UK schools could lose £288m in funding due to falling pupil numbers, watchdog warns

Schools in England face a potential funding gap of £288 million next year due to an expected decline in primary school pupil numbers, the public spending watchdog has warned.

The National Audit Office (NAO) has criticized the Department for Education (DfE) for not adequately supporting schools to adapt to these demographic changes.

This lack of preparation jeopardizes both the financial stability of educational institutions and the quality of teaching, according to Sir Geoffrey Clifton-Brown, chairman of the Public Accounts Committee.

The warning comes at a time when some primary schools are already being forced to merge or close their doors altogether due to declining student numbers.

As school funding is directly tied to pupil numbers, the NAO predicts a loss of £288 million by 2027, based on 56,300 fewer primary school pupils compared to 2026.

Even more significant cuts are expected; An additional reduction of £410 million is expected in 2028 due to a reduction of 80,200 students, followed by an additional loss of £334 million in 2029 due to 65,300 fewer children.

Julia Harnden, deputy policy director at the Association of School and College Leaders (ASCL), said the DfE needed to do more to support smaller primary schools at risk of closure.

“Pressures on primary schools due to the double whammy of inadequate funding per pupil and falling student numbers have created a major risk to the survival of many smaller primary institutions,” he said.

“The government has no strategy to reduce this risk and there is a real danger that more communities will lose the schools that have been a feature of these communities for decades.

“The industry is working really hard to keep these schools open, minimizing costs with measures such as mixed-aged classes. But there comes a point where it just isn’t possible to employ enough staff to actually run a school and keep the doors open.”

The NAO said the number of pupils in primary schools has fallen since 2018/19 and the DfE predicts the number will fall a further 7 per cent by 2030.

Disadvantaged students may be disproportionately affected by falling student numbers and funding.

Paul Whiteman, general secretary of school leaders’ union NAHT, said: “The decline in primary pupil numbers is hitting some schools hard, particularly smaller schools that have less of a buffer to manage fluctuating budgets. “We have already seen many schools closed, particularly in London, but also in other areas where the cost of living is high.

“However, there are areas of the country where demand is higher than ever due to population changes as families move or high levels of housing construction.

“Certainly more can be done to balance these demands and ensure primary school places are available in areas where they are needed, and to protect schools from closure in areas with reduced roles.”

The NAO said the DfE only began specifically monitoring the risk of not responding to changing demographics in 2024 and did not yet have a clear approach to supporting the sector in deciding when and how to respond.

The NAO is calling on the DfE to produce the school estates strategy to help the education sector identify places that may not be needed and how they can manage this, and to look at how a decline in pupil numbers could impact outcomes, particularly for disadvantaged pupils.

NAO chief executive Gareth Davies said falling scores would require a “targeted response” from the DfE, local authorities, the academy trust and individual schools.

Sir Geoffrey said: “Despite pupil numbers falling since 2018, it is deeply worrying that the DfE has been slow to respond to this challenge and has not assessed the impacts on the quality of education, particularly for the most disadvantaged pupils.

“As pupil numbers are expected to continue to fall, the DfE needs to make better use of its knowledge and insights from the sector to support schools, clarify what a resilient and effective school environment looks like and ensure children’s education is not compromised.”