Reeves may have to cut school funding due to declining birth rate

The Institute for Fiscal Studies (IFS) has warned that a steep decline in school-age children over the next decade could provide an opportunity for the Chancellor to reduce education spending. The number of children in the UK is projected to fall by roughly 800,000, around 7%, between 2025 and 2035 due to declining birth rates, leaving classrooms increasingly underfilled.

Birth rates have dropped from 1.94 children per woman in 2010 to just 1.41 last year, the lowest since records began in the 1930s. For population stability without migration, the replacement rate is 2.1 children per woman.

The IFS suggested that this demographic shift might allow the government to make budgetary savings while managing rising costs from an ageing population. Potential measures include school closures, fewer teachers, or smaller class numbers.

Earlier this year, the government announced a 1% annual real-term increase in per-pupil school funding. Analysts note that freezing per-pupil spending until 2028-29 could have saved approximately 2 billion.

Luke Sibieta, IFS research fellow, explained, Reducing teacher numbers and schools can generate public savings. With fewer children, maintaining the current number of schools may not be necessary.

However, such moves would likely draw criticism from education unions. Daniel Kebede, general secretary of the National Education Union, argued, Smaller class sizes are the right response to declining pupil numbers and would benefit students. Many classes still exceed 31 pupils, above the OECD average. The government should use this chance to reduce class sizes.

The IFS also noted that an alternative to cutting budgets would be to increase per-pupil funding. Sibieta added that the falling birth rate will have significant implications for education. Between 2016 and 2025, primary school enrollment fell by 3% in Scotland, 4% in Wales, 1% in England, and 9% in London, though this has not led to widespread school closures.

In London, overall primary school numbers decreased only 2% over the same period, with reductions primarily achieved by lowering teacher numbers and class counts. In contrast, other regions saw more closures: Wales lost 7% of primary schools, Scotland 3%, and Northern Ireland 6%.

Sibieta emphasized, Policymakers must decide whether the decline in children is long-term, requiring fewer schools and teachers, or temporary, which would argue against rapid cutbacks.

Funding pressures are also increasing due to responsibilities for special educational needs and disabilities (SEND). The Office for Budget Responsibility recently reported a 6 billion shortfall in central SEND funding, with sources for covering this gap not yet identified. The NEU has warned of strikes if core school budgets are used to fill this shortfall. Labour plans to overhaul the SEND system, with a white paper expected next year.

Commentary: The Financial Implications of Declining School-Age Populations

The recent warning from the Institute for Fiscal Studies (IFS) about the expected drop in school-age children in the UK over the next decade highlights a complex dilemma for policymakers. With the number of children projected to fall by 800,000, or 7%, by 2035, the government faces a potential opportunity to reduce education spending. While this demographic shift may seem like an obvious solution for cost savings, it raises several important questions about the long-term effects on the education system.

The IFS suggests that fewer children in schools could allow for a reduction in the number of teachers, school closures, or a decrease in class sizes. While such measures might bring immediate financial relief, they could be seen as undermining the quality of education, especially in an environment where teacher shortages and overcrowded classrooms are already persistent issues. Education unions, particularly the National Education Union (NEU), argue that smaller class sizes would be the right solution to the declining pupil numbers. Their call for using this opportunity to improve educational outcomes rather than cut spending seems to have merit, especially given the UK's current class size statistics, which are already above the OECD average.

At the same time, the IFS acknowledges that policymakers must consider whether this decline is temporary or permanent. The economic burden of an ageing population is likely to continue increasing, and while declining birth rates could reduce the need for schools in the short term, this trend may not be a permanent fix for the rising costs of social services. In this context, freezing per-pupil funding, as suggested by the government earlier this year, might be a quick way to save money, but it could also exacerbate existing funding gaps in the education system.

One of the most pressing issues facing the education system is the funding shortfall in special educational needs and disabilities (SEND). The £6 billion gap reported by the Office for Budget Responsibility, if not addressed, could further strain budgets. The government's plan to overhaul the SEND system may offer a more sustainable solution, but whether this will be enough to balance financial pressures while maintaining educational standards remains to be seen.

In conclusion, while the demographic shift in school-age children offers a potential avenue for cost savings, it is critical that the government takes a cautious approach. Reducing school funding or closing schools may alleviate immediate financial pressures but risks long-term damage to the quality of education. A balanced approach, which prioritizes both fiscal responsibility and educational integrity, is essential in navigating this transition.

Sources:

• Reeves ‘could raid school budget’ as birth rate collapses

Author: Grace Ellison
Grace Ellison is a journalist focusing on environmental issues and sustainability. She has experience publishing international reports and participating in documentary projects.