Budget 2025: impact on education sector

The latest Budget had a few things to say about education funding. Here are the key details:

Centralising SEND funding responsibilities

One of the most significant changes is the government’s decision to absorb the spiralling costs of Special Educational Needs and Disabilities (SEND) provision from 2028. This is a major shift in responsibility, as local authorities will no longer be expected to cover these costs once the statutory override allowing councils to set deficit budgets expires in 2027–28.

The Office for Budget Responsibility (OBR) estimates this will create a £6.3 billion pressure on central government in 2028–29, with no clear plan yet for managing existing deficits, which are projected to reach £14 billion. While this move offers relief to councils, it introduces uncertainty about how these obligations will be funded and what impact they may have on the wider schools’ budget.

Addressing child poverty 

The Budget also removes the two-child benefit cap for universal credit from April 2026. This measure is expected to lift 450,000 children out of poverty and is complemented by initiatives such as the national roll-out of breakfast clubs, extended free school meal eligibility, and new legislation to reduce the cost of school uniforms. Yet again, this change comes at a cost, OBR estimated it at £3 billion by 2029-30.

Early years and capital investment 

Capital investment remains a priority, with the government protecting £120 billion in spending to improve public estates. For education, this includes £20 billion for the School Rebuilding Programme. That will fund completing the rebuilding costs of 500 schools already in progress and will fund the rebuilding of a further 250 schools. The government expects these rebuilding programmes to be finished by 2035.

Funding has also been allocated for early years provision, with £400 million for school-based nurseries and £500 million for Best Start Family Hubs. However, despite these commitments, concerns persist about the ageing condition of the school estate and the absence of a clear strategy for meeting statutory decarbonisation targets following the cancellation of previous schemes.

The Department for Education will also lead a comprehensive review of childcare provision aimed at simplifying the system and ensuring families can access high-quality, affordable care.

Targeted funding for literacy and play

The Chancellor announced £5 million for secondary school library books, building on previous pledge of £10 million to provide every primary school in England with a library. According to the government, currently 1,700 primary schools have not got a library. 

The Chancellor also promised £18 million to refurbish up to 200 playgrounds, although it does not specify whether these are school setting playgrounds or public ones. 

Revenue funding and private school VAT

In contrast to these targeted measures, the budget offers no additional revenue funding for schools beyond what was set out in the previous spending review. The schools budget will rise from £64.8 billion to £69.5 billion by 2028, a cash-terms increase that may fall short of covering inflationary pressures and underfunded pay rises.

Meanwhile, the introduction of VAT on private school fees is forecast to generate £40 million more annually than expected, driven by updated earnings projections, though estimates for pupil migration from the private sector remain unchanged.

Conclusion

The budget brings few new measures for education but signals priorities such as early years and SEND reform. While commitments to long-term infrastructure and capital budgets are positive, details on implementation are needed to ensure funding delivers maximum impact. Upcoming guidance, including the Schools White Paper and DfE estate strategy, will be key to modernising and preparing the school estate for future demand.

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