Schools’ costs will outstrip their funding by £800 million this year if improved pay rises for teachers and support staff are approved without extra funding, analysis shows.
Labour ministers faced a barrage of complaints about school funding in Parliament today, as the leader of the largest academy trust warned of “ruinous harm” across the sector if the pay rises don’t attract new funding.
The £800 million cost to the sector of pay rises is the equivalent of employing more than 13,000 teachers.
This is higher than the 2.8 per cent ministers previously said would be “appropriate” for 2025-26.
Schools were already going to have to fund some of the lower proposed rise from “efficiencies”. The government confirmed today there would be “no additional funding for pay if recommended awards exceed what departments can afford”.
It also comes after support staff were offered a pay rise of 3.2 per cent.
Funding rising ‘£800m less than costs’
Luke Sibieta, of the Institute for Fiscal Studies, said: “If these pay offers are accepted, we estimate that mainstream school costs would go up by nearly 6 per cent in 2025-26.
“For comparison, mainstream school funding is due to go up by 4.3 per cent this year, or about £800 million less than costs.
“In its evidence to the pay review body, the government has assumed that schools could make efficiency savings of just over £500 million to fund for pay awards. That would leave a gap of £300 million that would need to be bridged from somewhere.”
Jon Coles, chief executive of United Learning, the country’s largest academy trust, posted on X that if the 4 per cent report was true “the one thing government can’t do is accept that without funding”.
He said funding for his trust was only rising by 0.7 per cent per pupil next year, and funding for the national insurance rise was “£1.5 million less than its cost”.
“So we would have £10.5m of unfunded costs. It’s no good Treasury waving their hands and saying ‘efficiency’ – that would be ~400 job losses.
“Sector wide, that would extrapolate to ruinous harm in the one well-functioning public service: tens of thousands of redundancies.”
Tables turned as Tories slam funding
In a sign that the issue is causing increasing concern across England, five of 21 education questions tabled by MPs in the House of Commons today were about funding.
Responding, schools minister Catherine McKinnell accused the Conservatives of leaving a “trail of devastation across our schools, with buildings crumbling and teachers leaving in their droves.
“Through taking tough decisions at the budget to fix the foundations, Labour has been able to increase school funding by over £3.2 billion, and as a result, there is a forecast of £400 million of headroom in schools’ budgets nationally.”
Funding fell in real-terms during much of the Conservatives’ time in office between 2010 and 2014, only finally returning to 2010 levels this year.
But looming unfunded pay rises, added to a shortfall in funding for the budget’s national insurance contributions rise, have led to widespread warnings schools will have to cut provision.
‘Stand up for our schools’
Richard Holden, a former DfE adviser and the Conservative MP for Basildon and Billericay, said “many heads, teachers and support staff have been in touch with me worried about school budgets going forward”.
Another Conservative MP, James Wild, said headteachers were “warning the gap in funding” to cover the NICs rise “is the equivalent of losing more existing teachers than the government is planning to recruit.
“And I’ve heard that message loud and clear from headteachers on my recent school visits, and unfunded pay awards will just make this worse. Why isn’t the education secretary actually standing up for our schools?”
Louie French, the Tory MP for Old Bexley and Sidcup, said he had been contacted by schools “who are outraged that Labour’s tax rises are forcing them to cut resources and staff while the government demands that teachers do more”.
‘An impossible situation’
The growing funding crisis is uncomfortable for Labour, which happily cheered on the unions’ School Cuts campaign before the election. They now find themselves in its sights.
The leader of the National Education Union Daniel Kebede has vowed to make Labour MPs “pay a high political price through our campaigning in their constituencies” if teachers are denied an increased, fully-funded pay rise.
Laura Trott, the shadow education secretary, accused education secretary Bridget Phillipson of leaving schools “in an impossible funding situation”.
“Every MP here has headteachers who are stressed beyond belief at how to manage their funding.
“So can the secretary of state guarantee worried headteachers up and down the country that they will not have to make teachers redundant because of her broken promises?”
Labour MPs also voiced concern about funding.
Sam Rushworth, the Labour MP for Bishop Auckland spoke of one school making four teaching assistants redundant.
“But there is an elephant in the room here, which is that the multi academy trust of which it’s a member, the chief executive has had an increase in his pay of £30,000 for the last two years, taking it to £275,000. That’s equivalent of 12 teaching assistants.”
Responding to the criticism, McKinnell said Labour made “no apologies for doing what the last government failed to do in office, and the extra money from national insurance contributions means we can protect key educational priorities.
“The party opposite should be honest. What will they cut to pay for our schools?”
She added the Conservatives’ “record in education was dismal.
“School buildings crumbling. Teachers leaving the profession. This is a government focused on returning education back to the centre of public life.”
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