The Department for Education has announced this week that national funding for 16- and 17-year-old learners will rise from £5,105 to £5,133 in the academic year 2026-27 – an increase of just 0.5%.
The DfE’s confirmation marks the lowest increase since funding rates were frozen in 2021-22.
This “real-terms funding erosion places additional pressure on recruitment and retention” and has created “a growing sense of dislocation” across the post-16 education sector, says Dr Nichole Munro, CEO of Atomix Educational Trust, which includes Stockton Sixth Form College and Prior Pursglove College in Guisborough.
“While the figure may appear, on the surface, to represent continued investment, the reality within colleges and sixth form settings is far more complex,” says Dr Munro.
“For many providers, this settlement is not simply lower than expected, it is fundamentally out of sync with financial planning assumptions that underpin responsible budget setting.”
Dr Munro said that education providers have built plans in good faith on established funding trajectories, workforce expectations, and policy directions. Institutions had “reasonably anticipated” a 2% uplift.
“The shift to 0.5% has therefore not only reduced real-terms funding but has disrupted the basis on which financial planning decisions were made,” she said.
“This creates significant challenge – budget setting processes that are designed to be forward looking, are now being forced into reactive calibration. In practice, this means revisiting staffing models, renewing curriculum plans and reconsidering previously board approved growth strategies, often part way through the academic and financial year.”
Dr Munro added that for some educational organisations, this has already resulted in “substantial” funding gaps.
“These gaps are not theoretical, they are material, immediate and operational,” she said.
“They translate into the use of reserves, delayed investment decisions and increasing constraints on the ability to respond to student demand. Where growth had been planned, particularly in areas of high needs or rising student populations, providers are now having to pause or scale back activity.
“This creates a wider systemic tension. On one hand, policy continues to emphasise the importance of skills, progression and expanding access to post 16 education. On the other, the financial framework within which providers operate is increasingly restrictive. The result is a growing mismatch between expectation and capacity: ambition at policy level is not always matched by the resources required to deliver it on the ground.
“The implications of this are particularly acute in relation to staffing and curriculum breadth. Colleges are already operating in a highly competitive labour market for teachers and support staff. Real-terms funding erosion places additional pressure on recruitment and retention. And risks narrowing the range of subjects and pathways that can be viably offered. Over time, this can reduce choice for learners and limit progression opportunities, particularly in technical and vocational routes.”
She calls for an “honest dialogue” about the relationship between funding levels, policy ambition, and delivery expectations.
“Providers are ready to engage in that conversation, but it must be grounded in the reality of what is happening in institutions today, not just in high-level policy aspirations,” she added.
“The challenge now, is in ensuring that the system remains not only ambitious but also sustainable.” For Dr Munro’s full article, visit www.atomix.ac.uk/news