Autumn Budget 2024 – Implications for the education sector

Increased funding for schools

Next year, schools will receive a £2.3 billion boost, with £1 billion specifically allocated for high needs, addressing the growing demand in the sector. The sector has been struggling with an increase in demand for special educational needs and disability (SEND) for over a decade now, and so whilst an increase in funding is undoubtedly welcome, the wider reform plans promised by the government will be eagerly awaited. The additional funding will also help meet the 5.5% pay award for teachers, which had previously been announced. While these measures are positive, the sector continues to await more details on long-term plans for SEND provision.

Boost for early years education

The government has pledged an additional £1.8 billion to early years education, expanding the eligibility to children as young as nine months old. This funding is also aimed at creating 3,000 school-based nurseries, with an additional £15 million of funding. Whilst these measures are a step in the right direction, it comes at a time where nurseries are already oversubscribed and availability of places is coming under significant strain.

Private nurseries will also feel the impact of the rising National Insurance Contribution (NIC) and minimum wage increase, meaning they will have to make tough decisions around how they maintain the sustainability of their business in the years to come. There are also concerns about whether schools have the physical estate and capacity to meet the demand for new nurseries.

School infrastructure investment

The budget includes £1.4 billion for the School Rebuilding Programme, alongside an additional £2.1 billion for maintaining and improving school buildings. This is particularly important as many schools continue to struggle with aging infrastructure, and address the safety risks associated with reinforced autoclaved aerated concrete (RAAC) within their buildings.

Further education

Further education colleges will benefit from an additional £300 million to improve their facilities. Colleges will be awaiting the further details on how this will be distributed. The Budget also announced an additional £40 million fund to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy, which create new opportunities for colleges to provide foundation and shorter apprenticeships. The key to success in this area will be engaging businesses to ensure that the new courses represent the needs of employers.

Other tax changes affecting the education sector

The budget also introduced key tax measures that will impact the education sector:

• An increase to the rate of employer’s NIC from 1 April 2025: The rate will rise from 13.8% to 15%, with a reduction in the earnings per employee threshold at which employer’s NIC is payable. This will have a significant impact on universities who are not considered public sector entities and as such will not be exempt from this increase. This, at a time the sector is going through significant cost constraint, redundancy programmes and questions over its long term financial sustainability will add an unwelcome additional cost.
• VAT on private schools: From January 2025, VAT will be applied to private school fees. The government estimates that this will cause 35,000 students (roughly 0.5% of the overall school population) to move from private to state schools. Whilst this figure is small and will have a limited impact nationally, it is likely to have localised impacts, particularly where state schools are near capacity and underprepared for an influx of new students.

Looking ahead

Since the Budget, the government announced on the 4 November the first inflationary increase of 3.1% to the maximum tuition fee cap for undergraduate students, effective from the 2025-2026 academic year. This increase is part of a wider reform of higher education funding in 2025, which will include a reduction in the maximum tuition fee for Foundation Year courses. The Higher Education sector will be analysing the net gain or loss once this increase is taken in aggregate with the increase in NIC.

Read our full expert analysis of what was announced during the Autumn Budget on our dedicated page below.

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For more information on how the changes announced might affect your institution, contact us and a member of the Public and social sector team will be in touch.

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