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1、lnstitute for Fiscal StudiesAnnual report on education spending in England:202425IFS ReportElaine DraytonChristine FarquharsonKate OgdenLuke SibietaDarcey SnapeImran Tahir The Institute for Fiscal Studies,January 2025 Annual report on education spending in England:202425 Elaine Drayton Christine Far

2、quharson Kate Ogden Luke Sibieta Darcey Snape Imran Tahir Copy-edited by Rachel Lumpkin Published by The Institute for Fiscal Studies 7 Ridgmount Street London WC1E 7AE+44(0)20 7291 4800 mailboxifs.org.uk http:/www.ifs.org.uk/TheIFS The Institute for Fiscal Studies,January 2025 ISBN 978-1-80103-212-

3、4 Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 2 Foreword This is the seventh IFS annual report on education spending,traditionally covering all phases of the system.The Nuffield Foundation has funded the series from the start,and it is one of o

4、ur most important and influential initiatives.The previous six reports were produced during a period of Conservative rule,and this is the first to be published since the advent of a Labour government.The new administration has already established financial frameworks and priorities,guided by one of

5、its five missions Break down barriers to opportunity,alongside some associated milestones.All of this has significant implications for the levels and distribution of education spending.In particular,there has been a major injection of funding into early years provision,a notable boost in support for

6、 schoolchildren with special educational needs and disabilities,and a more modest increase in spending on further education.But as the report highlights throughout,there are a number of factors outside of funding levels that affect the way raw spending translates into real resources on the ground fo

7、r pupils and students.These include:the demographic changes in the number of children and young people;levels of underlying need for children with educational vulnerabilities;and rapidly increasing costs for educational providers beyond core staff costs,for example in repairing and maintaining build

8、ings,or for some providers in higher employer national insurance contributions.This is all in the context of an extremely tough fiscal climate,with restrictive commitments around overall tax and spend,and high-profile priorities outside of education taking precedence.So there will be great pressure

9、on budgets in all parts of the education system.The IFS annual reports serve a powerful purpose in providing independent analysis of all these issues,holding those in power to account,and providing evidence for both policymakers and those seeking to influence them.In between the annual reports,deep

10、dives into specific areas and issues have provided more focused interventions into relevant debates.This years report arrives at a timely point in the policymaking cycle.There have been enough announcements and exposition of priorities and directions to get a sense of where detailed analysis will be

11、 critical,and a window of opportunity for readers of the report to influence next steps in the light of this.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 3 The report is an authoritative and compelling read,and adds to the now immense body of wo

12、rk gathered on the projects microsite at https:/ifs.org.uk/education-spending.We are proud to be supporting this work,helping all those with an interest in education to be fully informed on the funding issues and challenges facing policymakers and educational professionals.And of course ultimately t

13、o address the effects of these on the educational experiences of children,young people and adults.Josh Hillman Director of Education,Nuffield Foundation Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 4 Preface This report is the seventh in a serie

14、s of annual reports on education spending in England.The authors gratefully acknowledge the support of the Nuffield Foundation,which has funded this series of annual reports(grant number EDO/FR-000024394).The Nuffield Foundation is an independent charitable trust with a mission to advance social wel

15、l-being.It funds research that informs social policy,primarily in Education,Welfare and Justice.The Nuffield Foundation is the founder and co-funder of the Nuffield Council on Bioethics,the Ada Lovelace Institute and the Nuffield Family Justice Observatory.The Foundation has funded this project,but

16、the views expressed are those of the authors and not necessarily of the Foundation.Visit www.nuffieldfoundation.org.The authors also thank the Economic and Social Research Council for support via the ESRC Centre for the Microeconomic Analysis of Public Policy(grant number ES/T014334/1),which underpi

17、ns much of IFSs research.The authors would like to thank the members of the advisory group,officials from the Department for Education,and colleagues at IFS,who have commented on and greatly informed the analysis in this report.Jodie Reed provided valuable comments on the Early Years Single Funding

18、Formula.This report uses a range of data releases from the Department for Education,its predecessors,related agencies and non-departmental bodies.These are all listed in the sources below individual figures and/or in the methods and data section of our new microsite housing all our analysis of educa

19、tion spending(https:/ifs.org.uk/education-spending).The IFS graduate earnings model draws on National Pupil Database data linked to data from the Higher Education Statistics Agency(HESA).It also uses data from the Family Resources Survey and the University of Essexs British Household Panel Survey.Th

20、e National Pupil Database is Crown Copyright and made available by the Department for Education.HESA data are Copyright Higher Education Statistics Agency Limited.Neither the Department for Education nor Higher Education Statistics Agency Limited nor HESA Services Limited can accept responsibility f

21、or any inferences or conclusions derived by third parties from the data.The views and analysis presented in this report are those of the authors alone.Any errors or omissions are also their responsibility.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January

22、2025 5 Contents Executive summary.6 1.Introduction.11 1.1 Total spending on education.12 1.2 Student numbers over time.14 1.3 Methods and approach.18 2.Early years.20 2.1 Spending on the free entitlement.21 2.2 Distribution of spending across local authorities.27 2.3 Future changes and challenges in

23、 the early years.34 2.4 Summary.39 3.Schools.40 3.1 Total school spending per pupil.41 3.2 Average spending by primary and secondary schools.45 3.3 Growth in school costs.47 3.4 Future spending pressures.49 3.5 School capital spending.51 3.6 Concluding summary.54 4.Further education and skills.55 4.

24、1 1618 education.55 4.2 Adult education and skills.63 4.3 Concluding summary.70 5.Higher education.71 5.1 The unfreezing of tuition fees.71 5.2 University finances.76 5.3 Support for living costs.81 5.4 Student loans.84 5.5 Summary.87 6.Comparisons.88 7.Conclusion.92 References.94 Annual report on e

25、ducation spending in England:202425 The Institute for Fiscal Studies,January 2025 6 Executive summary This is our seventh annual report on education spending in England funded by the Nuffield Foundation.It seeks to provide a clear and consistent comparison of the level and changes in spending per st

26、udent across different stages of education.Our dedicated website(https:/ifs.org.uk/education-spending)further provides easy access to our latest analysis,figures and methodology.All figures quoted are in 202425 prices and relate to England unless otherwise stated.Total spending 1.In 202324,total pub

27、lic spending on education in the UK stood at 116 billion(including the net cost of issuing student loans and in 202425 prices).This represents an 11%or nearly 15 billion fall since 201011 and represents the level in real terms as in 200607.This drop mostly reflects a shift in the cost of higher educ

28、ation from the taxpayer to graduates over time.2.Education spending has also fallen as a share of national income,from about 5.6%of national income in 201011 down to about 4.1%in 202324.This equals recent historic lows seen in the late 1990s,late 1980s and mid-1960s.There has been no long-run increa

29、se in the share of national income devoted to public spending on education spending,despite large rises in education participation over the long run.Early years 1.Total spending on the free entitlement to early years education and childcare nearly quadrupled between 200102 and 202324,when it reached

30、 4.1 billion in todays prices.This was largely driven by expansions to the free entitlement.A new expanded entitlement for children aged under 3 is expected to lead to a further doubling of spending to 8.5 billion by 202728.This represents a major increase in resources at a time when other stages of

31、 education and public services have been squeezed.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 7 2.The rollout of the expanded entitlement is the biggest ever expansion to the free entitlement.From September 2025,this will provide children in wo

32、rking families with 30 hours of early education and childcare per week between ages 9 months to 36 months.3.Funding rates for new and existing entitlements have seen large increases in 202425 to incentivise growth in provision,particularly for younger children:the average hourly rate for under-2s is

33、 11.22,almost twice existing market prices.By comparison,hourly funding for existing entitlements for 3-and 4-year-olds are much closer to market prices.These higher funding rates for younger children better reflect differences in the costs of providing childcare to children of different ages than d

34、o current market prices(for instance,younger children require stricter staff:child ratios).4.Between 201617 and 202223 providers costs grew by 25%(mostly due to staffing but also energy,rent and food),which is about twice as quickly as the growth in funding rates for 3-and 4-year-olds(12%).Once we a

35、ccount for rises in providers costs,the average funding rate for 3-and 4-year-olds is worth about 15%less in 202425 than in 201213.5.Local authorities are responsible for distributing funding to providers and take different approaches to targeting spending.Just over a quarter(27%)of local authoritie

36、s dedicate less than 5%of resources to targeted funding streams,which are intended to support low-income children and children with higher needs and to provide quality and flexibility of provision.Almost another quarter(23%)of areas allocate more than 10%to targeted spending,with these tending to be

37、 more urban and more deprived.6.Changes to employers national insurance contributions(NICs)and minimum wage rises announced at the Autumn Budget 2024 will particularly affect lower-paid workers.These changes create both winners and losers:a small childcare setting with six or fewer employees on medi

38、an earnings(33,000)would benefit from the changes if they are eligible for more generous employment allowance;providers employing more staff would lose out and the bigger the employer,the more so.7.The plan to deliver an additional 3,000 school-based nurseries launched in October.Once fully rolled o

39、ut,this will represent around 30%of the existing number of school-based providers and is intended to drive up the quality of provision.While this may create additional capacity over the longer term,it is unlikely to substantially ease supply constraints by September 2025,the period when demand for n

40、ew places will be most acute.There may also be a geographical mismatch between spare capacity in primary schools and demand for new early years provision.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 8 Schools 1.Between 201920 and this financial

41、year(202425),total school spending in England grew by about 8 billion.This has led to 11%real-terms growth in school spending per pupil.This reverses past cuts and takes spending per pupil back to 2010 levels.2.In the Autumn Budget 2024,the government allocated a further 2.3 billion to the schools b

42、udget in 202526,with about 1 billion devoted to high needs.This allows for a further 1.6%real-terms growth in school spending per pupil.3.Secondary school spending per pupil in England in 202425 is due to be about 7,400,which is 11%higher than in primary schools(6,700).This is down from a difference

43、 of about 30%in the 2000s and over 50%during the early 1990s.4.Over half of the increase in school funding between 2019 and 2024 can be explained by growth in high needs funding.This reflects the rapid growth in the number of pupils identified as having special educational needs.After accounting for

44、 planned spending on high needs,we estimate that mainstream school funding per pupil grew by 5%in real terms between 2019 and 2024,rather than the 11%total increase.5.We estimate that mainstream school funding per pupil will grow by 2.8%in cash terms in 202526.We also estimate that school costs will

45、 grow by 3.6%in 202526 if the pay review body follows the governments recommendation of a 2.8%pay award for 2025.In this case,schools might struggle to cover their costs without making savings.6.Looking to the 2025 spending review,pupil numbers are expected to fall by 2%between 2025 and 2027.If the

46、government chose to freeze school spending per pupil in real terms,it could make savings of 1.2 billion by 2027.However,the government also projects that high needs spending will grow by 2.3 billion between now and 202728.This severely reduces the chances of making savings in the schools budget.7.Sc

47、hool capital spending is due to rise from 6.3 billion in 202324 to 6.5 billion in 202526.This leaves spending within the same range it has been for the last decade and about the same level as in the mid-2000s.From within this spending total,the government will need to cover the costs of the delayed

48、school rebuilding programme,the costs of addressing reinforced autoclaved aerated concrete(RAAC)in schools and other overdue school repair costs.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 9 Further education and skills 1.In the 202425 academic

49、 year,we estimate that funding per student aged 1618 in further education colleges will be 7,350,compared to 5,900 in school sixth forms and 5,500 in sixth-form colleges.Higher funding for further education colleges reflects extra funding for costly technical programmes and for students from more-de

50、prived areas.2.Between the 201011 and 201920 financial years,funding per student aged 1618 fell in real terms by 14%in colleges and 28%in school sixth forms.3.In the Autumn Budget 2024,the government announced a 300 million cash-terms boost to college and sixth-form funding.Because of rising student

51、 numbers and inflation,we calculate that this is only sufficient to deliver a real-terms freeze in funding per student.Combined with increases under the previous government,this leaves college funding per student about 11%lower in real terms than in 2010 and school sixth-form funding per student abo

52、ut 23%lower.4.Colleges and sixth forms face a range of financial uncertainty and challenges.They must accommodate a growing student population,which is expected to grow by 5%or over 60,000 between 2024 and 2028.Average college teacher pay is expected to be about 18%lower than for school teachers in

53、2025,which is likely connected to the high exit rates amongst college teachers(16%leaving their jobs each year).Meanwhile,whilst underlying college financial positions have improved since 2018,there remained about 37%of colleges operating deficits in 202223.5.Looking to the upcoming spending review,

54、the government would need to increase annual funding by 200 million in 2027 in todays prices to maintain spending per student in real terms,given the growth in the student population.A freeze in total funding in real terms would imply a 4%real-terms fall in funding per student.6.Total spending on ad

55、ult skills and apprenticeships is expected to increase by 12%in real terms between 201920 and 202425.However,this only reverses a fraction of past cuts:total spending in 202425 will still be 23%below 200910 levels.Spending on classroom-based adult education has fallen especially sharply,driven by fa

56、lling learner numbers and real-terms cuts in funding rates,and will still be over 40%below 200910 levels in 202425 even with the additional funding.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 10 Higher education 1.Upfront funding for teaching u

57、ndergraduate students has declined in recent years,standing at 9,750 per year for the 202324 university entry cohort(including fees and teaching grants,less bursaries).This is 2,300 or 19%lower in real terms than in 201213,driven by cash-terms freezes in the cap on tuition fees for all but one year

58、between 2012 and 2024.This real-terms fall took upfront funding per student back to the same real-terms level as in 201112,just before the tripling of the fee caps,and back to the same level as in the early 1990s.2.The new government chose to increase the tuition fee cap for the 202526 academic year

59、 in line with RPIX inflation,increasing the fee cap from 9,250 to 9,535(which applies to new and existing students).It is not clear if this policy of indexation will continue.If it does,then upfront resources per student will rise to about 10,000 for students entering courses in September 2025.3.Unt

60、il recently,there had been some good news for university finances,despite the long-running freeze in domestic fees.Income from international student fees had risen sharply,to 9.4 billion(a fifth of the sectors income)in 202223,and a revaluation of the USS pension scheme had improved sector finances.

61、However,student numbers in 2024 are well below forecasts(23%lower for international students).Together with the rise in employers NICs,the Office for Students forecast that a sector-wide surplus of 1.5 billion in 202223 could become a sector-wide deficit of around 1.6 billion in 202526,unless saving

62、s are made.4.The new government has chosen not to reverse the significant real-terms cuts in maintenance support for students of recent years.In 202526,the poorest students will be entitled to borrow around 1,125(10%)less in real terms towards their living costs than in 2020.The government is yet to

63、 signal any long-run intention for the future of maintenance support,including whether or not they will re-introduce grants.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 11 1.Introduction Education spending is the second-largest element of public

64、-service spending in the UK behind health,representing 116 billion in 202425 in todays prices or about 4.1%of national income.To make efficient and equitable policy choices,it is crucial to have a clear,consistent picture of how the level of spending at each phase of education has changed over time,

65、the expected future changes and the factors driving these changes.Such issues are a vital component of policy debate,given evidence showing how education investments at different ages combine to drive long-run outcomes(Cunha,Heckman and Schennach,2010;Johnson and Jackson,2019).In a series of annual

66、reports on education spending funded by the Nuffield Foundation,we have sought to cast light on this subject by illustrating how spending per pupil across different stages of education has changed over time.We also publish a range of smaller outputs throughout the year to provide more timely and rap

67、id analysis of the resource challenges facing different phases of education.This analysis is housed on a dedicated website(https:/ifs.org.uk/education-spending),providing easy access to the latest figures and the underlying methodology.The new government has high ambitions to improve education and r

68、educe inequalities.However,like most governments in recent years,it faces a very challenging set of public finances,maybe even more challenging than the situation faced by past governments.In the Autumn Budget 2024,the government chose to top-up departmental spending plans for 202526,including a 2.3

69、 billion increase in the schools budget in England.Public-service spending will,over the two years from 202324 to 202526,grow by an average 3.4%per year in real terms.Departmental spending plans for 202627 and 202728 will be determined in next years spending review.For these two years,the government

70、 has pencilled in real-terms increases in overall day-to-day spending on public services of 1.3%per year.However,once likely spending commitments on the NHS,defence and expansions to early years entitlements are accounted for,other areas would very likely face the need to make spending cuts.These wo

71、uld be cuts made from a higher level,following two years of budget increases but cuts all the same.There is naturally quite a bit of uncertainty around the precise scale of the cuts facing those areas it matters a lot,for instance,how much cash goes to the NHS,or whether geopolitical developments ne

72、cessitate a sharp increase in defence spending but the overall message is clear.On current plans,most areas of education will be asked to find real-terms savings after 202526.At the same time,the cost of special educational needs(SEN)provision is spiralling up by the billions,spending on skills and

73、further education is low by historical standards,and the government faces a delicate balancing act between asking indebted students to pay more for their Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 12 studies and universities warning of insolve

74、ncy.It is,of course,possible that these spending plans wont be implemented.Indeed,historic experience suggests that tight spending plans are likely to get topped up when a spending review comes along and specific choices have to be confronted.But the government has minimal room for manoeuvre against

75、 its fiscal rules and the Chancellor has ruled out further tax rises,and while the government could get lucky on growth,theres every chance that global events weigh on the UKs economic prospects.This is a delicate fiscal balancing act.Before we turn to individual areas of education,the rest of this

76、introduction provides overall context on total spending,pupil numbers across each sector over time and the overall methods.1.1 Total spending on education The total level of UK education spending rose significantly up to about 2010.As shown in Figure 1.1,growth was particularly fast from the late 19

77、90s through to the late 2000s,with real-terms growth averaging about 5%per year between 199899 and 201011.Education spending then fell as public spending cuts began to take effect from 2010 onwards.Between 201011 and 201920,official education spending fell by 15%in real terms.Since then,it has risen

78、 slightly,but remained 12%below its level in 201011 by 202324.Some of the decline in education spending during the 2010s reflects initially large declines in capital spending just after 2010(Sibieta,2024).These declines also reflect a deliberate increase in effective private funding for higher educa

79、tion through graduate contributions later in life.Unfortunately,these official figures do not fully account for the cost to the taxpayer of issuing student loans from 201112 onwards.As a result,the series overstates cuts to education spending since 201011.Changes to national accounting rules mean th

80、at the expected cost of issuing student loans is included in overall measures of government spending and the public finances,such as the deficit.We estimate that if official measures of education spending had followed the new national accounting rules for student loans,education spending would have

81、been around 6 billion higher in 201516,5 billion higher in 202223 and 2 billion higher in Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 13 202324.1 The reason for the decline in spending on student loans reflects the recent changes in repayment t

82、erms and increased expected graduate contributions(see Chapter 5 for more details).If we add these numbers to the official measure of education spending,the real-terms cut in education spending between 201011 and 202324 falls from 12%to 11%.As a result,the real-terms level of education spending in 2

83、02324 was the same as it was in 200607.This decline mostly reflects shifting most of the cost of higher education from the taxpayer to graduates.The actual amount of(gross)upfront support through loans for tuition fees has increased from about 5.0 billion in 201213 to 10.1 billion in 201516 and abou

84、t 10.6 billion in 202324.Figure 1.1.UK education spending(202425 prices and as a share of national income)Source:HM Treasury Public Expenditure Statistical Analyses 2024,and previous versions;HM Treasury(2024);Office for Budget Responsibility,Economic and Fiscal Outlook,various editions(https:/obr.u

85、k/efo/);Office for National Statistics,Student loans in the public sector finances:a methodological guide,January 2020(https:/www.ons.gov.uk/economy/governmentpublicsectorand taxes/publicsectorfinance/methodologies/studentloansinthepublicsectorfinancesamethodologicalguide).1 We proxy the additional

86、cost of student loans not accounted for in official education spending measures by the National Accounts measure of net spending on student loans.This is calculated as capital spending on newly issued student loans,representing the part of each loan not expected to be repaid,minus modified interest

87、on the part of any existing loan that is expected to be repaid,plus the net impact of any student loan sales(the impact of loan sales is zero since 201920,as the last sale concluded in December 2018;the student loan sale programme was cancelled in March 2020).All numbers are taken from the Office fo

88、r Budget Responsibilitys Economic and Fiscal Outlook(various editions;available at https:/obr.uk/efo/).For the 201516 to 201718 academic years,when the National Accounts treatment of student loans was different,we reconstruct what net spending would have been under the current treatment by subtracti

89、ng nominal interest under the treatment at the time from the additional cost of student loans arising from the accounting treatment change according to the Office for National Statistics.0%1%2%3%4%5%6%030609012015018019555619585919616219646519676819707119737419767719798019828319858619888919919219949

90、5199798200001200304200607200910201213201516201819202122 billion,202425 pricesShare of national income(RH axis)Real-terms level(LH axis)-Plus estimated additional cost of issuing student loans Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 14 Inclu

91、ding the adjustments for student loans,education spending represented about 4.1%of national income in 202324.This follows a temporary peak of 5%during the height of the COVID-19 pandemic in 202021,when spending was boosted and the size of the economy was depressed.The underlying picture,however,is a

92、 significant decline in education spending as a share of national income over the last 15 years.Following a significant rise over the 2000s,education spending as a share of national income reached a peak of 5.6%of national income in 2010.Since then,it has declined to its current level of 4.1%of nati

93、onal income.This equals a historic low point,with education spending as a share of national income equal to that seen in the late 1990s,late 1980s and mid-1960s.Indeed,it is clear that education spending as a share of national income has not seen a sustained rise since the early 1970s,when it stood

94、at 4.55%of national income.It has instead oscillated between about 4%and 5.5%of national income.This is despite large rises in participation in post-compulsory education over time,both in schools and higher education,as well as the creation of an early years sector.1.2 Student numbers over time Tota

95、l spending figures can obscure the impact of changes in the number of pupils or students,which is often one of the most important factors driving changes in the total and per-student level of spending over time.There have also been some fairly substantial changes to pupil and student numbers in rece

96、nt times,which are due to continue over the next decade.Figure 1.2(a)shows the number of pupils in state-funded primary and secondary schools over time.Numbers in primary schools grew by 17%between 200910 and 201920,the equivalent of an extra 700,000 pupils or effectively a full cohort of children.T

97、hey have since fallen,with a 3%or 100,000 expected drop between 201920 and 202425.Pupil numbers in secondary schools fell from the early 2000s through to about 201415.Between 201415 and 201920,they then grew by nearly 10%or 300,000,and are expected to have grown by a further 8%or 250,000 between 201

98、920 and 202425.Looking beyond 202425,the primary pupil population is expected to fall by over 150,000 between 202425 and 202728,whilst the secondary pupil population is only expected to start falling from 202627 onwards and at quite a slow rate initially.This implies a fall in the total pupil popula

99、tion of only about 2%or just over 150,000 between 202425 and 202728.Official forecasts for the school-pupil population end in 202728,but Office for National Statistics(ONS)forecasts for the total number of children by age groups suggest that the number of primary school age pupils will actually rise

100、 by about 2%or 100,000 between 202728 and 203031,whilst the number of secondary school age children will continue to fall(by over 100,000 or 4%between 202728 and 203031).This would amount to only a very small net Annual report on education spending in England:202425 The Institute for Fiscal Studies,

101、January 2025 15 reduction in the total pupil population between 202728 and 203031.Combined with earlier years,this would imply a 200,000 or 3%fall in the pupil population between 202425 and 203031.This small fall contrasts sharply with the 600,000 or 8%reduction implied by government forecasts publi

102、shed in 2023.Figure 1.2.Pupil or student numbers in education in England(a)Schools (b)Other stages of education Note:For source,see next page.1990199219941996199820002002200420062008201020122014201620182020202220242026202820300500,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,5

103、00,0005,000,0001990199219941996199820002002200420062008201020122014201620182020202220242026202820300200,000400,000600,000800,0001,000,0001,200,0001,400,000Further education and sixth forms(1618)Primary schools Secondary schools Higher education Early years Annual report on education spending in Engl

104、and:202425 The Institute for Fiscal Studies,January 2025 16 Source to Figure 1.2:Years refer to academic years starting from September(i.e.2002 refers to the 200203 academic year).Early years numbers represent part-time equivalent places of 3-and 4-year-olds taking up the universal and extended earl

105、y years entitlement(excluding 4-year-olds in infant classes)and are taken from Department for Education,Education provision:children under 5 years of age,January 2023,January 2010,January 2006 and January 2002.Primary and secondary school numbers are taken from Department for Education,Schools,pupil

106、s and their characteristics,January 2024 and earlier years,and National pupil projections:July 2024.Projections for primary and secondary school children for 202830 are based on ONS 2021-based forecasts for the growth in the population of 59-and 1014-year-olds.Further education and sixth-form figure

107、s refer to 1618-year-olds in state-funded schools or colleges as measured at the end of each calendar year in Department for Education,Participation in education,training and employment:2023.Higher education figures relate to full-time students on first undergraduate degrees and other undergraduate

108、courses from HESA,Whos studying in HE?and also use Historical statistics on the funding and development of the UK university system,19202002.Forecasts for the early years and 1618 education are based on ONS 2021-based forecasts for the population of 34-and 1618-year-olds.Forecasts for higher educati

109、on are based on Department for Education forecasts of entrants up to 2028(https:/explore-education-statistics.service.gov.uk/methodology/student-loan-forecasts-for-england-methodology)and then ONS 2021-based forecasts for the number of 18-and 19-year-olds.The numbers of pupils in primary and seconda

110、ry schools are mostly driven by demographic changes,while pupil numbers in other stages of education early years,further education and higher education are also affected by changing patterns of participation.Each of these three stages have seen substantial increases in pupil numbers,as shown in Figu

111、re 1.2(b).Population growth plays a role,but expansions of the free childcare entitlement(in the early years)and rising participation rates(at later stages)are more important factors driving these changes.Early years education and childcare in England is increasingly dominated by the free entitlemen

112、t to a government-funded early years education place.The free entitlement is comprised of several distinct offers and has been progressively expanded to cover more children for more hours:The universal entitlement offers all 3-and 4-year-olds a part-time(15-hour)place for 38 weeks of the year.The ex

113、tended entitlement,introduced in 2017,offers an additional 15 hours a week of childcare to 3-and 4-year-olds in working families.The 2-year-old offer,introduced in its current form in 2014,provides the roughly 40%most-disadvantaged children with a part-time early education place,again for 38 weeks a

114、 year.The expanded entitlement was announced at the March 2023 budget and is currently being rolled out.From September 2025,this will provide a full-time place(30 hours a week)for children aged 9 months to 36 months in working families.From 200102 to 201617,the total number of part-time equivalent p

115、laces for the universal free entitlement in the early years rose by a third,driven by increases in the population of pre-school aged children and expansions to free entitlement eligibility.With the introduction of the extended entitlement for children in working families in 201718,the number of part

116、-time Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 17 equivalent places jumped.Between then and 202324,there were no further expansions of the free entitlement and the number of part-time equivalent places has remained roughly constant.This stab

117、ility masks two offsetting trends:while the number of places taken up for the extended entitlement has grown by around 63,500,the number of children taking up the universal offer fell by around 9%between 201718 and 202324,driven by a combination of falls in the population of 3-and 4-year-olds and lo

118、wer take-up.Looking ahead,the latest ONS population projections forecast imply that the pre-school age population by 202930 will be close to the numbers for 202324.Meanwhile,if rising take-up of the extended entitlement continues,we would expect to see around 8%more part-time equivalent places for 3

119、-and 4-year-olds in 202930 compared with 202324.Figure 1.2(b)focuses on places for 3-and 4-year-olds,which historically have made up the bulk of children accessing the free entitlement.With the introduction of the expanded entitlements the largest and fastest expansion to date this is set to change

120、and will see substantial increases in the number of places for younger children.This is discussed further in Chapter 2.The number of students in 1618 education grew by almost 50%between 199091 and 201011,from about 800,000 to 1.2 million full-time equivalent students.After 201011,numbers fell by abo

121、ut 10%down to just over a million in 201819,reflecting reduced cohort sizes rather than falls in participation.Since then,numbers have started to rise again,and the number of students is 10%or 100,000 higher in the latest year of data(202324)than in 201819.This mostly reflects growth in cohort sizes

122、 again.Further rises are expected over the next few years due to population growth,with numbers currently projected to rise by 8%between 2023 and 2028,before then starting to fall slightly.This would make for 100,000 extra students by 2028.If realised,this would clearly place upwards pressure on col

123、lege and sixth-form spending.The number of full-time undergraduate students in higher education in England more than doubled between 1990 and 2019,to reach 1.06 million.Participation increased during the pandemic,with student numbers increasing by 6.5%in 2020,but growth has since slowed.In the lates

124、t year(2024),acceptances of offers at UK universities increased by 1.3%,far more slowly than the sector forecast(5.8%).As we discuss in Chapter 5,recruitment of international students has also fallen,which creates financial headaches for many UK universities.Nonetheless,the latest Department for Edu

125、cation forecasts imply a further increase in the number of England-domiciled higher education students of 4%or 44,000 between 2022 and 2026.ONS population forecasts would then imply a total increase of 6.5%or 76,000 by 2030 Annual report on education spending in England:202425 The Institute for Fisc

126、al Studies,January 2025 18 compared with 2022,taking the number of full-time undergraduate students in higher education to 1.25 million.Increases in higher education student numbers will clearly place pressure on spending.In the past,such as during the 1990s,spending has not always increased in line

127、 with rising student numbers,thereby reducing spending per student.At other times,large increases in higher education student numbers have led governments to make substantial changes to the higher education finance system in order to ensure sufficient levels of resources.The previous government alre

128、ady made large changes to the student finance system,which will likely reduce the cost of the system to the taxpayer(Waltmann,2022).However,we have also seen a large real-terms reduction in spending per student as rising inflation eroded the real-terms value of the tuition fee cap,which was frozen i

129、n cash terms at 9,250 between 2017 and 2024.This long-running decline in resources is now set to end,with the fee cap due to rise in line with RPIX inflation in 2025.1.3 Methods and approach The rest of this report mainly focuses on day-to-day or current spending on different areas of education in E

130、ngland.This is primarily for data availability reasons,though we have also provided analysis comparing school spending per pupil across the four nations of the UK,which indicates higher levels of school spending per pupil in Scotland in particular(Sibieta,2023a).We also provide some evidence in this

131、 report on trends in school capital spending.For the most part,we focus on public spending on education.This is due to a lack of reliable data on total private spending on each stage of education over time.For schools,we have produced additional analysis comparing state school spending per pupil and

132、 private school fees over time(Sibieta,2023b),including the likely effects removing tax exemptions from private schools.For higher education,we also separately consider the support provided to students with their living costs,and expected graduate contributions to higher education spending through s

133、tudent loan contributions later in working life.In Chapters 25,we examine trends in spending on the early years,schools,further education and skills,and higher education.In Chapter 6,we compare trends in spending per pupil across different stages of education over time.In each case,our methodology f

134、or calculating spending per student is detailed in full on the dedicated website(https:/ifs.org.uk/education-spending/methods-and-data).In most cases,figures relate to core education spending and exclude temporary support during the pandemic,though it is not always possible to separate this out.Chap

135、ter 7 concludes.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 19 In most cases,we calculate real-terms changes by adjusting for economy-wide inflation as captured by the GDP deflator.This is the standard practice used for analysing public spendin

136、g in the UK.Across long periods of time and in stable economic environments,the GDP deflator is likely to provide a close approximation to the costs faced by education providers.However,the recent spike in inflation was mainly driven by imported food and energy prices,which is not fully captured in

137、the GDP deflator.With this in mind and to provide more context,we often provide analysis of likely costs faced by providers.This also allows us to consider the financial pressures on providers budgets,and how the actual funding available to providers compares with their actual cost pressures.Annual

138、report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 20 2.Early years Today,public spending on early years education and childcare is synonymous with the free entitlement programme,the scheme that offers a government-funded place in early education and childca

139、re.The free entitlement has grown to become the largest pre-school education and childcare programme in England see,for example,Drayton et al.(2023)for a history of how early years support has changed with spending doubling in real terms over the decade from 2001,and rising further to reach 4.2 bill

140、ion last year(i.e.202324).On the back of this precipitous rise,it is also set to grow in importance:as shown in Figure 2.1,the free entitlement is forecast to undergo its fastest and largest expansion to date,rising to an estimated 8.5 billion in 202627.The free entitlement is not one single program

141、me;different offers are available to children of different ages,with different eligibility requirements.These include:a universal offer of 15 hours a week for all 3-and 4-year-olds;an extended entitlement to 30 hours a week for 3-and 4-year-olds in working families;a disadvantage offer of 15 hours a

142、 week for the most disadvantaged 2-year-olds.Alongside these schemes is the new expanded entitlement announced at the March 2023 budget by the previous government.This new entitlement for working families is currently being expanded under the following timescales:from April 2024,15 hours a week for

143、2-year-olds in working families;from September 2024,15 hours a week for children aged 936 months in working families;from September 2025,30 hours a week for children aged 936 months in working families.Once fully rolled out,the expanded entitlement will provide children in households with all adults

144、 in work with access to 30 hours a week of free childcare from the end of maternity leave(nine months)to when children start school.This chapter is split into three parts.The first(Section 2.1)documents how spending on the existing entitlements has changed over time,including changes to hourly fundi

145、ng rates,before turning to how spending is expected to evolve with the introduction of the expanded entitlements.The second part(Section 2.2)looks at how funding for the free entitlement is distributed by local authorities and the extent to which different types of provision or certain groups of chi

146、ldren are supported through the funding system.Finally,in Section 2.3,we Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 21 consider the implications of the most recent policy changes affecting the early years sector(including the expansion of scho

147、ol-based nursery places and the recent rises in employers NICs announced in the Autumn Budget 2024)and look forward to considerations for the upcoming spending review.2.1 Spending on the free entitlement Figure 2.1 shows total public spending on the free entitlement over the past 25 years,split by t

148、ype of programme.For the first decade of this period,the sole programme at the time,the universal entitlement,saw significant real-terms growth of about 120%in total.This saw total spending on a part-time place for 3-and 4-year-olds rise from 1.2 billion in 2001 to 2.7 billion in 2011.Over the 2010s

149、,real-terms total spending on free entitlement programmes continued to rise steadily,a notable departure from the real-terms cuts experienced in other stages of education(see later chapters).Figure 2.2 also highlights,however,how these increases in spending were largely driven by the introduction of

150、 additional entitlements rather than increased generosity in the funding of existing entitlements.Figure 2.1.Total real-terms spending on free entitlement hours in England(million,202425 prices)Note:Entitlements as described at the start of the chapter.The 2-year-old disadvantaged offer was initiall

151、y piloted in a small number of areas in 2012,before being rolled out nationally in 2013.Because our data on total spending do not split out the universal and extended entitlements,we allocate total spending proportional to their budgets from the Dedicated Schools Grant(DSG).From 202425 onwards,we us

152、e DSG budget for core funding.01,0002,0003,0004,0005,0006,0007,0008,0009,0002001-022002-032003-042004-052005-062006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-232023-242024-252025-262026-272027-28Spending(m,202425 prices)3&4:Univer

153、sal3&4:Extended2yo:DisadvantagedExpanded offersAnnual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 22 The final years in Figure 2.1 project from 202425(i.e.the first year of the rollout of the expanded entitlements)the expected budget for the free enti

154、tlements.This differs from the measures of spending out-turn for previous years but provides a useful indication of how spending may evolve in the coming year.Funding rate rises announced at the March 2023 budget are expected to restore total real-terms funding on existing entitlements(universal,ext

155、ended and 2-year-old disadvantage)in 202425 to the 201819 peak of around 4.7 billion in todays prices.This is even though the number of child-hours delivered for two of these programmes(universal and 2-year-old disadvantage)are lower than they were in 201819.In addition,the partial rollout of the ex

156、panded entitlements is expected to add a further 1.7 billion to this amount,representing the largest year-on-year increase in our series.Looking further ahead,spending on the free entitlement is projected to continue to rise substantially in real terms as the new entitlements are rolled out.By 20272

157、8,total spending will be more than double its 202324 level,representing a major increase in the early years budget.This significant injection of funding is notable against the backdrop of a historically challenging position for the public finances(Johnson,2024).Figure 2.2 paints a picture of a long-

158、term rise in real-terms spending on the free entitlement.However,this period has seen significant growth in the number of children and hours covered by the entitlements,as well as population fluctuations in the number of 2-,3-and 4-year-olds(see Drayton and Farquharson,2023 for more detail).It is th

159、erefore more instructive to consider how real-terms spending per child and per childcare hour has evolved over time.Taking 3-and 4-year-olds first(covering the universal and extended 30-hour offer),as shown in Figure 2.2,growth in real-terms spending per child taking up a place has largely tracked c

160、hanges in total spending and saw substantial real-terms growth,doubling over the decade from 200910.Between 201718 and 202324,where no new entitlements were introduced,spending per place was more volatile as it was exposed to funding rate changes as well as rising costs eroding the real value of res

161、ources,particularly during the 202223 inflation spike.In contrast,if we account for the number of hours of childcare children are taking up,we see much more muted growth,with real hourly resources growing by 23%over the 14 years between 200910 and 202324.That said,this still represents substantially

162、 higher growth in real resources compared to spending per pupil on other stages of education over the same period(Drayton et al.,2023).Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 23 Figure 2.2.Growth in real-terms spending on the free entitleme

163、nt for 3-and 4-year-olds(indexed 200910=100)Note:Spending on universal and(from 201718)extended entitlements for 3-and 4-year-olds.Spending per place is spending per part-time equivalent place(15 hours)across both entitlements,so a child accessing their full universal and extended entitlement would

164、count towards two part-time equivalent places;see https:/ifs.org.uk/education-spending/methods-and-data for more details.Source:See Methods and data at https:/ifs.org.uk/education-spending/methods-and-data.Note that 2-year-olds are funded at a different rate,and the picture for spending on the 2-yea

165、r-old disadvantage offer looks somewhat different:hourly resources have remained roughly stable since its introduction in 201516,but total spending on the programme has fallen over time(Drayton and Farquharson,2023).This is largely driven by a decline in the number of places taken up,which fell by a

166、 quarter between 201516 and 202223.The demographic shifts and tighter eligibility criteria for the programme that are behind this fall are discussed in greater detail in Drayton and Farquharson(2023).Funding rates While the total amount of funding for the free entitlement is an important indication

167、of the governments priorities,what matters more to childcare providers is the hourly funding rate that they receive for children in their care.This provides a proxy2 for the amount of resources providers have to deliver the free entitlement.2 It excludes uplifts such as the Early Years Pupil Premium

168、.0501001502002502001-022002-032003-042004-052005-062006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-232023-24Index(200910=100)TotalPer childtaking upa placePer hourAnnual report on education spending in England:202425 The Institute

169、for Fiscal Studies,January 2025 24 Figure 2.3 shows the average funding rate across England in 202425 by age of child,compared to current market prices for childcare.The first pattern that emerges is that providers tend to charge parents similar hourly prices for childcare,irrespective of a childs a

170、ge.This smoothing of prices across ages is notable given differences in the costs of providing childcare to children of different ages(for instance,younger children have stricter requirements around the number of staff per child).This gradient in the cost of provision by child age is reflected,howev

171、er,in the funding rates providers receive for children of different ages in their care,with higher funding rates for younger children.Figure 2.3.Free entitlement funding rates in comparison to market prices(202425 prices)Note:Market prices are shown from two sources:the Department for Education 2023

172、 Survey of Childcare and Early Years Providers(SCEYP survey)and the Childcare Survey 2024 from Coram Family and Childcare(Coram survey).Market rates from the Coram survey are a weighted average of rates across group-based nurseries and childminders,with weights based on number of registered places i

173、n the SCEYP survey.Funding rate rates are retrieved from the Dedicated Schools Grant 202425.Source:Department for Education(2023a,2024a)and Hodges,Shorto and Goddard(2024).The second takeaway from Figure 2.3 is that funding rates for younger children are much more generous than current market rates.

174、For 202425,the government has budgeted for a much higher funding rate for 2-year-olds,while rates for the under-2s will start at 9.45,almost 50%higher than existing prices in the market.This suggests the government is channelling resources towards younger ages to both incentivise expansion in provis

175、ion for younger children and to better align funding rates with differences in costs of provision for different age groups.-2.00 4.00 6.00 8.00 10.00 12.00Under 2Age 2Ages 3-4 per hour(202425 prices)Funding rate 2024-25Market rate 2023(SCEYP)Market rate 2024(Coram)Annual report on education spending

176、 in England:202425 The Institute for Fiscal Studies,January 2025 25 However,hourly funding for the existing entitlements for 3-and 4-year-olds is much closer to market prices on average.While this makes it less likely that this public funding translates into excess profits for providers rather than

177、being put to better use elsewhere in the public sector,it leaves less margin for error:providers who are less financially sustainable,or in areas experiencing challenges with delivery,may be more financially exposed if providers costs become misaligned with funding rates.While Figure 2.3 focuses on

178、hourly rates as they stand today,what also matters is how funding rates have evolved over time and the extent to which they have kept up with changes in provider costs.In Figure 2.4,we document how the funding rate has changed over time in cash terms for provision for 3-and 4-year-olds and 2-year-ol

179、ds,alongside changes in the costs that childcare providers face the provider cost index.These provider costs account for changes over time in employee wages,including changes in the minimum wage,as well as changes in other components of costs,including energy,rent and food.3 Figure 2.4.Growth in cor

180、e hourly funding and providers costs for 3-and 4-year-olds and 2-year-olds,indexed to 201617 Note:Funding rates up to 202223 are drawn from the Early Years block of the Dedicated Schools Grant.In 202324,funding rates mid-way through the financial year,in September;the chart presents weighted average

181、s of the AprilAugust and SeptemberMarch rates.The funding rate for 202425 has been announced as 8.28 for 2-year-olds and 5.88 for 3-and 4-year-olds in cash terms.3 See Drayton and Farquharson(2022)for a description of how the providers cost index is constructed.This is an average cost for providers;

182、different types of providers or those catering to different groups of children may face a different composition of costs.90100110120130140150160170201617 201718 201819 201920 202021 202122 202223 202324 202425Index(201617=100)Core funding:3-and 4-year-oldsCore funding:2-year-oldsProviders cost index

183、Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 26 As shown in Figure 2.4,between 201617 and 201920,funding rates for 3-and 4-year-olds were largely frozen in cash terms,with the exception of an uplift in 201718 when the extended entitlement for 3-

184、and 4-year-olds in working families was brought in.Over the same period,the costs that providers incur to deliver childcare slightly outpaced growth in funding:the average provider experienced a 9%rise in costs compared to a 6%increase in funding rate.However,recent years have seen a wedge open up b

185、etween funding rates for 3-and 4-year-olds and provider costs,as high inflation and rises in minimum wage have generated large cost rises for providers(Drayton and Farquharson,2022).This has meant that even relatively generous uplifts in funding rates in 202324 and again in 202425 have not offset th

186、e cost pressures.By our estimates,core resources per hour for 3-and 4-year-olds will remain 8%lower in real terms in 202425 than in 201617 once provider costs are taken into account.This rises to 15%lower relative to 201213.The picture looks somewhat different for childcare for 2-year-olds.As Figure

187、 2.4 shows,while growth in 2-year-old rates tracked changes in funding rates for 3-and 4-year-olds between 201617 and 202223,the two have diverged in the past couple of years with the largest cash increase in the 2-year-old funding rate in 202324 since its introduction(30%4).Funding for 2-year-olds

188、has also been prioritised this year,with a 17%cash-terms rise in 202425,well above current market prices.It is also important to consider how funding rates are set going forward.As explored in Drayton and Farquharson(2024),next year will see a small rise in core funding rates,expected to largely off

189、set the impact of economy-wide inflation(as measured by the GDP deflator).The uplift for 3-and 4-year-olds is slightly higher,meaning that effective funding rates will rise about 1%faster than economy-wide inflation.However,provider costs are set to rise next year too:rises in employers NICs and the

190、 minimum wage announced in the Autumn Budget 2024 will leave childcare providers with new expenses(we discuss possible impacts in Section 2.3).For some providers,this will outweigh the modest increases to funding rates,continuing the long-term trend of funding not keeping up with changes in provider

191、 costs(Reed and OHalloran,2024).4 Funding rates were raised midway through 202324:between April and August,the 2-year-old rate stood at 6;between September and March,this rose to 7.95.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 27 2.2 Distribut

192、ion of spending across local authorities Our focus so far has been to study total spending on the early years free entitlement at a national level.However,there is no single childcare market for England:different places have different availability of provision and serve different children and famili

193、es.What matters to childcare providers is not the headline funding rate but what they receive on the ground to deliver the entitlements.The funding childcare providers receive is governed by a two-step process.First,central government allocates funding between local authorities according to the Earl

194、y Years National Funding Formula(EYNFF).Under this system,areas receive different hourly funding rates,which vary according to local costs of providing childcare(areas with higher rents for premises and staff wages attract more funding)and the needs of the population(areas with more-deprived or disa

195、bled children or children with additional language needs attract additional funding).Drayton and Farquharson(2023)provide more detail on how the EYNFF works and the implications of the funding formula for different areas.In a second step,each local authority is responsible for distributing funding t

196、o the providers in its area based on its own funding formula,known as the Early Years Single Funding Formula(EYSFF).Technically,this results in 153 distinct funding allocation formulas across local authorities;in practice,local authorities are heavily restricted in how they distribute this funding.T

197、he two biggest constraints on local authorities are the requirements to pass through at least 95%of the funding received under the EYNFF to providers5 and to pay the same rate to different types of providers.6 Local authorities are then permitted to offer supplements that can be used to tweak their

198、formula;though again,there are restrictions on the total value of supplements,which must not exceed 12%of total funding.A deprivation supplement is mandatory for 3-and 4-year-olds;other allowable supplements can include:quality,to support workforce qualifications or system leadership;rurality or spa

199、rsity;5 Previously,this pass-through requirement applied only to funding for the 3-and 4-year-old entitlements.For 202425,the 95%pass-through requirement will additionally apply separately to the new extended entitlements(children aged 9 months to 2 years in working families and 2-year-olds in worki

200、ng families)and the 2-year-old disadvantage offer.It is the Department for Educations intention to raise this pass-through to 97%once the new entitlements are sufficiently embedded(Department for Education,2023c).6 Although local authorities are required to use the same base funding rate for all chi

201、ldcare providers,they are permitted to distribute additional funding to maintained nursery schools via the Maintained Nursery Supplement.This is in recognition that school-based nurseries face additional costs as a result of staff structure;for instance,they are required to have at least one qualifi

202、ed teacher and an SEN coordinator.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 28 flexibility,to support providers offering more flexible provision to match parents working patterns and needs;English as an Additional Language(EAL).Finally,the EY

203、NFF also allocates additional funding streams to areas such as the early years pupil premium(EYPP)and the disability access fund(DAF).7 These supplements operate somewhat differently:instead of raising the base funding rate for a local authority,which is then handed down to providers equally,provide

204、rs receive extra funding for each eligible child meaning that funding follows the child.By design,this standardisation across local authorities in use of the EYSFF imposes some alignment between the rate allocated under the national funding formula and the rates that providers receive.In this sectio

205、n,we study how 153 local authorities use the tools available to them under the EYSFF,focusing on 202324,the most recent year of data.A limitation of this analysis is that this reflects local authority allocations prior to the introduction of the expanded entitlements.These new entitlements represent

206、 a major expansion to the previous entitlements(the universal and extended entitlements for 3-and 4-year-olds and the 2-year-old disadvantage offer)and areas may well alter their allocations to support the delivery of the new entitlements for younger children in working families.This will be importa

207、nt to look into as data become available.In our analysis,we exclude the EYPP and the DAF,which allocate additional funding to deprived and high needs children,respectively,as these operate outside of the local authority funding system.We discuss EYPP and DAF funding separately in Section 2.3.Distrib

208、ution of spending under the EYSFF We first study how funding handed down from the national formula is channelled into different types of spending by local authorities.Figure 2.5 divides each local authoritys total funding under the single funding formula(excluding EYPP and DAF)into:core funding for

209、the core hourly funding rate;supplements,SEN inclusion fund and Maintained Nursery Supplement targeted spending to compensate providers with higher cost provision such as through the SEN inclusion fund,supplements for quality and deprivation,and supplementary funding for maintained nurseries;central

210、ly retained and contingency resources held back by local authorities for contingency planning,that is,resources for managing fluctuations in demand,and to 7 See https:/www.gov.uk/get-extra-early-years-funding.Annual report on education spending in England:202425 The Institute for Fiscal Studies,Janu

211、ary 2025 29 support early years related activities performed centrally,including eligibility checking or supporting local authority-wide specialist SEN services.Owing to the requirement to pass through at least 95%of core funding for the 3-and 4-year-old entitlements to providers,and restrictions on

212、 how much funding can be allocated to supplements,there is a reasonably high level of conformity in how different local authorities allocate funding.In particular,the pass-through requirement ensures that at least 95%of core funding is split between the base funding rate,supplementary funding rates,

213、the SEN inclusion fund and contingency funding.On average,local authorities distribute 88%of funding to the core hourly funding rate,received equally across providers.Three-quarters of local authorities allocate at least 85%of funding to the core rate.Figure 2.5.Composition of spending under the EYS

214、FF,by local authority Note:Excludes spending on the EYPP and the DAF.The pass-through requirement requires at least 95%of core funding to be split between Core,Supplements,SENIF and MNS,and contingency funding.Since we conceptually group centrally retained and contingency funding,it cannot be read f

215、rom this graph whether a local authority meets the pass-through requirement.There is variation,however,in how local authorities make use of supplements and SEN inclusion funding,the mechanisms through which areas can target more resources to providers serving higher-needs population or delivering hi

216、gher-quality or more flexible provision.Just over a quarter(27%)of local authorities dedicate fewer than 5%of resources to these more-targeted funding streams,while almost another quarter(23%)of areas allocate more than 10%to this targeted spending.Areas distributing more through supplements and the

217、 SEN inclusion fund 0%20%40%60%80%100%Share of EYSFF spend(%)CoreSupplements,SENIF and MNSCentrally retained and contingencyAnnual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 30 tend to be more urban(around two in five are in London)and more-deprived.

218、We study the use of supplements in greater detail in the following subsection.Another way to see how the centrally determined funding rates translate into resources on the ground is to examine how closely provider base rates set by local authorities align with the EYNFF rates.Table 2.1 shows differe

219、nces across areas in the proportion of the EYNFF funding rate that providers receive in their base rate from local authorities.Table 2.1.Core rates under EYSFF versus EYNFF for 202324 2-year-olds 3-and 4-year-olds Share of national rate passed to provider base rate Number of LAs Share of LAs(%)Numbe

220、r of LAs Share of LAs(%)1 or higher*64 42 5 3 0.951 56 37 10 7 0.90.95 27 18 68 45 0.850.9 3 2 54 36 0.80.85 1 1 10 7 0.750.85 0 0 4 3 Note:*Only two and one local authorities(LAs)have a pass-through higher than 1 for the 2-year-old rate and 3-and 4-year-old rate,respectively.For 2-year-old funding

221、rates which,for 202324,relate to the 2-year-old disadvantage offer many local authorities(41%)pass on exactly the EYNFF rate to providers.A further 37%of areas pass through at least 95%of the EYNFF rate.Since the 2-year-old disadvantage entitlement is eligible only to low-income children,it serves a

222、 less variable population,and therefore resources are more easily targeted through the base rate with less need for additional supplements(as we will see,this was also encouraged in Department for Education guidance).As the expanded entitlements draw in 2-year-olds from working families into the fre

223、e entitlement,however,local authorities may need to change their funding formulas to ensure providers are encouraged to(continue to)offer childcare places for disadvantaged 2-year-olds.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 31 For 3-and 4-

224、year-olds,fewer resources feed into core funding relative to targeted spending(e.g.supplements),resulting in lower pass-through from the EYNFF rate to the universal base rate.Very few areas pass on the EYNFF rate to providers exactly,and only 7%of areas set the base rate to 95%of the EYNFF rate or h

225、igher.Still,all local authorities feed at least three-quarters of the EYNFF rate into their base rate for 3-and 4-year-olds,with the majority of areas falling in the 8595%range.Local authorities use of supplements Figure 2.6 shows,for each type of supplement permitted by the Department for Education

226、,the share of local authorities who offer additional funding for that factor for entitlements for 3-and 4-year-olds.8 Figure 2.6.Use of supplements for entitlements for 3-and 4-year-olds by local authorities All local authorities use deprivation funding for 3-and 4-year-olds,which is a mandatory req

227、uirement.This can be measured in different ways:some areas top up funding for children eligible for the EYPP,others may target providers located in deprived neighbourhoods(e.g.based on the Index of Multiple Deprivation,IMD).Around half of local authorities additionally fund higher quality provision,

228、that is,providers with more qualified staff or who support other local providers to deliver quality provision,at higher rates.Only around 1 in 10 areas support 8 We focus on use of supplements for 3-and 4-year-olds because 202324 Department for Education guidance encourages local authorities to fund

229、 all providers according to a flat hourly base rate for 2 year olds(Department for Education,2023b).0%20%40%60%80%100%Deprivation(mandatory)QualityFlexibilityRuralityEALShare of local authoritiesAnnual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 32 fl

230、exibility of provision,for instance,providers who offer wraparound care or out-of-hours provision.This suggests incentivising high quality early years education and childcare and supporting provision for parents who require flexibility(such as shift workers)through higher funding rates is not a univ

231、ersal approach taken by local authorities.Variation in use of quality and flexibility supplements may also have implications how different types of provider fare in different areas.For instance,childminders often provide greatest flexibility of provision,while quality supplements are more likely to

232、benefit group-based providers,whose staff tend to hold more early years qualifications,and providers with more resources to support systems leadership amongst local providers.Figure 2.6 also highlights that very few areas compensate for rurality and for serving children with EAL.Partly,this is becau

233、se most areas will not serve especially rural or EAL populations.Yet,the relationship between the use of the supplements,rurality and EAL is not entirely straightforward.For instance,it is local authorities with high,but not the highest,shares of children with EAL that make greatest use of the EAL s

234、upplement:no local authorities in the top quartile of children with EAL use the supplement,while 14%of local authorities in the third quartile have an EAL supplement.This suggests that in areas with more homogeneous populations(mostly rural or mostly EAL),support flows through the core funding rate,

235、while in more mixed areas it is useful for local authorities to target support via supplements.As well as considering how local authorities use the different supplements available to them,it is also important to consider the extent to which they align with the needs of an area.Figure 2.7 plots for e

236、ach local authority the share of total spending under the EYSFF going to deprivation uplifts against the average level of deprivation in the local authority,measured using the index of multiple deprivation(IMD).The downwards-sloping relationship confirms that more-deprived areas tend to allocate mor

237、e funding to deprivation supplements:an increase in deprivation equivalent to moving 10 ranks on the IMD is associated with a 5 percentage point increase in the proportion of funding dedicated to deprivation.That said,there is a lot of variation in funding for deprivation amongst local authorities w

238、ith similar levels of deprivation.It is also notable that some of the local authorities with the most resources dedicated to deprivation are those in the middle of the pack and many are based in London.A number of London boroughs have pockets of deprivation alongside wealthier neighbourhoods,possibl

239、y making it more effective to direct resources via supplements compared with more uniformly deprived areas.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 33 Figure 2.7.Value of deprivation supplement by local authority IMD Note:2019 index of multi

240、ple deprivation.Share of total spend under the EYSFF,excluding the DAF and EYPP.Overall,the EYSFF is a transparent method of allocating funding to different providers within a local area.The requirements for what local authorities can and cant do with free entitlement funding are relatively restrict

241、ive,generating a fair amount of conformity in how money is spent in different places.There are differences,however,in how much areas spend on targeted funding streams(supplements for deprivation,quality,rurality,EAL and SEN inclusion fund),with more-urban and more-deprived areas making greater use o

242、f these funding mechanisms.These areas are likely to have a higher prevalence of disadvantaged and SEN children,indicating that funding is responsive to need.Interestingly,some particularly high-need areas make less use of supplements than those in the middle of the pack,suggesting that the funding

243、system provides areas with the flexibility to tailor resource allocation to the needs of the local area.Understanding how this funding system and differences in approaches across local areas map on to measures of performance in the early years,such as availability and quality of provision,is an impo

244、rtant next step for future research(Reed and OHalloran,2024).0.000.010.020.030.040.050.060.070.080.09020406080100120140160Share total spend on deprivationIMD rank(lower=more-deprived)LondonAnnual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 34 2.3 Futu

245、re changes and challenges in the early years In this section,we return to looking at the early years system from a national perspective to assess what we know so far about the rollout of the new entitlements,to study the impact of more recent policy changes and to look ahead to considerations for th

246、e spending review.Delivery of the new entitlements Local authorities are responsible for ensuring there is sufficient childcare provision for eligible children to access the free entitlements.Since April 2024,this expanded to 15 hours of childcare per week for 2-year-olds from working families and,f

247、rom September 2024,for children aged 9 months in working families.From September 2025,these children will be entitled to 30 hours per week.A widely discussed issue(e.g.Drayton and Farquharson,2023)is around the deliverability of these entitlements.A key determinant of this is the hourly funding rate

248、 the providers receive.As discussed in Section 2.1,for 202425 this is relatively generous for younger children(2-year-olds and under),which is expected to incentivise providers to offer the new entitlements.An early indication of how well the rollout is going comes from Department for Education stat

249、istics on the number of childcare codes issued and validated for the new entitlements.Codes are issued by local authorities to children who apply and are eligible for the entitlements;they are validated when children take up a place with a provider.The former offers insight into demand for the new e

250、ntitlements,while the latter is a proxy for the availability of childcare provision.9 The latest release of statistics covers the full summer term 2024 for 2-year-olds,and data for the autumn term 2024 until 13 October for 2-year-olds and for children aged 936 months.Table 2.2 shows,for England,the

251、number of codes issued(representing the number of children)and the share that have been validated(demonstrating that a child has taken up a place)in the first term of eligibility for the new entitlements.The final row provides a comparison with the 30-hour expansion for 3-and 4-year-olds in Septembe

252、r 2017.At the same point in the rollout,the share of interested and eligible children taking up childcare across the age groups looks very similar(at around 85%)and,if anything,it is slightly higher for 1-year-olds(88%).This is encouraging as the market for 1-year-olds is less established than for 2

253、-year-olds,likely 9 A code may also not be validated if the child,after being issued a code,does not take up the childcare place.It is difficult to ascertain to what extent parental decisions versus provider behaviour drives the gap between the number of codes issued and validated.Annual report on e

254、ducation spending in England:202425 The Institute for Fiscal Studies,January 2025 35 requiring more new provision rather than changes in who is paying for existing childcare(Farquharson,2024).This is also broadly in line with take-up during the rollout of the previous 30-hour offer for 3-and 4-year-

255、olds at 90%.Validation rates have since risen to 96%for 2-year-olds by the end of summer term 2024.Table 2.2.Codes issued and validated by entitlement and age of child for first term of eligibility in England Entitlement offer Codes issued Share validated Expanded entitlements(introduced in 2024)2-y

256、ear-olds 247,514 85%1-year-olds 215,907 88%912 months 44,946 84%Extended entitlements(introduced in 2017)*3-and 4-year-olds 216,384 90%Note:Using the first release of code data for the first term of eligibility to account for validation rates rising over time.For 2-year-olds,this is for summer term

257、2024 for codes applied for by 31 March and issued and validated by 2 May.For children aged 912 months and 1-year-olds,this is for the autumn term 2024 using codes applied for by 31 August and issued and validated by 13 October.*The final row provides code statistics from the previous extension of th

258、e free entitlement of 30 hours for 3-and 4-year-olds for comparison.This covers codes issued by 31 August 2017 and validated by 9 October 2017.Source:Department for Education(2017,2024c,2024f).Taken together,this suggests that the rollout,at least at a national level,is in line with previous expansi

259、ons.However,as emphasised throughout this piece,childcare provision operates locally,and at this geography there is more scope for demand and supply to become misaligned.Department for Education(2024f)analysis suggests substantial variation across the country in the percentage of codes validated for

260、 the autumn term 2024 for children aged 936 months.Overall,local authorities in the north of England exhibit higher validation rates(i.e.higher proportions of approved children taking up a childcare place)compared with the south.Urban areas also tend to have lower rates.Some areas in London as well

261、as local authorities surrounding London have particularly low validation rates compared with elsewhere;for instance,in Haringey,only 74%of childcare codes have been validated,while in Birmingham Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 36 th

262、e figure is 88%.This suggests that eligible and interested parents in more urban areas,particularly in the South East of England,are possibly unable to access free entitlement places or are not well matched to the places on offer.Upcoming policy changes The expansion of the free entitlements represe

263、nts a large change to early years education and childcare in England but is also a continuation of previous government policy.Finally,we consider policies announced since the new government took office that are likely to affect the early years sector,and we look at challenges ahead for the governmen

264、ts first spending review.The first policy is capital funding for primary schools to facilitate the conversion of classrooms into nurseries.This scheme comes with a total funding pot of 15 million and can be used by schools to make adjustments to the school estate,such as changing the layout of rooms

265、,providing additional toilets or creating outdoor play areas,in order to meet regulations for nursery provision.The first phase of the programme,which launched in October 2024,aims to support 300 new or expanded nurseries(Department for Education,2024g),with the aim of ultimately generating 3,000 ad

266、ditional school-based nurseries.Once fully rolled out,this will represent around 30%of the existing number of school-based providers,although these providers currently make up only 20%of places(Department for Education,2023a).Additional support for expanding childcare provision will certainly be wel

267、come,especially if the places generated are higher quality,which is an explicit aim of the policy(Labour,2024).However,there are two key risks that could undermine the schemes ability to meet additional demand for childcare places as the new entitlements are expanded.The first is around when these a

268、dditional places will become available.Under current timescales,the first tranche of nursery conversions(which represent one-tenth of the target)are expected to come online for the final stage of the expanded entitlements rollout in September 2025(Department for Education,2024g).While this policy ma

269、y generate additional capacity over the longer term,under existing plans it is unlikely to substantially ease supply constraints when they are most acute.As well as the timeliness of the policy,another consideration is where in the country the additional school-based places will become available.The

270、 policy is largely targeted at repurposing primary classrooms where pupil rolls are falling,but if there is a geographical mismatch between falls in primary school population and rises in demand for new early years provision,this could prove a challenge to delivering these nursery school targets.Ano

271、ther set of policies that is likely to affect childcare providers comes from the Autumn Budget 2024.These policies include increases in the rate of employers NICs,albeit alongside more generous offsets for small businesses,and rises in the national minimum wage,which will take effect in April 2025.A

272、nnual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 37 Early years staff are essential to delivering early years education and childcare,reflected in the high share of providers costs that go to staffing(around three-quarters).Changes that raise the cos

273、t of employing workers can therefore have significant impacts on providers financial position.Moreover,the Autumn Budget 2024 changes will particularly affect younger and lower-paid workers.A full-time early years worker earning 25,000 a year would see the employers NICs bill rise by more than a thi

274、rd,while a minimum-wage worker aged 1820 would see a 16%jump in hourly wage.Higher wages would be welcome for many early years professionals earning at or near the minimum and could support the drive to recruit around 35,000 additional early years staff by September 2025(Department for Education,202

275、4h).But together with changes to NICs,it also adds cost pressures to providers.The impact of these changes will really depend on the type of early years provider.Most obviously,childminders,who tend to be self-employed or,if they employ an assistant,often fall within the tax-free allowance,would be

276、much less affected.For most providers,however,what matters is the number of employees and how much they are paid.The majority of the tax increase comes through the reduction in the NIC threshold,which affects employers with lower-paid workers most in proportional terms.These are the same providers w

277、ho will be most likely to be hit by increases in the minimum wage.These impacts are somewhat offset by a more generous NIC employment allowance,which could particularly help providers with small numbers of employees,as they are unlikely to pay NICs.However,providers are not currently eligible for em

278、ployment allowance if more than 50%of their business is done in the public sector,which may apply to more early years providers as the free entitlement expands over time.Two illustrative examples of providers who if eligible for the employment allowance would stand to benefit under the Autumn Budget

279、 2024 changes are:a small provider with six employees(or fewer),each on median earnings of 33k;a small provider with seven employees(or fewer)on the current minimum wage.Providers employing more staff than in these examples would lose out from the changes announced in the Autumn Budget;the bigger th

280、e employer,the more so.Although data availability makes it difficult to assess the impact on the early years sector as a whole,these illustrative scenarios highlight which sections of the market are more exposed to these financial pressures.Over the longer term,providers may be able to pass on highe

281、r costs to workers:on average,around 60%of the impact of the NICs tax rise will eventually be felt by workers,in the form of smaller pay rises and lower wages.This adjustment will be more challenging,however,for providers with many employees at or near the minimum wage.Annual report on education spe

282、nding in England:202425 The Institute for Fiscal Studies,January 2025 38 Targeted funding in the early years Another important area of early years funding is provisions for children with additional needs,such as low-income children through the EYPP and support for SEN via the DAF.These operate diffe

283、rently from the funding formulas discussed earlier and provide additional payments to providers per eligible child.As shown in Figure 2.8,historically,the low frequency of updating rates has eroded the real value of these funds over time,leaving childcare providers with fewer resources to support hi

284、gher-needs children.For example,the EYPP rate fell by 9%between 201718 and 202122.A funding system that is responsive to need is more important in the context of rising demand:although smaller in absolute numbers than rises for primary school age children(Sibieta and Snape,2024),the proportion of ch

285、ildren identified as having SEN and taking up the 15-hour entitlement rose from around 6%to 9%between 2018 and 2024,representing a 30%increase in numbers of pre-school age children with SEN(Department for Education,2024e).Figure 2.8.Real-terms funding for the early years pupil premium and disability

286、 access fund Note:Uses HM Treasury GDP deflators(HM Treasury,2024).The EYPP offers top-up funding for childcare providers looking after children from disadvantaged backgrounds.The DAF also offers top-up funding in respect of children receiving Disability Living Allowance.In 202425,there has been a 9

287、%cash-terms increase in the EYPP and DAF,as well as an extension of eligibility to younger children,and the introduction of deprivation supplements for the new entitlements(Department for Education,2024d).Next year will see bigger changes,with EYPP rising to 570 a year,which is a 44%increase in real

288、 terms.This is a major uplift,meaning that,for the first time,the value per hour will be comparable to the pupil premium funding that schools receive for disadvantaged pupils(though because EYPP only applies to part-time childcare entitlements,the total funding will still be half as much as for scho

289、ols).200 300 400 500 600 700 800 900 1,0002017182019202021222023242025-26Annual value per eligible childEYPPDAFAnnual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 39 2.4 Summary The discussion throughout has raised a number of considerations ahead of t

290、he 2025 spending review.In contrast to other areas of public spending,the spending envelope has already been set for spending on early years education,including funding allocated to the new entitlements.Within this allocation,notwithstanding modest rises next year,money has been directed more toward

291、s provision for younger children(via higher funding rates)compared with 3-and 4-year-olds,leaving resources for 3-and 4-year-olds at greater risk of losing value.Tax and minimum-wage changes announced at the Autumn Budget 2024 are expected to add cost pressures to providers and exacerbate this risk.

292、The process for setting rates has historically generated uncertainty for providers,with rates frozen for multiple years and inflation eroding their real value,followed by a big adjustment at a spending review or fiscal event(Drayton and Farquharson,2023).The spending review would be an opportunity t

293、o consider a process for setting funding rates that is more responsive to changing financial pressures.In terms of targeted early years funding,the rise in EYPP next year represents a major increase in real resources for children from disadvantaged backgrounds,children who are less likely to achieve

294、 a good level of development by the end of Reception.This is particularly welcome as the new entitlements are by and large geared towards reducing the costs of childcare and helping parents into work rather than addressing inequalities in childrens development.It does,however,come on the back of mul

295、ti-year freezes to EYPP,which reduced the progressivity of the early years funding system.Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 40 3.Schools In the Autumn Budget 2024,the new government chose to increase school spending by 2.3 billion,wit

296、h the core schools budget increasing in cash terms from 61.6 billion in 202425 to 63.9 billion in 202526.This allows for a 1.6%real-terms increase in spending per pupil.Coming on the back of an 11%real-terms increase in spending per pupil between 201920 and 202425,this allows spending per pupil to r

297、eturn to,and exceed,its previous high point in 2010.This is not the full story,however.Out of the 2.3 billion cash-terms rise in the core schools budget in 202526,about 1 billion is focused on the high needs budget,which covers pupils with the highest levels of SEN and disabilities.After accounting

298、for this,the 1.3 billion rise in the rest of the schools budget is likely to amount to a 2.8%rise in cash terms in funding per pupil in mainstream schools in 202526,which is a very small real-terms rise relative to economy-wide inflation of 2.4%.In contrast,we estimate that school costs are likely t

299、o rise by about 3.6%,which includes the effect of government proposals for a 2.8%pay rise.If these projections are accurate,then core school budgets will feel very tight in 202526.This pattern of seemingly large rises in total school spending per pupil being swallowed up by large increases in high n

300、eeds funding is a familiar one.About half of the increase in total school spending per pupil between 201516 and 202425 can be accounted for by rises in high needs funding.As we document in our recent briefing note(Sibieta and Snape,2024),this reflects rapid increases in the number of pupils with ide

301、ntified needs,particularly those with Education,Health and Care Plans(EHCPs).These plans create statutory obligations to provide specific support to individual children.This has pushed up spending even faster than funding,leading to large deficits across local authorities.These deficits have effecti

302、vely been moved off balance sheet to prevent local authority bankruptcies.This Statutory Override is due to run out in March 2026.In the rest of this chapter,we present trends in spending per pupil to date and examine the potential pressures on spending in the period covered by the next spending rev

303、iew,particularly 202627 and 202728.For further details,on the methods used to analyse school spending,please see the accompanying Methods and data section at https:/ifs.org.uk/education-spending/methods-and-data.Annual report on education spending in England:202425 The Institute for Fiscal Studies,J

304、anuary 2025 41 3.1 Total school spending per pupil Figure 3.1 shows total school spending per pupil aged 319 between 200304 and 202425 broken down into four different components:Funding allocated to schools.This includes funding directly allocated to schools and early years providers.Early year fund

305、ing for children aged 34 is included in primary school budgets for past years.We cannot exclude this for all years,so we include early years funding for children aged 34 in all years to maintain consistency.This includes funding for special schools and alternative provision.It also includes high nee

306、ds top-ups and place-funding provided to state-funded mainstream and special schools.Local authority spending.This includes central spending on a range of services for pupils with SEN,admissions,transport and other services.Sixth-form funding.This is funding provided to schools for pupils aged 1619.

307、We include this given that it is often included within total secondary school expenditure figures.Extra funding for employer pension contributions.From September 2019,schools received about 1.5 billion in extra funding to meet the cost of higher employer pension contributions.From April 2024,they we

308、re provided with a further 1.1 billion to cover another increase in employer pension contributions.We often present figures with and without this extra funding for comparisons over time as the funding was directly intended to compensate schools for higher costs.Combining all these factors,we calcula

309、te total school spending as nearly 70 billion in 202425,or nearly 73 billion if we include all recent employer pension contribution grants.This is higher than the core schools budget for England presented by the government,which was 61.6 billion in 202425(this covers school funding for pupils aged 5

310、16).This can be mostly explained by the fact that we include 3 billion in post-16 funding and over 4 billion in early years funding,as well as additional services provided by local authorities that are funded through the wider local government settlement.However,as we shall show directly below,our m

311、easure appears to show faster growth in total school spending per pupil in 202425 than the core schools budget on what should be an equivalent basis.In 200304(the earliest year for which we can produce this consistent set of figures),total school spending stood at about 6,500 per pupil in 202425 pri

312、ces.This rose by 23%in real terms up to 200910,reaching a high point of 8,000 per pupil.After 200910,spending per pupil fell by 9%in real terms to reach 7,300 in 201920,taking spending per pupil back to around the level last seen around 2006.Up to 200910,each of the components rose by similar amount

313、s.After 200910,the different components evolved very differently.Per-pupil funding provided to schools rose by around 4%Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 42 in real terms between 200910 and 201920.In contrast,local authority spending

314、on services fell by 57%over the same period.A large part of this contrasting pattern is mechanical,reflecting a transfer of funding and responsibilities from local authorities to both academies and maintained schools.There was also a big drop in sixth-form funding.As we show in Chapter 4,school sixt

315、h-form funding per pupil fell 28%over this period.Figure 3.1.Total school spending per pupil by component(202425 prices)Note and source:See Methods and data at https:/ifs.org.uk/education-spending/methods-and-data.No data are available for 202021,so these are imputed based on a constant real-terms g

316、rowth rate between 201920 and 202122.HM Treasury(2024).Since 201920,school spending per pupil has begun to grow again in real terms.Between 201920 and 202425,we estimate that spending per pupil grew by more than 11%in real terms.This results from an 8 billion increase in total school spending over t

317、hese five years,as well as the 1.1 billion extra in July 2024 to cover the costs of the 2024 teacher and support staff pay awards,over and above what schools could already have afforded.As shown in Figure 3.2,this already takes total school spending per pupil in 202425 back to the level of its most

318、recent high point in 200910.In the Autumn Budget 2024,the government announced a 2.3 billion increase in school spending for 202526.This amounts to a 1.6%real-terms increase in spending per pupil,and would take spending per pupil about 3%above its previous high point in 2010.01,0002,0003,0004,0005,0

319、006,0007,0008,0009,000200304200405200506200607200708200809200910201011201112201213201314201415201516201617201718201819201920202021202122202223202324202425Spending per pupil,202425 pricesSpending by schoolsSpending by local authoritiesSchool sixth-form fundingEmployer pension contributionsAnnual repo

320、rt on education spending in England:202425 The Institute for Fiscal Studies,January 2025 43 Figure 3.2.Growth in school spending per pupil and costs between 2019 and 202425 under various definitions Note and source:See Methods and data at https:/ifs.org.uk/education-spending/methods-and-data for cas

321、h-terms spending per pupil up to 202425.Cash-terms spending per pupil forecast for 202526 based on figures for the core schools budget(excluding pensions grants)published in the Autumn Budget 2024(see https:/www.gov.uk/government/publications/autumn-budget-2024)and national pupil projections(https:/

322、explore-education-statistics.service.gov.uk/find-statistics/national-pupil-projections).See also HM Treasury(2024).Figure 3.2 also shows the growth in school spending per pupil if spending per pupil exactly followed the growth in the national core schools budget(excluding pensions grants).Up to 2022

323、23,the two series are relatively close together.For 202425,we see a significant gap.Our measure of total school spending per pupil increases by 5%in real terms,or by 3 billion in 202425 prices.In contrast,the core schools budget increased by 1.5 billion(excluding pension grants)or about a 3%rise in

324、spending per pupil in real terms.As shown in Figure 3.3,this drives a large difference in growth in spending per pupil across the two measures between 201920 and 202425.We see 11.5%real-terms growth in our measure based on total planned school spending by local authorities(excluding the pensions gra

325、nts),which compares with 8.0%real-terms growth in the core schools budget in per pupil terms(also excluding pensions grants).These figures are naturally higher if we include the effect of the 2.6 billion in pension grants(combining grants that began in September 2019 and April 2024).Given that the c

326、ore schools budget only covers pupils aged 516,it is important to narrow planned spending by local authorities down to the same age group(which we can do for recent years,but not for earlier years).This reduces the real-terms growth in total planned spending on schools down to 10.9%,which is still 2

327、.9 percentage points higher than the 8%growth in the core schools budget per pupil.80859095100105200304200405200506200607200708200809200910201011201112201213201314201415201516201617201718201819201920202021202122202223202324202425202526Relative to real-terms level in 200910Total spending on schools(a

328、ges 319)Projecting from 2019 based on core schools budget(ages 516)Annual report on education spending in England:202425 The Institute for Fiscal Studies,January 2025 44 Figure 3.3.Growth in school spending and funding per pupil between 201920 and 202425 under various definitions Note and source:Tot

329、al spending per pupil reflects planned spending by local authorities on schools as defined in Figure 3.1 and further described at https:/ifs.org.uk/education-spending/methods-and-data.Early years spending excludes all funding for 3-and 4-year-olds as part of planned spending by local authorities(spe

330、nding on younger ages is already excluded).Sixth-form spending is defined in Figure 4.2.The core schools budget covers pupils aged 516 only,and figures are taken from the Autumn Statement 2022(https:/www.gov.uk/government/topical-events/autumn-statement-2022)and Autumn Budget 2024(https:/www.gov.uk/

331、government/publications/autumn-budget-2024).Planned spending and funding for high needs are taken from Sibieta and Snape(2024).Pupil numbers are taken from Department for Education,national pupil projections(https:/explore-education-statistics.service.gov.uk/find-statistics/national-pupil-projection

332、s)and figures provided by the Department for Education.See also HM Treasury(2024).In the final set of bars,we exclude high needs funding from central government and planned high needs spending by local authorities.This reduces the gap in growth rates slightly to 2.6 percentage points,reflecting the

333、faster growth in planned spending than in funding.However,this analysis also shows the importance of the growing cost of high needs provision in explaining trends in funding and spending.After accounting for growth in high needs funding,the growth in funding per pupil drops from 8.0%to 2.9%.Similarly,the growth in planned spending per pupil drops from 10.9%to 5.5%.As such,the growth in the cost of