The End of the PE Premium: What CFOs and SBMs Need to Know About the New School Sport Funding Model

The Department for Education has confirmed a major reform to PE and school sport funding that will significantly impact school budgets, planning, and financial reporting from 2026 onwards.

For over a decade, the Primary PE and Sport Premium has been a familiar, ring-fenced funding stream for schools. However, despite its regular inclusion in school budgets, it has historically been confirmed late each year, often creating a degree of uncertainty for finance planning. This long-standing arrangement is now coming to an end.

In this article, we will break down:

• What is changing
• How funding flows will shift
• What this means for your budget and BFR
• Practical steps finance leaders should take now

PE and Sport Premium: What Is Changing?

The PE Premium Is Ending

The £320m annual Primary PE and Sport Premium will be removed from the end of the 2025/26 academic year.

This removes a direct-to-school grant that many budgets have come to rely on in practice, despite its historically late confirmation.

A New National Funding Model

From Spring 2027, funding will move into a centrally coordinated:

PE and School Sport Partnerships Network

• Backed by £580m nationally
• Will replace direct school allocations
• Covers primary, secondary and special schools
• Delivered via a national partner and local networks

This marks a fundamental shift from autonomy to brokerage, meaning there will be no direct payments to schools, but instead access to centrally commissioned support and provision.

Total Investment Package

The government has announced £1bn+ across school sport:

• £580m → Partnerships Network
• £200m → Capital funding for facilities
• £100m → Transitional funding for primaries
• £166m → Final PE Premium payments and School Games Organisers

Transitional Arrangements (Critical for Budget Planning)

During the transition period, the PE Premium will continue into Autumn 2026, after which schools will receive a reduced, one-term transitional payment in 2026/27 before school-level funding is fully withdrawn; the new Partnerships Network is expected to begin operating from January 2027, with full national rollout by Spring 2027.

What the New System Will Provide

Instead of cash, schools will access:

Universal Offer

• CPD and training
• Online resources
• National guidance

Targeted Support (Needs-led)

• Specialist coaching
• Swimming catch-up programmes
• Extra-curricular development
• Links to clubs and governing bodies

This approach is designed to target disadvantaged pupils and reduce inequalities in participation.

The Financial Reality for Schools

The funding is not disappearing, but it is no longer controllable at school level.

1. Loss of a Ring-Fenced Revenue Stream

The PE Premium has typically been included in school budgets as a regular income stream, either within GAG or tracked separately; under the new system, this income line disappears entirely, creating immediate pressure on discretionary spending.

2. Reduction in Equivalent Value

Analysis from Schools Week suggests the new system equates to approximately 22% less annual funding than the current PE Premium, introducing a structural reduction in available resources for schools.

3. Expansion Across More Schools

Funding now includes secondary and special schools, which will dilute the funding intensity per school.

This is likely to be particularly impactful for smaller primary schools, which have historically benefited from the lump sum element of the grant.

4. Shift from Revenue to “Provision in Kind”

The shift from direct revenue funding to centrally provided “provision in kind” means that existing budget lines for coaching contracts, PE specialists, and external providers may need to be reduced, replaced, or increasingly justified from core school budgets.

Impact on Budget Setting & BFR

Short-Term (2026/27)

• Include partial transitional funding only (typically two terms for maintained schools and one term for academies)
• Build exit plans for Premium-funded contracts
• Expect uncertainty in delivery model and access

CFO Actions:

• Treat funding as non-recurring
• Avoid embedding into ongoing staffing structures

Medium-Term (2027/28 onwards)

• Remove PE Premium income entirely from forecasts
• Treat sport provision as either core-funded or supplementary

BFR Impact:

• Potential in-year pressure if schools choose to maintain provision
• Reduced flexibility in curriculum enrichment budgets

Advice from School Business Services

We asked our Finance Consultant, Kirsty Chinn, what advice she would give to School Business Leaders.

1. Treat This as a Structural Funding Change, Not a Delay

Do not assume that replacement funding will appear or that the network will fully offset the loss. Schools should plan now on the basis that no direct funding will be received going forward.

2. Audit Current PE Premium Spend Immediately

Identify what is essential versus discretionary, and understand what supports:

• Statutory PE delivery
• Safeguarding
• Ofsted enrichment expectations

3. Avoid Committing to Long-Term Contracts

Avoid entering into new multi-year commitments and review renewal clauses on:

• Sports coaches
• SSP memberships
• External providers

4.Review Equipment and Capital Replacement Needs

The PE Premium has often been used to fund equipment purchases, such as replacing sports kit, maintaining outdoor equipment, or investing in larger items like goalposts or storage facilities. Schools should now review the condition of existing equipment and consider the financial impact of future replacement and maintenance, as these costs will likely need to be met from core budgets going forward.

5. Rebuild a Sustainable PE Model

Schools should review how their PE and sport offer is structured and ensure that any ongoing provision can be sustained within core budgets, rather than relying on external grant funding.

6. Scenario Planning

Model different approaches to future provision:

7. Watch Capital Opportunities Closely

With £200m allocated for facilities, finance teams should:

• Prepare bids early
• Align proposals with estates strategy

Strategic Takeaway

This reform represents a fundamental change in how enrichment is funded: a shift from financial delegation to centrally coordinated provision.

For CFOs and SBMs, the change is not just operational, but strategic:

• Reduced autonomy over spend
• Increased reliance on national systems
• Greater requirement to justify enrichment within core budgets

What You Should Do Now

A practical checklist for finance teams:

• Remove PE Premium from three-year forecasts
• Identify all staffing and contracts funded by it
• Build transition plans for 2026/27
• Engage with SLT on the future PE model
• Monitor Autumn 2026 guidance closely
• Prepare for capital funding opportunities

Final Thoughts

While the policy intent is to improve equality and consistency, the transition will create short-term budget pressure and uncertainty.

Finance leaders who act early will be best placed to protect provision while maintaining financial stability.

Talk to an Expert

Kirsty Chinn

Finance Consultant

Kirsty Chinn is a finance consultant at School Business Services with extensive experience supporting the education sector in compliance, financial management and best practice across a wide range of settings, specialising in maintained primary schools. She has a strong track record in monthly accounting, budget management and year-end returns, working across multiple financial systems. Prior to joining SBS in August 2022, Kirsty spent seven years as a School Business Manager and has also held roles in project management, commercial accounting support and resource management, giving her a well-rounded and practical understanding of the financial challenges schools face.

Connect with Kirsty Chinn