reviews, as well £2.3 billion extra funding from 2023–24 as announced in the 2022 Autumn Statement. As a result, between 2019–20 and 2023–24, total school spending per pupil grew by 5% in real terms, partially reversing past cuts, or by 7% if we include funding to compensate schools for extra employer pension contributions. 

Figure 3.2 projects total school spending per pupil up to 2024–25 based on the latest government spending plans and forecasts for pupil numbers and inflation. This is shown relative to 2009–10, the most recent high-point in school spending per pupil in real terms. This includes the effects of an extra £825 million over a full year in school funding announced in July 2023 to cover the costs of increasing the average teacher pay offer to 6.5% from September 2023. For consistency with government figures, we focus on total school spending including compensation for higher employer pension contributions. We present two scenarios. The first shows actual and expected future real-terms trends after adjusting for economy-wide inflation based on the GDP deflator. The second uses an estimated measure of schools-specific cost inflation, which includes actual increases in staff salaries and non-staff costs up to 2023–24, and an assumed 3% increase in staff salaries for 2024–25. 

We do not have the necessary data to extend these series back in the same way before 2019–20. However, our previous analysis has compared trends in school spending per pupil (based on economy-wide inflation) with trends assuming staff costs follow trends in overall public sector pay per head. Under both scenarios, we found that school spending per pupil declined by about 9% in real terms between 2009–10 and 2019–20. Whilst freezes in public sector pay in 2011 and 2012 initially kept school costs down, increases in employer pension contributions and National Insurance contributions increased school costs in 2016 and 2017.

Spending per pupil increased in real terms using both measures of inflation up to 2021–22, with a brief dip in 2022–23. Based on economy-wide inflation, school spending per pupil is then expected to grow further in real terms up to 2024–25, taking it back to 2010 levels. We see a very different picture if we account for schools-specific cost inflation, with the purchasing power of school budgets declining slightly in real terms up to 2024–25. This would leave the real-terms level of school budgets about 4% lower than they were in 2009–10. 

The reason for this divergence results from the specific way in which the GDP deflator measure of economy-wide inflation is calculated. In particular, it focuses on domestic prices and largely excludes the effects of rises in the price of imports. This matters a great deal in the current situation as imports of food and energy have played a big role in driving overall inflation.

The GDP deflator is currently forecast to grow by 6.1% in 2023–24, whilst our measure of schools-specific costs is due to grow by 7.2%. The faster growth in school costs is driven by fast growth in staff salaries (such as the 6.5% growth in teacher pay in September 2023 and an expected 8% growth in other staff pay in 2023–24). Schools will also face rises in non-staff costs, which are probably best reflected in the expected 6.1% growth in the Consumer Prices Index in 2023–24. 

For 2024–25, the GDP deflator is currently forecast to grow by 1.7%. In contrast, we project a 3.8% increase in school costs, which is only just covered by a 3.8% cash-terms increase in school funding per pupil. As part of our estimates for school costs, we assume a 3% increase in staff salaries, matching OBR projections for CPI inflation in 2024–25. The actual increases in school costs will depend on actual pay awards and the out-turn for inflation. However, the risks are likely to be on the upside for costs. There is still evidence of significant recruitment and retention difficulties in the teacher and support staff labour market. The government is also committed to recruiting extra teachers as part of plans to reform the post-16 system. Furthermore, the National Living Wage is due to rise by 10% in April 2024 and local government employers have made it clear that they aim to maintain ‘headroom’ in school support staff pay relative to the National Living Wage. This suggests school support staff pay is likely to increase by significantly more than 3%. An increase of 6.5% for school support staff would add a further 1 percentage point to the growth in school costs in 2024–25. 

Average spending by primary and secondary schools

Figure 3.3 shows our estimates for the level of primary and secondary school spending per pupil in England from the late 1970s through to 2021–22 (in 2023–24 prices), together with projections up to 2024–25. Spending levels exclude temporary COVID-related grants. Actual figures up to 2021–22 are based on spending levels by individual schools, which excludes spending undertaken by local authorities and spending on special schools. The figures are therefore lower than those shown in Figure 3.1. We produce projections based on both the GDP deflator and our own estimates of the growth in schools-specific cost. 

Spending per pupil has evolved in a number of distinct phases:

• Modest growth over the 1980s and 1990s. During the 1980s and 1990s, primary school spending per pupil grew by 2.1% per year, on average, in real terms and secondary school spending per pupil grew by slightly less (1.4% per year, on average). This includes a 6% real-terms cut in secondary school spending per pupil during the early 1990s, when primary school spending per pupil was largely constant in real terms. 
• Rapid growth over the 2000s. From 1999–2000 onwards, spending per pupil grew rapidly, with growth of nearly 6% per year in real terms for primary and secondary schools over the 2000s. This led primary school spending per pupil to rise from £3,200 per pupil in 1999–2000 to reach £5,800 by 2009–10, whilst secondary school spending per pupil grew from £4,300 to £7,600 per pupil (all in 2023–24 prices). 
• Funding squeeze since 2010 and increased role of individual schools. There has been a squeeze on funding since 2010–11. This has not, however, always been visible in the spending levels of individual schools. This is because maintained schools and academies both received extra funding to take on responsibility for services previously provided by local authorities (i.e. this was a transfer of funding, rather than an increase in funding for existing activities). As a result, over the decade between 2009–10 and 2019–20, primary school spending per pupil grew by 6% in real terms, whilst secondary school spending per pupil fell by 8%. This averages out to an effective real-terms freeze on spending per pupil by individual schools. Secondary schools saw a worse picture partly due to big reductions in school sixth-form funding. 
• Return of growth up to 2024. Core school spending per pupil is expected to grow in real terms through to 2024. Combining actual growth in spending per pupil and forecast growth up to 2024–25, primary school spending per pupil is likely to grow by 5% in real terms between 2019–20 and 2024–25, and secondary school spending per pupil by 2% (both adjusting for economy-wide inflation). The expected growth rates are lower when we instead account for our estimates of school costs growth, with 2% real-terms growth in primary school spending per pupil and a 1% real-terms fall in secondary school spending per pupil (leaving it about 10% lower in real terms than in 2009–10). 

Two long-term trends emerge from this analysis. First, the gap between secondary and primary school spending has fallen significantly over time. In the 1980s, secondary school spending per pupil was about 56% higher than primary school spending per pupil. This narrowed to 49% in the 1990s and then to 30% in the 2000s. This narrowing continued through the 2010s, and the secondary:primary school funding difference is due to be only 10% in 2024–25. Some of the recent narrowing reflects that primary schools have benefited more from the transfer of responsibilities and funding from local authorities to schools. However, this is also clearly part of a long-term relative shift in funding and resources from secondary to primary schools. 

Second, there have clearly been cycles in the growth of spending per pupil. Modest growth or cuts during the 1980s and 1990s were followed by large increases during the 2000s, which were in turn followed by cuts and freezes during the 2010s. One could argue that squeezes in funding per pupil during the 2010s were less concerning because they followed on from big increases during the 2000s. But one could equally argue that the large increases during the 2000s were needed to catch up, following the modest rises and cuts during the 1980s and 1990s. Unfortunately, none of these trends provides any definitive guide to a right or target level of spending per pupil. Instead, decisions on school spending are best guided by objectives for the school system, the extent to which extra resources are needed to achieve those objectives, and the state of the labour market for teachers and support staff.