What the 2025 UK Budget Means for Schools and Trusts

The Chancellor’s November 2025 Budget made national headlines, but for schools, trusts, and local authorities, the key question is how it affects day-to-day budgets, staffing, and the services pupils rely on.

Alongside the Budget, the OBR’s latest Economic and Fiscal Outlook highlights the growing pressures on the education system. From SEND and school funding to rising support staff costs, the implications for school finance leaders are significant. Here’s what schools and MATs need to know.

SEND: The Fastest-Growing Pressure

The number of pupils with an EHCP has more than doubled in the last decade, rising from 256,000 in 2016 to 639,000 today. The OBR warns that high-needs costs could shift from local authorities to central government budgets from 2028–29, though funding for this change hasn’t been confirmed.

For schools, this means:

• Mainstream settings will continue absorbing unmet SEND needs
• Any future budget redistribution could impact core school funding

The Government’s SEND review has been delayed until early 2026, which could impact potential changes to policy and EHCPs.

Finance leaders should factor SEND pressures into scenario planning and long-term budgets, as these demands are likely to grow over the coming years.

School Buildings and Capital Funding

There were no new capital announcements for school buildings or estate improvement. With ongoing RAAC pressures and a growing maintenance backlog, trusts should focus on existing capital programmes rather than expecting new funding.

Rising Costs for Support Staff

The National Living Wage increase and wider public sector pay growth will push up support staff costs in 2025–26. For a typical MAT, this affects:

• Teaching assistants
• Lunchtime supervisors
• Administrative staff
• Site teams and caretakers

With support staff making up a significant part of school spending, these increases will add pressure to both maintained schools and academies.

Free School Meals, Breakfast Clubs & Wraparound Care

The November Budget made no new commitments in this area. Previously, the government had announced:

• Expansion of FSM eligibility, with £410m per year by 2028–29 for pupils on Universal Credit
• £80m for early years and post-16 FSM support
• Free breakfast clubs in 750 Early Adopter primary schools, reaching over 180,000 pupils
• Almost £370m over four years to expand school-based nurseries
  
  

£5 Million for Secondary School Libraries

Secondary schools will receive £5 million to update their libraries, averaging around £1,400 per school. This builds on £10 million already pledged to give every primary school a library by 2029, supporting the National Year of Reading 2026.

£18 Million for Playground Improvements

The government will invest £18 million over two years to improve up to 200 playgrounds across England. Locations and whether schools will benefit directly have yet to be confirmed.

Apprenticeships and Skills

Rachel Reeves confirmed the scrapping of co-investment payments for small and medium employers hiring apprentices under 25, though a start date is not yet set. Other changes include:

• Government co-investment reduced from 95% to 75%
• Levy-paying employers have only 12 months to use their funds (down from 24)
• The 10% top-up to levy accounts is being scrapped

For schools and MATs, this could make early-career apprenticeships cheaper for smaller trusts, while professional development for existing staff may be harder to fund.

Supporting Education Group have launched a new managed service, Skills Hub. Our expert team will audit your levy fund, suggest a full catalogue of education specific apprenticeships and deliver the full training and assessment.

Private School VAT: Potential Impact on State Sector

The OBR reports that introducing VAT on private school fees will raise £40 million more per year than previously expected. Private school numbers are projected to fall by 6%, with many pupils likely to move into the state sector by 2029–30.

Implications for schools and MATs: increased demand on admissions, SEND services, and sufficiency planning, especially in areas with high private school attendance.

Key Takeaways for Finance Leaders

The 2025 Budget reinforces a challenging financial environment for schools and trusts. While the core schools budget is protected in cash terms, inflation, pay increases, and rising support staff costs continue to outpace funding.

Expect:

• Ongoing pressure on reserves
• Limited flexibility for school-level investment
• Constrained options for support staff structures and pastoral provision

Finance leaders should:

• Forecast rising support staff and SEND costs carefully
• Monitor budgets closely and use reserves strategically
• Engage proactively with local authorities
• Prepare early for increasing demand on school places

School Business Services will continue analysing these changes as more detail emerges from the DfE. If you need support with budgeting, financial planning, or scenario modelling, our team is ready to help.

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