Budget and Education

Following the budget, the chancellor has laid out the Labour government’s plans for school spending for 2025-26.

The Labour government has announced that core school funding will increase by £2.3 billion a year, let’s have a look at how this will be broken down.

SEND and AP:

£1 billion will be used for special educational needs and disabilities (SEND) and alternative provision (AP). The Treasury predicts it is likely that local authorities (LAs) will use additional funding to reduce in-year deficits. This is likely to eradicate around £865 million from councils’ SEND deficits next year, but this is only a quarter of the total of local authority deficits within High Needs Funding.

Teachers Pay Rise:

Of the remaining £1.3 billion, £450 million will be needed to make up the full cost of this year’s teacher pay rise.

School Cost Pressures:

This will leave around £850 million left for other cost pressures.

Extra Nurseries:

The Budget confirmed £15 million already announced to create 3,000 new or expanded nurseries.

Capital Funding:

The DfE will get £6.7 billion in capital funding next year. Of this, £1.4 billion is to deliver on the existing School Rebuilding Programme, which was announced in 2020 and aims to rebuild or refurbish about 500 schools in a decade. This extra cash also includes £2.1 billion for school maintenance, an increase of £300 million compared with this year.

Other spending commitments:

This includes £3 million to expand the Creative Careers Programme, which will help school children learn more about creative career routes. Next year will also see £2 million spent on Holocaust remembrance and education, and £300 million for further education.

Still to do:

The increase in National Insurance (NI) contributions for employers, increased by 1.2 percentage points from April 2025 is likely to cost school budgets £175-200 million over the next year. The Treasury has indicated that additional funding will be provided to public sector bodies including schools for the increased employer NI contributions. Further detail on this is expected to be set out in phase two of the Spending Review in the spring.