School Budget Management Under Real-Terms Funding Pressure

Where the pressure is actually coming from

The national picture is more complicated than “funding has been cut,” and it’s worth getting the shape of it right before you build a case for governors. According to the Institute for Fiscal Studies’ Annual Report on Education Spending in England 2025–26, total school spending per pupil fell by 9–10% in real terms between 2010 and 2019 — the largest sustained cut in over 40 years — before recovering through an £8 billion real-terms increase between 2019–20 and 2024–25, equivalent to roughly 11% real-terms growth per pupil. Put those two movements together and, by 2025, spending per pupil was back to roughly where it stood in 2010. Not a triumph, but not the horror story of a decade ago either.

That recovery hasn’t landed evenly. IFS figures for 2025–26 put primary funding at around £7,000 per pupil, up 12% in real terms since 2010–11. Secondary funding sits at around £7,800 per pupil, still down 3% on 2010–11. If you lead a secondary school and it feels like the recovery everyone talks about hasn’t quite reached you, the national data backs that up.

Looking forward, the core schools budget is set to be held flat in real terms from 2025–26 to 2028–29, with additional funding earmarked to extend free school meals to all children on Universal Credit. Combined with falling pupil numbers nationally, that technically produces a small real-terms rise in funding per pupil — but a flat cash pot at national level gives individual schools very little room to absorb local inflation shocks, a bad September enrolment number, or a spike in one cost line.

The cost line doing most of the damage for many schools is SEND. IFS reporting shows SEND spending in schools has almost doubled in real terms over the past decade, driven by rapidly rising numbers of pupils with Education, Health and Care Plans. The Office for Budget Responsibility forecasts a £6 billion gap between local authorities’ high-needs spending and the funding available for it by 2028–29 — a shortfall IFS describes as equivalent to roughly 9% of the anticipated total schools budget in that year. Whatever the national per-pupil headline says, this is the line quietly eating your discretionary headroom.

You can see the practical result of that squeeze in the deficit data. Schools Week’s analysis, published 11 July 2025, of Freedom of Information responses from 71 local authorities covering 5,345 maintained schools, found the average in-year deficit for maintained primary schools rose from £3,162 in 2023–24 to £6,360 in 2024–25. Secondary schools were more exposed still: an average £46,000 in-year surplus in 2023–24 flipped to an average £43,000 deficit the following year. Across all maintained schools in the dataset, the average in-year deficit quadrupled, from £1,169 to £4,585. The number of primary schools in cumulative deficit rose from 645 (14.2%) to 710 (16%) of the 4,540 primaries covered. It’s worth being precise about what this data is and isn’t: it’s a large FOI-based sample of maintained schools across roughly half of England’s local authorities, not a full national census, and it doesn’t cover academies directly. But the direction of travel is unambiguous, and it’s consistent with what the funding and SEND figures above predict. NAHT’s policy team told Schools Week that school leaders were “being forced into cuts including reducing hours of teachers and teaching assistants,” and NEU’s general secretary put it more bluntly: schools should expect “further cuts for the foreseeable future.”

None of that is an argument for panic. It’s the argument for treating this year’s budget round as a genuine planning exercise rather than a repeat of last year’s spreadsheet with different numbers typed in.

Start with the plan, not the cuts

The instinctive response to a shrinking gap between income and cost is to look for things to cut. The better sequence is to build — or rebuild — a curriculum-led financial plan first, so that any reduction you eventually make is a deliberate design choice rather than a panicked one.

The DfE’s Integrated Curriculum and Financial Planning (ICFP) tool, built into the Financial Benchmarking and Insights Tool (FBIT), exists for exactly this. It works from your curriculum design outward: subjects offered, class and group sizes, contact ratios, staffing structure, and it maps those choices against what you can actually afford. As the DfE’s own guidance on using ICFP puts it, the aim is to build the best curriculum you can within the funding you actually have, rather than discovering the mismatch after the fact. Used properly, it also produces a workforce deployment plan you can defend to governors line by line, because every post is tied to a specific curriculum decision rather than “that’s how we’ve always staffed it.”

The value of doing this before you start cutting is that it forces the conversation to happen in the right order. If a Year 9 option block is running at nine pupils in three groups, that’s a curriculum design choice with a financial consequence, and it’s a much easier conversation to have deliberately in April than to discover accidentally in a February deficit warning.

Buying power: procurement collaboration and trust deals

After staffing, procurement is usually the largest lever a school has — and it’s the one most schools under-use, because renewal dates creep up quietly and get rolled over rather than reviewed.

Multi-academy trusts have a structural advantage here: centralising energy, HR systems, finance platforms, IT and insurance procurement across several schools routinely produces savings that a single school negotiating alone can’t match, because suppliers price for volume and certainty. If you lead a trust school, it’s worth checking whether your central team is actually using that leverage on the contracts that renew this year, not just the ones that were centralised at conversion.

If you’re a standalone school or a small MAT, you’re not locked out of this. Local authority buying consortia, regional school-to-school purchasing groups, and national frameworks such as those listed through the DfE’s buying guidance and Crown Commercial Service exist precisely so that smaller schools can pool volume with others rather than negotiate alone. “Energy baskets” — groups of schools or public bodies buying gas and electricity together on a shared contract — are a well-established example, and they typically secure better unit rates than an individual school’s consumption alone would command.

Two practical actions for this budget round: first, pull your contract renewal calendar now, not the month a contract lapses, because the leverage in a procurement negotiation almost entirely depends on not being a forced buyer. Second, before renewing any significant contract, ask what a comparable school or trust nearby is paying for the same service — governors and neighbouring business managers are usually willing to share this, and it’s a faster sense-check than a full retender.

The other big line: energy and the estate

Energy is typically the second-largest cost line after staffing, and it’s also the one with the most genuinely wasteful spend hiding in plain sight — heating an empty hall on a Saturday, lighting corridors nobody walks down after 6pm, hot water running in a wing that’s closed for the holidays. None of that requires a capital project to fix, just someone with the authority to actually change the timer settings and the confidence to override “that’s how the caretaker’s always run it.”

Beyond day-to-day waste, the harder estate problem is the maintenance backlog that most schools are carrying, and the temptation to fund urgent repairs out of the revenue budget because the capital process feels slower. Where work qualifies, routing it through the School Condition Allocation or the Condition Improvement Fund rather than revenue keeps it off the budget line that’s already under the most pressure — it’s worth checking with your local authority or trust estates team whether a repair you’re about to pay for out of revenue could legitimately be reclassified or funded through one of these routes instead.

When cuts are unavoidable: protect the classroom last

Efficiency measures buy you time and headroom, but for a growing number of schools, as the deficit data above shows, they don’t close the whole gap. When reductions do become necessary, the order in which you make them matters as much as the total amount saved.

The sequence most experienced school leaders defend to governors, and the one worth defending publicly if asked, runs roughly: discretionary and non-essential spend first (training budgets beyond statutory requirements, consumables, non-contractual extras); back-office and administrative overhead next, including anything that can be shared, automated, or delayed without touching a child’s day; then support structures around the classroom, reviewed for actual impact rather than history; and only last, and only when the alternative is a genuinely unsustainable deficit, anything that changes what happens in front of pupils directly.

Be honest with yourself about where teaching assistant hours sit in that order. TAs are frequently the largest movable staffing cost after teachers, which is exactly why NAHT’s polling of school leaders points to TA hours as one of the first things schools actually cut when budgets tighten — but “largest movable cost” and “last resort” aren’t the same test, and conflating them is how classroom-facing cuts happen by default rather than by decision. If TA hours do have to move, the honest version of that decision names which pupils and which sessions are affected, rather than describing it to staff and governors as a vague “efficiency.”

The single most useful discipline here is refusing to let “efficiency” become a euphemism. If a change reduces contact time, group support, or enrichment that pupils currently receive, say so plainly in the paperwork that governors sign off, even if the number is small. It protects you later, and it’s also just the honest description of what’s happening.

Talking to staff and governors honestly, without causing panic

Governors need the real numbers, on a real timeline, before a deficit becomes urgent rather than after. That means monthly or termly management accounts that show the actual trajectory against the budget you set, not just a year-end reconciliation that surprises everyone in July. If you’re forecasting a deficit, say so as soon as the forecast is reasonably confident, with the mitigations you’re already working on attached to the same paper — a problem presented alongside a plan lands very differently from a problem presented alone.

Staff are a different audience with a different risk. Silence gets filled with rumour, and rumour is almost always worse than the actual number. The staff room doesn’t need every line of the budget, but it does need to hear, from you, in a planned way, that there’s a gap, roughly how big, and what’s already being looked at to close it — ideally before anyone hears a distorted version of it in the car park. Separate the “here’s the situation” conversation from the “here’s what’s changing for you specifically” conversation where you can; conflating them tends to make people assume the worst-case option is already decided when it usually isn’t.

The tone that works best with both audiences is the same: precise, calm, and specific about what is and isn’t yet decided. Vague reassurance that “everything will be fine” tends to erode trust faster than an honest “here’s the gap, here’s the plan, here’s what we don’t know yet.”

Sense-checking your position with the DfE’s own data

Before you take any budget narrative into a governors’ meeting, it’s worth checking whether your cost base is actually unusual, or just feels that way from the inside. The DfE’s Financial Benchmarking and Insights Tool lets you compare your spending, staffing structure and key ratios against schools with a genuinely similar profile — matched on pupil numbers, phase, proportion of pupils with SEN, free school meal eligibility and EAL, rather than against national averages that may not reflect your context at all. It covers maintained schools, academies and trusts, and it’s free to use with a DfE Sign-in account.

Two uses of this are worth building into your budget cycle rather than treating as a one-off exercise. First, use it to check individual cost lines — if your premises spend, or your admin staffing ratio, or your SEN support costs look markedly out of line with genuinely comparable schools, that’s worth understanding before you either defend it or cut it. Second, the tool is explicitly designed to let you find and contact schools with a similar profile, which is a faster route to a sensible procurement benchmark or staffing structure comparison than starting from scratch.

The honest starting point

The national funding story genuinely has two halves: real recovery since 2019 after a brutal decade before it, and a SEND cost curve that’s outpacing the formula’s ability to keep up, pushing a rising share of individual schools into deficit even while the national per-pupil average looks better than it did five years ago. Both things are true at once, and a governing board that’s only heard one half of that story will either panic unnecessarily or be blindsided later. A curriculum-led plan, real procurement discipline, an honest ordering of what gets protected, and a habit of checking your numbers against genuinely comparable schools won’t make a structural funding gap disappear. But they’re the difference between a school that manages a hard year deliberately and one that discovers the hard year has already happened to it.