NAO report warns of £1bn school funding gap as falling birthrate leaves places unfilled

A failure to account for England's falling birthrate is leading to a glut of school places and a potential £1bn fall in pupil funding over the next three years, according to a National Audit Office report. The government's spending watchdog said the Department for Education started to specifically track the risks around changing demographics only in 2024, long after primary enrolments began falling in 2018. "Despite primary school pupil numbers falling for several years, there is no clear approach to help the sector to decide when to respond," said the report. "DfE has not clearly communicated expectations to the sector and does not yet have a clearly defined approach for helping the sector understand the places it needs." With a further 7% fall in enrolments expected by 2030, the audit office said many local authorities and schools would struggle because funding was linked to pupil numbers, leading to difficult decisions over closures and mergers. The NAO report forecasts a £288m fall in pupil-based funding in 2027, followed by falls of £410m in 2028 and £334m in 2029, for a total loss of more than £1bn in three years. Sir Geoffrey Clifton-Brown, chair of the Commons public accounts committee, said: "It is deeply concerning that, despite pupil numbers declining since 2018, DfE has been slow to respond to the challenge and has not assessed the implications for education quality, particularly for the most disadvantaged pupils. "As pupil numbers are expected to continue to fall, DfE must make better use of its information and insights across the sector to support schools, clarify what a resilient and effective school estate looks like and ensure children's education is not compromised." The audit office said the DfE did not "systematically collate and check" on annual feedback from local authorities about unfilled school places, limiting its ability "to understand the extent of value-for-money risks" and when or where it needed to take action. However, the NAO said the DfE has begun to "identify opportunities to reuse space and cut costs" – including encouraging schools to create or expand nurseries – and had provided funding to help manage the impact of falling rolls. Paul Whiteman, general secretary of the National Association of Head Teachers, said he supported a coordinated effort by the DfE, local authorities and academy trusts to better manage school places. He added: "More could absolutely be done to balance these demands and ensure that primary school places are available in the areas they need to be – and to protect schools in areas with falling roles from closure. There is a real opportunity here for the government to use these population changes to deliver positive benefits, like smaller class sizes and its ambition of more Send inclusion." A DfE spokesperson said the government was taking action to shape the schools system as pupil numbers change. "Our estates strategy will introduce a new decision-making framework from autumn 2026 to help local leaders respond to changing demand, while the children's wellbeing and schools bill gives the schools adjudicator the power to specify a school's published admission number as a last resort where local agreement breaks down," the spokesperson said.