Autumn Budget 2025: impact on school estate maintenance and upgrades

Background:

The Annual report on education spending in England: 2024–25 was published on 8 January 2025 by researchers at the Institute for Fiscal Studies (IFS). The report concluded that the 2.8% cash-terms growth in mainstream school funding per pupil in England in 2025-26 will not be sufficient to cover the expected increase in school costs, currently predicted to be around 3.6%.

As such there are fears that capital spending will be less than expected moving forward, leading to plans for improvements to the estate being pared back at a time when backlog maintenance and other costs are growing.

Funding Available and Autumn Budget Analysis:

For 2024-25, government plans still imply spending of about £6.1bn, matching previous plans. In the Autumn Budget 2024, the Government set out education capital spending plans of £6.5bn for 2025-26. From this amount, the Government has already committed to about £2.1bn for school maintenance (about equal to the average real-terms spending over the past decade). It has also committed £740m to help mainstream schools adapt infrastructure to expand core provision for SEND. This leaves about £3.8bn, which will need to cover school and college rebuilding projects, the costs of addressing RAAC, as well as any other capital plans.

A Department for Education spokesperson added: “Driving high and rising school standards is at the heart of our mission to improve children’s life chances, and high-quality and sustainable buildings are a key part of that. For too long our school estate has been neglected – but this government is now gripping the issue, ensuring our schools are fit for the future. That’s why, despite having to take difficult decisions at the Budget to fix the foundations, we are increasing investment next year to £2.1bn to improve the condition of school buildings and will be starting work on another 100 projects under the School Rebuilding Programme next year.”

The report reveals that the funding awarded to government departments and arm’s-length bodies by the Government for maintenance work has often been significantly lower than the amounts they estimated they need. For example, the DfE in its Spending Review 2020, recommended £5.3bn a year as the capital funding required to maintain schools and mitigate the most-serious risks of building failure,  once it had expanded its School Rebuilding Programme. Since it would take time to achieve this expansion, DfE requested an average of £4bn a year for 2021-2025. But HM Treasury allocated an average of £3.1bn a year.

Issues with Funding Available:

The report shows that total capital spending on education in England was about £6.3bn in 2023–24. About £1.8bn was devoted to school maintenance and repair, £900m was spent on free schools, and £900m was spent on rebuilding further education colleges, with about £2.7bn on new schools and other aspects of capital spending.

Interestingly, though, the actual level of capital spending seems to be about £900m less than previous plans from a year ago and this is likely to reflect the significant delays in the school rebuilding programme. Money for these delayed projects will either need to come out of allocations from 2024-5 onwards, or the plans will need to be scaled back, says the report.

The big question is whether spending is meeting current needs. The National Audit Office (in 2023) reported that the Department for Education calculated it needed about £5bn per year from 2021 to 2025 in order to maintain school buildings and mitigate the most serious risks. This was based on a survey of the condition of school buildings. It instead requested about £4bn per year based on the rate at which it could increase spending. HM Treasury allocated about £3bn per year. As a result, actual funding allocations from government have been more than 40% below government-assessed levels of need. For 2025–26, school maintenance spending is due to be about £2.1bn, which is about 13% higher than in 2024-25, but still about the same level in real terms as the average over the past decade. This strongly suggests that school maintenance spending remains well below government-assessed levels of need. In summary, spending on school buildings is relatively low in historical terms and low compared with levels of need for maintenance and repair.

Based on the analysis of the National Audit Office and Department for Education, there is a strong case for increasing spending on school buildings.

School Maintenance Issues

The National Audit Office (NAO) has released new figures which show the cost of addressing backlog maintenance in government-owned buildings stands at more than £49bn – with schools particularly affected by ongoing underinvestment: and this figure could be much greater as poor government data means the true cost cannot be confirmed.

The report claims the poor condition of the education estate is due to a number of factors:

·         Historic underinvestment

·         Cost increases and inflationary pressures

·         Many aged buildings which are reaching the end of their intended operational life at the same time

And it makes a number of recommendations for addressing the crisis, including a more-long-term approach to capital funding and improved data collection.

Having good-quality property that is properly maintained, utilised, and adaptable to future needs is fundamental to delivering public services. However, the condition of government property has declined over the last decade. The Government will need to consider the optimal way to manage its assets alongside its long-term investment plans, in addition to the cost of ongoing maintenance, to bring property condition to a satisfactory level.

What schools can to do help with issue:

In the Autumn Budget 2024, the Government chose to top-up capital spending allocations for future years, particularly 2025-26. However, total capital spending across departments is only expected to rise by 3% in real terms in 2026-27 and is due to be frozen in real terms in 2027-28. This suggests little scope for further significant increases in school maintenance spending over the next two-year spending review period.

Given wider pressures on public spending, it is important to make effective decisions on prioritisation. This involves deciding which works to carry out and which to forgo or postpone; whether to maintain existing properties, refurbish, or build new ones; and whether to divert funds allocated to maintenance to other areas of spending.

With a small drop in the pupil population anticipated over the next few years, there might be some scope to redirect funding from new schools towards repairs and maintenance but the short and medium term do not show any significant projected alleviation of concerns around the state and condition of school buildings.