FEATURE FOCUS: FINANCE
Money matters: the importance of effective budget management
In the wake of the government’s 2025-26 Budget announcement, Managing Editor for Education Today, CHARLOTTE WESTWOOD, explores why it is so crucial for schools to manage their budgets effectively in a challenging economic climate
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n the context of UK education, effective budget management is not just a matter of fiscal responsibility; it is crucial for the overall success and sustainability of schools. The pressure is on for schools to do more with less, dealing with rising operational costs and the growing demand for high-quality education.
The government recently unveiled its Budget for 2025-26, announcing that funding for schools will be increased by £2.3 billion next year. £1 billion of that funding is for high needs, responding to the requirements of the sector. The government is continuing to develop plans to transform England’s Special Education Needs and Disabilities (SEND) system and improve outcomes for young people.
The remaining increase to the schools budget will continue to fully fund this summer’s 5.5% pay award for teachers, and help cover pay awards in 2025-26.
The government has also committed an additional £1.4 billion to make sure the School Rebuilding Programme can continue, which means 100 rebuilding projects starting next year and keeps us on track to rebuild 518 schools in total. A further £2.1 billion is being allocated to maintain and improve school buildings, which is an increase of £300 million compared to last year.
This is clearly positive news for the UK education sector, where state- funded schools receive funding through two main funding pots - revenue funding and capital funding.
Schools can decide how they spend their revenue funding. It is used to pay for the day-to-day running costs of a school, such as teacher pay, support staff pay, energy bills, minor maintenance, and teaching materials. Capital funding is a separate pot of money used to pay for new school buildings and improvements to the school estate.
Spending from these two funding pots covers most major costs for 36
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UK state schools, so budget increases across both areas will naturally be welcomed. But in a climate of inflation and rising costs, it goes without saying that effective budget management remains as essential as ever if schools are to reap the benefits. With this in mind, schools must adopt robust budgeting practices that allow them to allocate resources wisely and ensure financial stability.
Why does budget management matter?
A robust budget planning process ensures schools and academies do not spend more than they have coming in. But effective budget management is far more than financially beneficial - it brings reputational and educational benefits as well. For instance, schools that have a handle on their budgets can focus on wider objectives around teaching, attainment and student wellbeing. Moreover, a well-managed budget affords peace of mind to all stakeholders: pupils, parents, teachers, leadership, governors, the local authority, Ofsted and the DfE.
One major challenge faced by schools is resource allocation. With so much to take into consideration, from staff pay and training through to teaching materials, maintenance and much more, effective budget management is the best way for schools to ensure they are allocating resources according to their needs. With a strategic budget planning process in place - one which makes effective use of financial data to inform decisions - school leaders can identify which areas require more funding and which can afford to be scaled back. It goes without saying that a strategic approach will take the longer-term into consideration, too; it pays for schools to think ahead, aligning their budget with their strategic long-term goals. For instance, perhaps a school might want to overhaul certain facilities, or allow for more extracurricular clubs. Having the financial foresight to plan for the long-term is crucial - and it also means schools are in a better position to plan for any unexpected
November 2024
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