We have found that mainstream schools face a sharp squeeze in their spending power in 2024-25. We expect mainstream schools’ costs to exceed the increase in school funding by 3.1 per cent, this is equivalent to £1.4bn. As a consequence, 18,484 (92%) mainstream schools will be unable to cope with cost increases without cutting education provision.

Funding for Mainstream Schools

We looked at the core funding streams for mainstream schools listed below:

Schools Block funding;
Pupil Premium grant;
2023-24 Mainstream Schools’ Additional Grant;
Teachers’ Pay Additional Grant.

We have used the notional figures for the National Funding Formula (NFF) as a proxy for the Schools Block allocation. The NFF is set to increase by 1.9 per cent per pupil in 2024-25[1] above the combined value of the NFF for 2023-24 and the Mainstream Schools’ Additional Grant for 2023-24. This figure was revised down from the original increase of 2.7 per cent announced in July 2023[2]. This revision reduced funding for schools by £370m.

We have used the Pupil Premium Allocations for 2023-24 and have increased them by 2.7 per cent for 2024-25. The Government have yet to announce how much the Pupil Premium will be increased by, we have used what we consider the highest likely increase.

We have used the published allocations for the Teachers’ Pay Additional Grant (TPAG) for 2023-24 and calculated the TPAG for 2024-25 by finding twelve sevenths of the figure for 2023-24. (The 2023-24 TPAG covers September 2023 to March 2024, seven months. The 2024-25 TPAG covers April 2024 to March 2025, which is 12 months long.)

School Costs

Teachers

Teachers’ pay rose by 5.4 per cent on average in 2022-23[3]; 6.5 per cent in 2023-24 and we believe it is reasonable to assume it will increase by the same amount in 2024-25 given the scale of the teacher recruitment crisis. Teachers’ pay increases follow the academic year and so we have converted to the financial year below. Changes in the composition of the workforce described as pay drift, e.g. more new teachers and fewer old teachers, affect average pay and we have used the DfE figures[4]. We have added 0.4 per cent[5] to the pay bill for the Health and Social Care Levy in 2022-23; however, it was cancelled in November 2022 so we have subtracted it for 2023-24.

Year	Teaching staff (academic year)	Pay Drift (academic year)	Teaching staff (financial year)	Health and Social Care Levy	Per teacher costs
2022-23	5.4%	-0.2%	5.2%	0.4%	3.5%
2023-24	6.5%	0.0%	6.5%	-0.4%	5.6%
2024-25	6.5%	0.0%	6.5%		6.5%

Table 1

Non-teaching staff

Non-teaching staff pay rose by 7.8 per cent in 2023-24. We expect the local government employers to offer the same flat rate increase in 2024-25, £1,925, as they did in the previous two years. These increases have been driven by the increase in the value of the National Living Wage and the Chancellor committed to another significant increase in April 2024[6]. A flat rate increase of £1,925 would be equivalent to 7.3 per cent. The DfE project an increase in the contributions schools must make to the Local Government Pension Scheme in 2023-24[7].

Year	Non-teaching staff pay	Local Government Pension Scheme Contributions	Health and Social Care Levy	Non-teaching staff costs per worker
2023-24	7.8%	0.3%	-0.4%	7.7%
2024-25	7.3%	0.0%		7.3%

Table 2

Non-Staff Costs

We have used the GDP Deflator[8] to estimate non-staff costs.

Year	GDP Deflator
2023-24	2.5%
2024-25	1.6%

Table 3

Energy Costs

The DfE estimate energy cost rises will add £750m[9] to school costs over 2021-22 and 2022-23. This is 0.9 per cent of core mainstream school funding[10] for 2022-23.

Costs Summary

School expenditure has three main components; teachers’ pay (54%), non-teaching staff pay (28%) and non-staff costs (18%)[11]. We have weighted the inflation due to teachers’ pay, non-teaching staff pay and non-staff costs by their share of expenditure.

Year	Costs weighted by expenditure			Energy costs	Schools’ core costs per pupil
Year	Teachers’ pay awards	Non-teaching staff pay awards	Non-staff costs	Energy costs	Schools’ core costs per pupil
2023-24	3.0%	2.2%	0.5%	0.9%	6.5%
2024-25	3.5%	2.0%	0.3%		5.8%

Table 4

In 2023-24, we estimate schools’ costs rose by 7.2 per cent, this matches the estimate made by the Institute for Fiscal Studies (IFS)[12]. Our expectation of schools’ costs for 2024-25 is higher than that of the IFS because we expect staff pay to increase at a faster rate; however, the IFS estimate was made before the increase in the National Living Wage was announced.

Calculating school funding changes

We have calculated core school funding as follows:

F = Core school funding
NFF = National Funding Formula
MSAG = Mainstream Schools’ Additional Grant
PP = Pupil Premium
TPAG = Teachers’ Pay Additional Grant

We have calculated per pupil funding in 2023-24 prices as follows: