Financial Position 2025 - 2026

Dear Chair and Principal

I am writing to bring a matter of significant importance to your attention, and to request the assistance of all our school-based leaders across the education sector.

As you will be aware, the sector continues to face very significant budgetary pressures for the financial year 2025-26, and while I acknowledge the continued efforts of all school leaders to manage budgets in these circumstances, the scale of the challenge requires that we all continue to work together and share responsibility in navigating a way through the current financial challenges. We are living as a sector with the consequences of years of increasingly unmanageable funding shortfalls. The warnings about this year's budget that were made publicly by the Department and others are sadly being borne out by events.

At this juncture, EA is currently reporting a funding gap of c£300m and, unlike the position in previous years, we have been advised that no further significant funding allocations are likely to be made available to address this shortfall. We are therefore currently on a trajectory towards a significant overspend at year end. While EA and DE continue to work together in seeking to identify a range of potential strategic measures to reduce costs for the future, at an operational level the sector must demonstrate a rigorous and extensive approach to financial control that aligns with the extent of financial risk we are facing this year.

In that context, it is critical that school leaders seek to take any and all actions possible to reduce expenditure. This should include, among other issues, not proceeding with discretionary spend, minimise, as far as possible, entering into new financial commitments related to appointments, and restricting the use of substitute cover. EA will continue to make similar difficult decisions in relation to our operations.

Whilst I fully respect the autonomy Boards of Governors have been conferred under the Local Management of Schools arrangements, we cannot ignore the reality that all schools’ expenditure impacts on the overall education sector financial position. Specifically, the use by schools of any accumulated surpluses is unfunded, and would be an additional pressure on the EA budget.

Therefore, I am asking you to ensure that a rigorous approach is taken to all spending decisions within your schools, and to take all reasonable steps to contain expenditure where possible. Approval to incur expenditure should only be given to the highest priority and inescapable requests.

I regret having to make this request but, given the scale of the financial pressures this year, I trust you understand that we must all play our part.
Yours sincerely

Richard Pengelly CB
Chief Executive