Maximising School Budgets: Insights from the IFS Report 2024-2025

The IFS’s 24-25 report, published on January 8th, 2025, highlights the challenges schools face in balancing their budgets amid rising costs and targeted funding increases. Despite a real-terms increase in spending per pupil, mainstream schools are likely to experience financial pressures due to inflation and growing costs. This article explores actionable steps schools can take to optimise their resources and how tools like SBS Financial Planner can provide a strategic advantage.

Key Findings from the IFS Report

1. Real-terms spending increases are modest.

• Core schools budget rises by 1.6% in real terms for 2025–26, reaching £63.9 billion
• This builds on an 11% increase since 2019–20, restoring funding per pupil to 2010 levels

1. High needs funding allocation continues to grow.

• £1 billion of the increase is earmarked for the high needs budget, leaving less flexibility for mainstream schools

1. Inflation and rising costs put pressure on resources.

• Economy-wide inflation at 2.4% and expected school cost increases of 3.6% will outpace funding growth for many schools

1. Budgeting challenges are likely for mainstream schools.

• Mainstream schools receive a 2.8% cash-terms increase in per-pupil funding, which could feel like a cut in real terms when rising costs are accounted for

Challenges for Schools in the 2024/25 Academic Year

Given these findings, schools face a balancing act:

• Managing rising operational costs (e.g., energy, staffing, and resources)
• Addressing the needs of SEND pupils while maintaining provision for mainstream students
• Preparing for unexpected cost pressures, particularly as inflation forecasts can shift

For guidance on achieving efficiency savings read our Achieving Efficiency Savings article.

Factoring in Falling Pupil Numbers

A decline in pupil numbers is creating further challenges for schools, as funding is often allocated based on per-pupil calculations. Fixed costs such as staffing, utilities, and building maintenance are increasing, even as income decreases. This mismatch can strain budgets and force difficult decisions about resource allocation.

To manage falling pupil numbers effectively, schools can:

• Forecast Enrolment Trends: Use tools to project pupil numbers and plan for funding adjustments
• Consolidate Resources: Explore opportunities to share services, facilities, or staff across schools or Multi-Academy Trusts (MATs)
• Optimise Staffing: Align staffing levels with enrolment figures to avoid unnecessary expenditure

Practical Steps to Manage Budgets Effectively

1. Use Data to Drive Decisions

Accurate, real-time financial data is essential for managing tight budgets. Schools should ensure they:

• Track actual vs. planned spending to identify discrepancies early
• Use scenario planning to model the impact of cost increases, such as staffing adjustments or energy rate changes

2. Prioritise Spending Areas

With limited resources, prioritisation is key. Schools should:

• Focus spending on initiatives that directly impact student outcomes
• Regularly review spending on non-essential areas to find potential savings

3. Plan for High Needs Provision

As more funding is directed toward high needs, schools should assess their SEND budgets carefully.

• Ensure funding allocations match the actual costs of supporting SEND students
• Use forecasting to plan for potential changes in SEND enrolments or requirements

4. Streamline Budget Submissions

With tight timelines for budget submissions to local authorities or MATs, efficiency is critical.

• Automate processes to reduce manual errors and save time
• Ensure reporting aligns with statutory requirements to avoid delays

How SBS Financial Planner Can Help

• Customised for Schools: Built specifically to handle the unique complexities of school and MAT finances
• Scalable Solutions: Designed to grow with your Trust or school, accommodating multiple sites and shared budgets
• Seamless Integration: Sync with financial systems like Sage Intacct and Xero for accurate data consolidation
• Scenario Planning: Explore unlimited "what if" scenarios to understand the financial impact of key decisions

The IFS report underscores the financial pressures facing schools in the 2024/25 academic year. By adopting a proactive approach to budgeting and leveraging tools like SBS Financial Planner, schools can maximise their resources, address rising costs, and continue to deliver quality education. Now is the time to take control of your finances and ensure every pound is working hard for your school community.

Talk to our Team

If you would like a bespoke quote for SBS Financial Planner for your Trust or would like to talk to our finance team around managed accounts and consultancy please get in touch below. 

Get in Touch