School funding per pupil set to rise by 9% in real terms, as government yet again tops up schools budget

Top-ups to the schools budget and faster-than-expected falls in pupil numbers mean that school funding per pupil in England is now expected to grow by 9% in real terms between 2025–26 and 2028–29. This is more than twice the 4% growth expected at the time of last summer’s Spending Review.

The financial outlook for schools has therefore improved significantly. Last week’s decision not to claw back savings from lower employer pension contributions for support staff effectively adds £500 million to school funding this year. This comes on top of a £700 million top-up announced already this year in July (which will rise to £1.1 billion from next year) to help meet higher-than-expected teacher pay costs. We expect funding per pupil to grow faster than school costs in each year to 2028–29, reversing the squeeze seen in recent years. 

This is the tenth time in the past decade that governments have topped up the schools budget outside the spending review process. In total, these top-ups have increased the annual schools budget by around £9 billion (13% of the current budget). This is not a good way to make funding decisions: repeated changes make it harder for schools to plan their budgets effectively, while allowing government to postpone the difficult trade-offs involved in setting public spending levels.

Per-pupil spending has also been pushed up by faster-than-expected falls in pupil numbers. Pupil numbers are now expected to fall by 400,000 (5%) between 2025–26 and 2028–29, compared with a 3% fall previously expected. While this will push up average funding per pupil, schools where pupil headcount is falling particularly fast could see their total funding fall, and will need to reduce their overall costs.

These are among the conclusions of a new IFS report, ‘The outlook on school funding in England’, published today, and funded by the Nuffield Foundation. This provides our latest projections for school funding and costs in England.

Key findings include: 

• Schools are now in a better position to meet costs. We project 5% growth in cash-terms per-pupil funding this year (2026–27), compared with 3% growth in costs per head in the same year. We expect funding growth to exceed cost growth through to 2028–29, reversing the squeeze seen in recent years.
• However, rising demand for special educational needs and disabilities (SEND) support will continue to absorb a substantial share of the increase in funding. The government has allocated an additional £3.5 billion from the schools budget for SEND by 2028–29. Stripping this out, mainstream school funding per pupil is expected to rise by around 3% in real terms over the period.
• Policy changes mean schools will also need to adapt their workforce. Reforms to the SEND system mean schools will have to take on more responsibility for assessment and provision. The recent review of the curriculum and assessment proposed that more pupils should be able to take individual sciences at GCSE level, increasing demand for teachers in subjects that in recent years have struggled to meet recruitment targets. A broader pivot towards technical education routes from age 14 would have further consequences for the shape of the teacher workforce. 

Luke Sibieta, IFS Research Fellow and author said: ‘School funding per pupil is now expected to rise by 9% in real terms between 2025–26 and 2028–29, more than twice the growth we expected at last year’s Spending Review. This comes after yet another top-up to the schools budget, the tenth in a decade, raising questions about the stability of the way school funding is being set. While a string of spending top-ups and fast-falling pupil numbers will improve schools’ financial position on average, there remain wider pressures on school budgets. Rising demand for SEND provision and potential changes to the curriculum will change what schools are expected to deliver, requiring them to rethink not just the size of their workforce, but the mix of staff they need.’

Josh Hillman, Director of Education at the Nuffield Foundation said: ‘This new research shows that the headline of rising school funding does not tell the whole story. Growing demand for SEND support means that much of the additional investment will be required simply to keep pace. While that funding is vital, many mainstream schools are still likely to face continuing financial pressures over the coming years as they respond to falling pupil numbers and changing patterns of need.’