Julia Harnden provides a summary of what the government’s funding settlement for 2025/26 means for school and college budgets.

Mission impossible?

We are all familiar with the government’s ‘Breaking Down Barriers to Opportunity’ mission, which aims to create a more equitable and effective educational landscape. No one would reject such an aspiration, but it does require a level of investment equivalent to the task.

Early years settings and schools had been encouraged by the July announcement of an additional £1.2 billion to support cost pressures in the 2024/25 funding year, but colleges were left out.

The next opportunity to get the ball rolling on the mission was in autumn in October last year – a lot was riding on the chancellor’s Autumn Budget 2024, so what did the settlement for 2025/26 provide?

Early years entitlement

A total of £1.8 billion will fund the continued expansion of the early years entitlement to free childcare for working parents.

Core schools budget (mainstream schools and high needs funding)

An additional £2.3 billion has been allocated to the core schools budget for the 2025/26 funding year. This represents a real-terms uplift of 1.6% in spending per pupil.

Mainstream schools

A total of £1.3 billion of this will deliver the mainstream schools national funding formula (NFF), pupil premium and other smaller grants. Funding through the NFF is increasing by 2.23% per pupil on average in 2025/26, compared to 2024/25. This includes a 1.28% increase required to ‘bake in’ the core schools budget grant (CSBG).

Estimates suggest that school costs will increase by about 3.5% in 2025/26. If that is the reality, our analysis indicates that about 75% of state-funded primary and about 90% of secondary schools will not achieve an uplift in their NFF per-pupil funding sufficient to meet cost pressures. The government is not blind to this and in its evidence to the STRB, the DfE said “the department recognises that most schools will need to supplement the new funding they receive in FY2025-26 with efficiencies”.

Breakfast clubs

The Autumn Budget delivered a down payment of £30 million on the manifesto pledge to provide free primary breakfast clubs (tinyurl.com/3a4t6pra). The early adopters’ test and learn phase is being rolled out from April 2025.

Colleges

An additional £300 million revenue has been allocated to the colleges sector. More recently, the DfE has confirmed that £50 million of this will be available to colleges as a one-off grant in the 24/25 funding year to support pay awards. At the time of writing, we understand that the remaining £250 million will be targeted towards the learner rate for 16–19 programme funding next year. However, some of this will be required to fund student growth.

High needs block funding

Of the £2.3 billion increase in the core schools budget, £1 billion will be added to the overall high needs budget. In 2025/26, the high needs block will total £11.9 billion. This includes £480 million for a core schools budget grant (CSBG) for special schools and alternative provision (AP) to combine the high needs elements of the 2024/25 teachers’ pay and pension grants (teachers’ pay additional grant (TPAG), teachers’ pension employer contribution grant (TPECG)).

Special schools and AP funding

Special schools and AP will continue to be funded via place funding at £10,000 per place, and top-up funding for the additional costs of provision. This funding will be allocated to providers by local authorities.

Addressing building condition

The Autumn Budget confirmed an additional £6.7 billion into the education capital budget for 2025/26. This will support a range of policy initiatives that require capital funding next year, including:

• the schools rebuilding programme, which is behind schedule; the DfE indicates that 100 projects will begin in 2025/26
• £2.1 billion will go into the condition funding pot to be distributed as schools condition allowance or the condition improvement fund
• £300 million will be targeted towards the colleges’ estate
• £15 million will fund the initial tranche of school-based nurseries

As well as confirming the settlement for the education budget, the Treasury has confirmed that public sector employers will be supported to cover the costs of the uplift in employers’ National Insurance contributions (NIC) implemented on 1 April 2025. We expect to find out more details of the methodology of this NIC grant in the next few weeks.

The Autumn Budget set the fiscal envelope for government spending for the spending review (SR) and delivered budgets for Phase 1 of the SR. This means that government departments went straight back into negotiations with the Treasury to determine their settlements for Phase 2 of the SR period (April 2026 onwards). The outcome of Phase 2 is expected in the spring. So far, the funding settlement feels more like mission impossible than mission accomplished. We urge the Chancellor to use the opportunity presented by the Spending Review in spring to bring the mission to life.

---

Julia Harnden
ASCL Funding Specialist
@julia-harnden.bsky.social

Designed with IMPACT

© 2025 Association of School and College Leaders | Valid XHTML | Contact us