Navigating funding changes and budget challenges

The 5.5 per cent pay rise for teachers, as well as other changes, will have budget implications for schools. Peter Doyle, policy manager at British Educational Supplier Association (BESA), discusses the tools available to support budget management and forecasting in schools.

From rebuilding crumbling schools, to expanding government-funded nursery care, it’s no secret that the sector is in desperate need of additional funding. In fact, this topic has rarely been out of the headlines over recent years.

Teachers receiving a long-awaited 5.5 per cent salary increase in September was certainly a step in the right direction. The average classroom teacher’s pay packet increased by over £2,500, while the median salary for the 2024/25 financial year rose to over £49,000.

This increase followed suggestions made by the School Teachers’ Review Body (STRB), and despite only technically applying to maintained schools, in practice most academies are also following these recommendations.

However, pay is not the only hurdle schools need to overcome. There’s a plethora of other issues that urgently need addressing if schools are to slow the exodus of teachers leaving the profession, and continue providing good quality education.

The impact of the Autumn Statement

The Chancellor’s Autumn Statement included a number of new initiatives, with a £2.3 billion planned increase in school funding for 2025-26 - raising the total budget from £61.6 billion this year, to £63.9 billion next year.

While a number of areas are set to benefit from this additional funding, many anticipated that action would have to be taken following the 5.5 per cent salary increase being awarded to teachers, as well as the desperate requirement for extra SEND funding.

In fact, of the total £2.3 billion, £1 billion has been allocated for SEND and alternative provision. Despite Councils having “discretion” on how they will spend the additional cash, the Treasury predicts that much of this funding will go into reducing their in-year deficit.

Notably, the DfE is also set to receive extra funding following the announcement to increase employers’ National Insurance contributions. Just weeks before the Autumn Statement, The National Foundation for Educational Research estimated that the impact of this rise could cost schools hundreds of millions of pounds – an amount that they simply couldn’t afford.

Time for change

That being said, more cash won’t fix everything.

Attracting new talent to the profession requires a new approach, with figures published in 2023 showing that recruitment targets had, perhaps unsurprisingly, been missed. This shortfall places strain on the existing workforce, further increasing workloads, exacerbating stress and pushing teachers to explore alternative career options.

Combine this with the fact that many private sector roles now offer flexible or hybrid working, there’s questions around whether the rewarding elements of a career in teaching are worth the pressure.

It’s clear that change must happen if the sector is to tackle this problem. Let’s not forget, teaching assistants (TAs) also play a vital role in the development of young people. From supporting students with additional needs, to building relationships with parents, even fulfilling administrative tasks and supporting teachers within a classroom setting, TAs are key to a well-running school.

There’s a big question around how recent salary increases for classroom teachers will impact TAs longer-term as unlike teachers, TAs are employed on the pay and conditions of the National Joint Council (NJC) for Local Government Services meaning they are yet to see any sort of pay increase.

How will these changes impact school budgets?

From conversations we’ve had, school finance teams will likely still be worried about how far their budgets can stretch.

It’s a lot to navigate and get your head around, especially for the schools that rely on a small finance team. Often, these people tend to be responsible for a whole host of other tasks, from liaising with parents, to ordering supplies for teachers.

That’s where software and new technologies can come into play, helping to analyse data, save time and automating many of the time-consuming admin tasks.

I recently attended a panel discussion hosted by Access Education where this topic was discussed. While additional funding will always be welcomed by the sector, there’s no denying that schools are looking to technology to help them balance the books.

Budgeting software can store all key information relating to income and expenditure, providing a clear and accurate overview of the school’s budget in real-time.

Those reliant on siloed or manual systems will struggle to achieve this level of oversight and potentially not notice a problem until it’s too late. At the most basic level, a reliance on manual systems can also cause delays in the processing of certain payments, while duplicated work across the organisation drains time that could be put to much better use.

Longer term, these small issues culminate and can be detrimental to an organisation’s overall financial health.

With the sector having navigated endless challenges over the past few years, planning and reporting are vital elements of any budget. Monitoring budgets in real-time, as well as being able to view actual spend, projected spend and year-to-date (YTD) spend, can help schools take action before the situation has spiralled and they are left facing a significant deficit.

Similarly, software makes accurate forecasting much easier. For example, if electricity costs are expected to rise by around five per cent year-on-year, teams can input this information into their budget management system and map out the projected impact on our budgets over a certain period of time. The same process can be followed for salary increases.

The ability to model the financial impact of multiple scenarios doesn’t just relate to money being spent. It also allows schools to quickly estimate the impact of additional funding, informing smarter decision making. Following the Autumn Statement, for example, those using technology can adapt their budget forecast for 2025-26, making adjustments as and when required.

Of course, every school is unique and will have its own way of managing its budget. That being said, there are a range of tools out there that schools should certainly look to capitalise on to help their finance teams balance the books over the coming years.