It’s been two weeks since the new Labour government delivered its first budget, and as expected, education funding was a central topic. Schools and teachers across the UK have been waiting to see what this budget means for them, particularly in light of ongoing challenges around recruitment, retention, and resources.
In this quick guide, we’ll break down the key announcements related to education and explore what impact these changes may have on schools, teachers, and ultimately, students.
Increased Funding for Schools
The October 2024 UK Budget has introduced a significant increase in funding for schools, addressing some of the long-standing financial challenges faced by the education sector. The core schools budget will see a substantial rise of £2.3 billion for the 2025-26 financial year. The government claims this increase will support per-pupil funding in real terms. The additional funding is intended to bolster various aspects of the education system, including supporting the government’s pledge to hire thousands more teachers into key subjects. This increase follows several recent funding boosts, which were largely allocated to cover staff pay rises.
Special Educational Needs and Disabilities (SEND) Funding
SEND funding has been recognised as a priority, with £1 billion of the £2.3 billion increase set aside specifically for SEND and alternative provision. This is a 6% real-terms rise in SEND funding, which shows a clear commitment to improving support for children with special educational needs. However, it’s important to note that it is expected that much of this funding will go towards addressing existing deficits in local authority SEND budgets, rather than creating new services or provisions.
While this funding boost is welcome, the real challenge will be ensuring that it leads to meaningful improvements in support for children with SEND.
Teacher Recruitment
The increase in school funding is part of the government’s pledge to hire 6,500 new teachers in key subjects across England, a commitment made in the Labour party’s election manifesto. This funding aims to improve working conditions and reduce workload for current teachers, while also fully covering the 5.5% pay award for teachers this summer. Additionally, it will help fund potential pay awards in 2025-26.
Free Breakfast Clubs
The budget includes funding for free breakfast clubs in primary schools, with an investment boost to over £30 million, aimed at supporting parents, especially those from disadvantaged backgrounds. The goal is to help ensure children are ready to learn and to improve behaviour, attendance, and attainment. The investment will support the current DfE school breakfast programme, which benefits around 2,700 schools, and fund the introduction of new free breakfast clubs, with the first 750 schools set to launch in the spring.
Impact on Private Schools
The introduction of VAT on private school fees, effective from January 2025, marks a significant shift in education funding. This change, alongside the removal of business rates relief from private schools in April 2025, is expected to have a lasting impact on both private and state schools. With the additional costs for private school families, an estimated 35,000 students are expected to transition from private to state schools over the long term. This increase in demand for state school placements could put a further strain on resources.
To ensure SEND students continue receiving the support they need, councils and devolved governments funding private placements for pupils with SEND needs that can “only be met” in private schools will be compensated for the VAT on those pupils’ fees. Private schools primarily focused on providing full-time education to students with education, health, and care plans will continue to qualify for business rates relief.
National Insurance Contributions
Starting April 2025, employers’ National Insurance contributions will rise by 1.2 percentage points, a change expected to add substantial costs to school budgets. Estimates from the National Foundation for Educational Research (NFER) indicate that a 1% increase could cost schools between £175 million and £200 million annually. The Department for Education is anticipated to receive additional funding to help schools offset this rise, though the exact amount has yet to be confirmed.
Capital Investment
The government is dedicating £6.7 billion in capital funding for schools next year, a significant boost aimed at improving educational facilities. This includes £1.4 billion specifically for the School Rebuilding Programme, which aims to rebuild or refurbish 518 schools over a decade. Another £2.1 billion is allocated to improve the condition of school estates, an increase of £300 million from last year. This funding will help ensure school buildings are safe, modern, and better equipped for students and staff. Colleges will receive an additional £300 million to enhance their facilities, giving them greater financial stability to plan long-term improvements across the further education sector.
Support for Early Years
The government has strengthened its commitment to early years education by dedicating £1.8 billion in new funding, raising the total annual spend to over £8 billion. This funding will extend free childcare to children as young as nine months, giving working parents up to 30 hours a week of support by 2025. The Budget also includes £15 million to fund 3,000 school-based nurseries, with up to 300 new nurseries planned for the first phase, aimed at making high-quality early education more accessible and affordable.
Final Thoughts
The additional funding has been welcomed across the education sector, though some experts believe it only partially addresses years of underfunding. The boost for SEND support and school infrastructure is essential given the challenges in these areas. While teachers and school leaders may benefit from the extra resources, they will need to adapt to planned changes and potentially increased student numbers due to private school policy changes.
You can find more information on how the 2024 Budget affects schools here: TES Magazine’s Budget 2024: What Schools Need to Know.
