£1bn for schools to cover national insurance hike

The government will provide more than £1 billion in funding for schools to cover the rise in employer national insurance contributions.

But early reports from leaders suggest “shortfalls ranging from around 10 to 35 per cent”, a union warned.

For the first time, the funding for mainstream schools will also include additional grants for those with special units and resourced provision to “support the higher staffing costs”, government said.

Overall, £930 million will cover rises in mainstream and high needs settings from April 2025 to March 2026.

Another £25 million will be issued for schools with early years provision, and £155 million for post-16 schools and further education colleges.

The cash will cover increases for both teachers and support staff, and for councils employing centrally-employed teachers.

From April 6, employers’ national insurance contributions will increase from 13.8 per cent to 15 per cent.

Previous analysis by the National Foundation for Educational Research estimated a two per cent increase would cost £400 million for teachers. This did not include the estimated cost for the rise in contributions for support staff.

Leaders say funding falls short

Julia Harnden, funding specialist at the Association of School and College Leaders, said: “We are still in the process of gathering feedback from members about the adequacy of the rates for the National Insurance contributions grant, but early indications suggest shortfalls ranging from around 10 to 35 per cent.

“This represents large sums of money that schools must now account for and only adds to the financial pressure that they are already under. We need to understand how representative these shortfalls are across the system.”

And Leora Cruddas, chief executive of the Confederation of School Trusts, said: “Both the changes to national insurance and the funding formula for schools are complicated, and together with some gaps in information for early years and post-16, it is difficult to get a clear picture on the impact.

“Based on what we know so far, however, some trusts are reporting shortfalls up to 20 per cent of the increased costs on employer national insurance contributions, and this will add to already severe cost pressures being faced by the sector.”

How much will schools get?

The payments are based on factors used in previous pay and pension grants, including a basic per-pupil rate and a lump sum paid to all schools (see funding rates below).

Allocations in May, payment in September

The cash will be paid in the form of a grant, although for high needs settings it will go through the core schools budget grant.

Allocations for schools will be published in May, for payment in September. Updated allocations for new and growing schools will be published next February.

But government has today published a calculator tool for mainstream schools and academies to estimate their NICs grant funding.

The DfE said it was the first time that additional grant funding had been provided for schools with specialist units and resourced provision (SURPs).

“This funding will support the higher staffing costs that schools with SURPs typically face,” government said.

Funding for mainstream schools will be incorporated into core budget allocations for 2026 to 2027 by being rolled into the national funding formula.