Estimates day: The spending of the Department for Education

The debate

On Tuesday 24 June 2025, there will be an Estimates Day Debate on the spending of the Department for Education (DfE). The topic for the debate was proposed by the Backbench Business Committee, on application from Helen Hayes MP, Chair of the Education Committee. Following the debate, the House will vote on whether to approve the Main Estimate for the Department of Education for 2025/26.

The Estimate Day-to-day spending (Resource DEL)

DfE proposes a Resource DEL (day-to-day spending) budget of £100,619.8 million for 2025/26, a £12,052.7 million (-10.7%) decrease from the Department’s budget for 2024/25 of £112,672.6 million.

The main driver of this decrease is a reduction of £17,948.8 million in budgeted Resource DEL for costs associated with the student loan book. This includes the RAB charge (the portion of student loans issued which is not expected to be repaid), and overall the student loan book is a highly variable area sensitive to wider economic factors. The budget for 2025/26 will be reviewed at the Supplementary Estimate to ensure appropriate budget cover for the remainder of the year.

Additional drivers of this decrease include:

• A decrease of £417.5 million largely driven by a transfer (and subsequent consolidation of) six children’s social care grants to the Ministry for Housing, Communities and Local Government (MHCLG). These grants have been consolidated into a new Children’s and Families Grant to be distributed as part of the local government finance settlement.
• A £119.7 million decrease to the budget for higher education arm's length bodies, mostly driven by a reduction in the budget for the Office for Students.
• A £38.8 million decrease in the budget for the Education and Skills Funding Agency (ESFA), reflecting the closure of the ESFA and its functions returned into the core department.

This has partially been offset by the following increases:

• A £5,465.5 million uplift to the core schools budget, high needs budget, and an increase in the early years budget as announced as part of the spending review 2025 Phase 1.
• An increase of £345.6 million to the budget for apprenticeships, driven by increased demand.
• An increase of £175.2 million to the further education budget.
• A £109.2 million increase relating to supporting activities, made up of a general increase in the administration budget and the absorption of budget for activities previously delivered by the ESFA.
• A £94.0 million increase to school funding, driven by budget uplifts in respect of supporting teachers, initial teacher training, and breakfast clubs funding, but offset by the transfer of the extended rights transport grant of £54.1 million into the MHCLG.

Investment spending (Capital DEL)

DfE proposes a Capital DEL (investment spending) budget of £6,777.7 million for 2025/26, a £1,060.6 million (+18.6%) increase from the Department’s budget for 2024/25 of £5,717.1 million. The main drivers of this increase include:

• £659.5 million uplift in funding across high needs allocations, basic needs allocations, and school condition allocations - just under half of this funding is allocated to improve the condition of the school estate.
• £585.0 million uplift in funding across the ‘other school funding (department)’ subheading, mainly driven by an increase in funding for the School Rebuilding Programme, as per the Autumn Budget 2024;and
• £31.1 million uplift largely driven by an increase in funding for children’s social care reform, totalling £90.0 million as announced at Spending Review 2025 Phase 1.

This is partially offset by:

• An £85.3 million reduction in the funding for the Office of Students, reflecting a feasible one-year delivery scenario in a one-year SR settlement year.
• A decrease of £78.7 million in the further education budget subheading as commitments relating to the Institutes of Technology programme, the Skills Injection Fund, and the FE capital transformation programme have now been delivered.
• A decrease of £56.8 million relating to a reduction in the sustainability budget at the start of the year (note however that sustainability funding for schools is expected to receive a budget transfer later in the year of £40.0 million from DESNZ as part of a pledge to put rooftop solar panels on 200 schools).

Demand-led spending (Annually Managed Expenditure)

DfE proposes a Resource AME (demand-led day-to-day spending) budget of £-4,037.5 million for 2025/26, a £5,085.4 million (-485.3%) decrease from the Department’s budget for 2024/25 of £1,047.9 million. The main driver of this decrease is an increase in budgeted income of £5,062.7 million relating to student loan assets. This in turn driven by an increase in RPI forecasts compared with 2024/25. This also reflects the standard practice of including headroom against the department’s forecast at the Supplementary Estimate (given the sensitivity of the valuation to macroeconomic changes).

DfE proposes a Capital AME (demand-led investment spending) budget of £29,751.0 million for 2025/26, a £3,684.7 million (-11.0%) decrease from the Department’s budget for 2024/25 of £33,435.6 million. The main driver of this decrease is an improved earnings outlook in respect of student loans, leading to a £3,589.5 million decrease in Capital AME. This effectively represents an increase in the repayments forecast. There has also been a £78.6 million decrease in costs associated with further education loans resulting in a net income position of £0.2 million. This is again driven by a more optimistic earnings outlook.

The budgets for Resource and Capital AME relating to student loans will be revised at the Supplementary Estimate in line with DfE’s usual practice and the annual revaluation of the student loan book.

Policy background relevant to DfE Estimate

The full debate pack, available to download as a PDF using the buttons above and below this summary, provides policy and funding background, and a selection of commentary, on:

• Early years and childcare
• Schools and high needs
• Further education
• Higher education