The crisis comes as school funding falls and could plunge by more than £1bn within five years, sparking warnings that further budget cuts would be “catastrophic” for the sector.
Because school funding is closely tied to student numbers, demographic changes pose “imminent challenges to the financial health of education systems and schools,” the Education Policy Institute said.
In a report published this morning, the think tank urged the government to maintain funding levels on a cash basis. This means that excess cash can be “reinvested” to increase per-pupil funding ratios.
Pepe Di'Iasio, general secretary of the Association of School and College Leaders, said the strategy would “put education on a more sustainable footing without incurring additional costs”.
“Schools should not be left to manage the enormous financial risks posed by changing national circumstances.”
Key findings from the report include…
1. £1 billion less funding
The national decline in fertility rates is expected to result in 818,000 fewer students between 2022-23 and 2032-33.
The number of children in primary school classrooms is falling from a peak of 4.7 million five years ago. According to EPI projections, this will decline to 4.06 million by 2028-29.
Secondary figures will also fall “at an increasingly rapid pace” over the next five years.
EPI said that in the worst-affected areas, “schools may be consolidated or closed.”
Funding, based on previous year’s student numbers, is set to rise to £42.7 billion in 2024-25.
It is not known how much school funding will increase in the future. But EPI said that even if the government increased per-pupil rates by 0.5% per year, overall school funding would still fall to £41.6 billion by 2019.
2. Expansion of fund distribution for secondary schools
Total funding for primary schools is currently 5.9% higher than for secondary schools. However, EPI projections show that primary funds will be overtaken by secondary funds in 2026-27, before both funds begin a “downward trend” as numbers decline.
The analysis is based on school block budgets.
EPI researcher Robbie Cruikshanks said: “The scale of the expected change in the student population presents major policy challenges for future governments.”
3. North East and London schools worst hit
The report said base funding would decline in “all regions” over the next six years. The Northeast will be hit hardest, with a 9% decline.
London, Yorkshire and the Humber are also expected to see their primary funding decrease by more than 8%.
At secondary level, Yorkshire and the Humber (0.1%), the North East (1.2%) and London (2.5%) are the only regions expected to see a reduction in funding.
Paul Whiteman, general secretary of the National Association of Principals, warned that “further cuts” would be “catastrophe for our children”.
But he urged the government to think “long term”. “It would be a waste to close small schools because we need more schools.”
4. How can I reinvest my savings?
Cruikshanks, who conducted the study, said policymakers should consider how best to redistribute the savings created by lower rolls.
In his report, he considered “reinvesting” this to increase the basic qualifications schools receive for each pupil through the National Funding Formula (NFF).
This will increase funding per pupil by a further £167 for primary pupils and £143 for secondary pupils by 2030.
In this scenario, the East Midlands would receive the greatest funding while London would be the least affected.
5. Areas expected to be deprived are also increasing
But Cruikshanks pointed out that such changes would disproportionately benefit “schools with low deprivation, mobility and prior attainment”.
This is because a smaller portion of the NFF “will be allocated through: [its] Deprivation and additional need factors”.
He believes the savings could also be reinvested to increase the pupil premium or “other factors of deprivation”.
“Some schools, particularly those in London and other urban areas, are likely to see student numbers fall and poverty rates rise,” the report explained.
“Significant reductions in funding in this area risk further widening disparities as school budgets struggle to meet the additional needs of disadvantaged students.”