Financial data obtained by PoliticsHome under the Freedom of Information Act, covering 8,539 non-academy state schools in 93 local authorities, shows the schools made an average in-year surplus of £13,963 each on their day-to-day revenue spending in 2021/22.
But this plummeted to an average deficit of £10,561 each in 2022/23, as rising inflation and growing numbers of children with complex special needs combined with sustained underfunding by Government to squeeze schools’ finances.
Taking all 8,500 schools together, the sector went from a total £119 million in-year surplus in 2021/22 to a £90 million in-year deficit in 2022/23.
“These findings highlight the significant pressures on schools,” said Councillor Louise Gittins, chair of the Local Government Association’s children and young people board.
“Schools keep a relatively small proportion of their income in reserve,” he said. “Given that over 80 per cent of school expenditure is spent on staffing, the only realistic way to balance the books for a school spending more than its income is to cut staffing.
“The vast majority of school staff are either teaching, helping in the classroom or providing one-to-one support for pupils. The simplest measure is to increase class sizes or cut back on support staff. England has the highest pupil-teacher ratios in Europe and over a million pupils are now taught in classes with more than 30 pupils. These statistics will continue to deteriorate.”
Most schools have accumulated reserves, particularly during Covid when schools’ expenditure fell, but these financial buffers are dwindling – especially if the 2023/24 forecasts come to pass.
Provisional forecasts for 2023/24, covering 5,061 schools in 50 local authorities, show an average in-year deficit of £52,904 each. These figures should be treated with caution, as they are early forecasts that don’t always take account of funding streams such as the pupil premium.
“Next April school funding will only rise by just 1.7 per cent per pupil on average,” Kebede said. “As a result, the vast majority of schools will not be able to cope with increased costs and will have to cut provision. The Office for Budgetary Responsibility projects that core school funding will increase by less than inflation every year right up to 2029. The future for schools looks very bleak indeed.”
The Institute for Fiscal Studies published separate research on Monday showing that secondary schools with the most disadvantaged pupils saw spending per pupil fall by 12 per cent in real terms between 2010 and 2021, compared with five percent for schools in the most affluent areas.
Councils that spoke generally attributed local schools’ declining finances to government funding failing to keep pace with rising costs, such as energy bills, food for school meals and staff pay. The impact of the pandemic has also reinforced the longstanding rise in children with increasingly complex special education needs and disabilities (SEND).
In some cases, gradually declining pupil numbers mean schools have lost per-pupil government funding while still having to maintain staffing levels.
Non-academy state schools in Lambeth went from an average surplus of £24,000 each in 2021/22 to an average deficit of £20,500 in 2022/23. The provisionally forecast average deficit in 2023/24 is £128,000 per school.
Councillor Ben Kind, Lambeth’s cabinet member for children and families, said: “School funding is complex and influenced by various local factors such as declining birth rates, compounded by broader issues such as Brexit, the cost-of-living crisis and soaring housing costs.
“Amidst these challenges, some schools are contending with smaller year groups, making resource management a difficult task within the constraints of a government funding formula that tends to disadvantage areas like Lambeth. Despite falling student numbers, minimal funding increases for inner London areas like Lambeth further exacerbate the financial hurdles faced by our schools.”
Wigan’s schools have gone from an average surplus of £7,500 in 2021/22 to a £25,000 average deficit in 2022/23, with a provisionally forecast £89,000 average deficit in 2023/24. The council said the main reason was cost pressures rising much faster year-on-year than government funding via the Dedicated Schools Grant.
Many schools in shire counties have also seen a financial reversal. Hampshire schools went from an average £38,000 surplus to £5,000 deficits per school, with early forecasts of £64,500 average deficits in 2023/24. A council spokesperson said Hampshire was “transforming” its SEND system while lobbying the government for funding and policy reform.
Because most secondary schools have become academies – meaning they don’t report their finances to the local council – around 85 per cent of the schools in PoliticsHome’s dataset are primary schools. Pupil referral units and SEND-focused special schools are also showing signs of financial strain, however – across England they went from a £56,000 average surplus to a £19,500 average deficit, with three-quarters forecasting a deficit in 2023/24.
A Department for Education spokesperson said: “The figures quoted are very provisional forecasts rather than a full and current picture of schools’ finances.
“School funding is rising by over £3.9 billion this year compared to 2022/23 and nationally will reach £59.6 billion, the highest level in history, in real terms per pupil, by 2024/25.
“This additional funding is helping school leaders to continue to invest in high quality teaching and targeted support to the children who need it most – as well as help schools to manage higher costs, including staff pay awards and higher energy bills.”
