How the UK Budget 2025-26 Will Impact Schools and Education
Key Changes and Funding Updates
On October 30, 2024, the Chancellor announced the Budget for 2025-26. Here’s a breakdown of how this Budget impacts schools, colleges, and early years providers across England and Wales.
School Funding Increase: £2.3 Billion Boost for 2025-26
Schools in England will benefit from a £2.3 billion funding increase, with £1 billion dedicated to high needs, supporting the Special Educational Needs and Disabilities (SEND) sector. This funding covers the 5.5% teacher pay rise and helps schools manage upcoming pay awards.
Minimum Wage and National Insurance Contributions: Key Changes for School Budgets
The national minimum wage will rise by 6.7% for over 21s, affecting school budgets for lower-paid staff. From April 2025, schools and colleges will receive targeted funding to offset the 1.2% employer National Insurance increase.
It is worth noting that many suppliers and outsourced service providers, such as for cleaning or groundskeeping, may experience large cost increases due to increase NMW and NI, which may be passed on to schools through increased contract prices. The cost increases are likely to be difficult for some suppliers to absorb without increasing prices.
Help budget for these increases with SBS Financial Planner
Investment in School and College Infrastructure
The government is putting in an extra £1.4 billion to keep the School Rebuilding Programme moving. This will support 100 rebuilding projects next year and the target of rebuilding 518 schools in total.
Additionally, another £2.1 billion will go toward maintaining and improving school buildings. There is a further £300 million allocated to colleges to help them enhance their facilities.
Expansion of Breakfast Clubs
Funding for breakfast clubs is being expanded, to provide more children with nutritious meals to start the school day. This funding will support the existing DfE school breakfast programme as well as the roll out of new free breakfast clubs.
Funding for Early Years Childcare
The Budget includes a boost for early years funding, with an additional £1.8 billion in 2025-26, to continue to fund the expansion of funded childcare hours for parents with children from nine months, up to the ages of three and four.
Plus, there’s a specific push to expand school-based nurseries. The government has earmarked £15 million towards the funding of 3,000 new or expanded nurseries, with schools able to apply for grants of up to £150,000. By September 2025, there are expected to be 300 new or expanded nurseries in operation, helping to give more families access to early education.
Funding for Further Education and Apprenticeships
An additional £300 million has been set aside to support further education. Details on how these funds will be distributed are yet to come.
There’s also a push to make apprenticeships more flexible. The Apprenticeship Levy will be rebranded as the Growth and Skills Levy, with £40 million allocated to deliver foundation and shorter apprenticeships, particularly in high-demand sectors.
National Funding Formula Announcement
The National Funding Formula (NFF) is the government’s method for determining how much funding each school receives based on factors like student need, location, and specific characteristics of the school. While the 2025-26 Budget has outlined the main areas of funding increases, the exact financial implications for individual schools will become clear only when the Department for Education releases the updated NFF later in November.
Autumn Budget Essentials Webinar for Education Sector
Join SBS's Lara Scadding and Kelly Crawford, along with Susan Fielden, Trust and School Funding Policy Specialist for Confederation of School Trusts (CST), on December 3rd for an in-depth look at the Budget’s impact on schools, including insights into the National Funding Formula (NFF) update and what it means for your school’s budget.
