London Councils has been analysing demand for school places for a number of years. This year’s (2024) research explores the significant fall in demand for school places, implications for school budgets and standards, and how partners can work together to tackle challenges. The analysis includes school-level data on budgets (for local authority maintained schools) for the first time. The report sets out recommendations for what local government and central government can do to support schools.
Analysis
London local authorities and schools are currently dealing with a significant fall in demand for school places, with implications for school budgets and standards. There are a number of localised factors which have led to families moving away from London, including the impact of: the Covid-19 pandemic, the increase in the cost of living, the UK’s exit from the European Union and the lack of affordable housing available in London. As more people choose not to raise a family in the capital, we have seen the birth rate in London continue to decrease.
Graph: Pupil Headcounts and projections
Primary school demand
Most London boroughs are expected to see a decline in reception pupil numbers from 2023-24 to 2027-28. Over this four year period there is a forecast drop in demand of 4.4% at reception on average across London – this masks some larger decreases, including seven boroughs in London that are forecasting a decrease in demand over 10%. There are a small number of areas of growth, particularly in two outer London boroughs. If the four areas of growth are excluded, the remaining boroughs are forecasting a 5.9% drop in demand for reception places. There are seven boroughs that are forecasting a decrease in demand over 10%. Inner London boroughs are expected to experience the drop in demand for reception places most intensely.
Secondary school demand
At secondary school level, forecast demand is also falling. The numbers of pupils in Year 7 across London are expected to see a decline from 2023/24 to 2027/28. There is a forecast drop in demand of 4.3% for Year 7 places on average across London. Again, the challenge of managing falling rolls is due to be felt more acutely in Inner London, with a forecast drop of 6.7% than in outer London at 3.4% although this masks some significant forecast decreases in outer London.
School budgets
The drop in the child population is creating challenges for schools, many of whom are already in deficit, and face further budgetary reductions due to fewer pupils on their school roll. Boroughs have raised that falling rolls play a key part in driving schools into deficit. London Councils’ analysis shows that in 2022-23 approximately a quarter of all local authority maintained schools in London are in deficit. The majority of London’s maintained schools are either in deficit or have less than 8% surplus budgets1. There is concern that many of the 40% maintained primary schools currently with less than 8% surplus budgets will fall into deficit without intervention.
Graph: Number of schools in deficit and surplus 2022-23
These deficits will contribute to the deficits in the Dedicated Schools Grant (DSG) which is currently £281m for 2023/24 collectively across all London boroughs. We project that this will rise to £370m by 2025-26. At present a statutory override prevents local authorities from having to cover any deficits in the Direct Schools Grant (DSG) and it is vital that this remains in place to protect wider local authority budgets.
London’s schools have been on a successful improvement journey, achieving the best Key Stage 2 and GCSE results in the country as well as having 95% of all schools rated good or outstanding by Ofsted. There is a risk that stretched budgets will lead to a drop in standards.
School closures
In some instances local authorities will have to take forward plans to close schools that have become financially unviable, and keeping these schools open will have a detrimental impact on the wider sustainability of other local schools. Local authorities recognise the disruption to a child’s education that a school closure can create, so they work very closely with affected families and other local schools mitigate the impact on children’s education.
Boroughs make decisions about where to close schools based on a range of key factors, including the popularity of schools, Ofsted ratings, travel routes, demand forecasts and budget deficits. They want to ensure that local areas have choice in the system and any school closure don’t disadvantage particular groups of children. However, these strategic decisions need to be made in agreement with partners and local authorities should be able to consider all local state schools, including academies, as part of a fair and transparent process. Currently academies do not have to be part of a local authorities’ school places strategy and local authorities have no statutory duties over academies in terms of places planning.
Protecting educational assets
With school closures on the increase, London Councils is concerned about the loss of educational assets for future generations. London’s birth rate has historically ebbed and flowed, and London is likely to become a more popular place to raise a family at some point in the future, leading to renewed demand for school places. To avoid the DfE from having to purchase land and build new schools in the future it is vital that we are able to keep current educational assets in use for educational purposes to enable flexibility going forward.
Commentary
Local authorities have a statutory responsibility to ensure that there are sufficient school places for every child in the local area and to support schools with falling rolls, to ensure that they can remain financially viable and educationally excellent, offering choice to families in the local area. However, there are a number of barriers to achieving this at present, particularly the lack of levers around engaging academies in local place planning arrangements. Given the current and forecast drops in demand for both reception and year 7 places, it is essential that local authorities, schools, Multi Academy Trusts, the Dioceses and the DfE work together to ensure that children in London are not being adversely affected by falling rolls.
London Councils will work with other regional partners to:
- Continue to support local authorities by identifying and sharing areas of good practice for example around managing school budgets effectively, reducing PANs and managing closures in the most effective way to minimise disruption to children
- Co-ordinate regional discussions with key partners including Dioceses, Regional Director for London at DfE and Ofsted to ensure that all partners are aware of latest developments and are working together to find solutions to support schools
We need central government to help ensure that all schools, including academies, need to work together as a local ecosystem of schools to manage the implications of falling rolls on school budgets and performance, and to minimise the impact on children’s long term outcomes.
We call on the DfE to:
- Ensure that academies are part of local school place planning arrangements and school organisation plans, and that they are considered for PAN reductions or school closure, as part of a transparent and fair process that provides choice to families and excellent local schools
- Provide a long term guarantee to keep the statutory override in the DSG in place
- Review the funding model for schools with falling rolls to protect London’s schools for the future
- Review arrangements to protect closed school buildings for educational purposes, working with local authorities and other education partners
- Work with local authorities and schools to promote more inclusion in schools and ensure that schools receive consistent and appropriate levels of funding to enable more children with SEND to access mainstream school places
- Enable neighbouring local authorities to have access to key data where appropriate
1 8% represents one month’s operating costs and is recognised by the DfE as the level many schools aim for as a minimum to protect cash flow, where possible. For example: Academy trust reserves - GOV.UK (www.gov.uk)