This NFER article looks at what the latest data from the DfE tell us about the current financial situation in England’s local authority maintained schools in England for the 2022/23 financial year.
England's schools are facing a perfect storm of financial pressures, threatening their ability to deliver quality education. Soaring energy costs, rising food prices, and the wider cost-of-living crisis have created a significant strain on school budgets. This financial squeeze is having a real-world impact, with many schools forced to run deficits, make cuts to essential resources, and deplete their reserves.
Data from 2022/23 paints a concerning picture. School expenditures rose at a much faster rate than income, leaving a significant funding gap. Over 10% of local authority maintained schools reported a deficit in their revenue balance, highlighting the widespread nature of this financial struggle. Schools have traditionally relied on reserves to weather financial storms, but these buffers are now shrinking. The ratio of reserves to annual income has fallen across the board, indicating that schools are dipping into their savings to stay afloat.
Looking to the future, the outlook remains bleak. While the government has pledged increased funding, it's unlikely to be enough. The Institute for Fiscal Studies estimates that even with these additional resources, spending per pupil will not reach pre-pandemic levels in the coming years. This means schools will continue to grapple with tight budgets despite rising costs.
Compounding these financial woes are demographic changes. The birth rate in England has been declining, leading to projected drops in student numbers. Primary schools are expected to see the most significant decline, with pupil numbers potentially falling by 11% between 2023 and 2030. While fewer students might seem like a positive at first glance, it presents a financial challenge. Each student brings funding to a school, so a declining enrollment translates to less income. However, schools' fixed costs, like staffing, typically aren't affected by small shifts in student numbers. This means fewer students could put even more pressure on already tight budgets. Regions with the largest projected declines in primary school students – London, Yorkshire and the Humber, and the North East – are already seeing a higher proportion of schools running deficits, highlighting the potential severity of this issue.