Balancing budgets, meeting learner needs, responding to policy shifts and investing in the future - all at the same time - has become the defining challenge for education leaders.

The financial landscape in education is not just complex; it is constantly moving, shaped by uncertain funding streams, rising costs and competing priorities that rarely align neatly. This is particularly hard to navigate because decisions made today must satisfy immediate operational pressures while also safeguarding long-term sustainability and impact.

In this environment, focusing only on what is directly ahead is not enough. To navigate well, education leaders must keep one eye firmly on the horizon, anticipating change, scanning for risk and opportunity and ensuring that short-term financial choices do not quietly undermine the future they are meant to support.

When thinking about the year ahead, it’s worth bearing in mind that there is massive variation in individual school contexts as well as high-level differences between the structures that exist in our current system.

For example, as we head into 2026, local authority-maintained schools will be working towards their financial year end (31 March) and considering how the position they finish the year in will affect next year’s budget plan. Meanwhile, trusts will be midway through the budget year, reviewing income and expenditure profiles to benchmark the mid-year projections against actuals.

But what are the things we all need to keep an eye out for?

Bills and White Papers

The Employment Rights Bill received royal assent on 18 December, and the required legislative changes will be phased in over time.

Those that will affect education include the establishment of the School Support Staff Negotiating Body, and changes to “day-one rights” for employees (which apply from the first day in a job), such as the right to request flexible working and parental leave.

The Children’s Wellbeing and Schools Bill is also expected to gain royal assent in the first half of next year.

The provisions within this bill represent a multifaceted overhaul of both the children’s services and education sectors. One big-ticket item is primary breakfast clubs, which need to be resourced effectively to succeed in their very laudable aim of ensuring that every primary-age child starts the day ready to learn with a full tummy.

Meanwhile, the schools White Paper has been delayed, but for good reason. A significant chunk will set out desperately needed reforms to the system for funding and delivering special educational needs and disabilities in mainstream schools. We absolutely must get this right for the children and families who need it.

When the new system comes into play, schools face a challenging transition. Leaders will need to build confidence in the reforms and find the financial resource to actualise them.

Building financial resilience

Pay awards and staffing costs make up the biggest part of any planned spending in schools, and yet it’s always been hard to pin down sensible assumptions to use in planning.

In her letter to the School Teachers’ Review Body, education secretary Bridget Phillipson asked for recommendations for a multi-year award. This would be helpful. However, we will have to wait until February for those recommendations. Governing bodies and trust boards will need something to work towards until then.

So, in the meantime, what do we know for sure? The Department for Education has suggested a pay award of 6.5 per cent across three years, while the Office for Budget Responsibility is projecting that average earning will grow by around 7.5 per cent over the same period.

The elephant in this room is that the funding settlement at individual school level may not be enough to cover finalised pay awards for both teaching and support staff. What happens then?

The Autumn Budget made it clear that there is no additional funding coming from the Treasury. The DfE has also been clear that it expects schools to continue to drive better value and contribute to the costs associated with staff pay.

In an effort to support this, the DfE recently published ”Maximising value for pupils”, a collection of tools that schools may find helpful. That said, leaders are regularly telling us at the Association of School and College Leaders that it has become incredibly difficult to find savings that don’t have a negative impact on pupil learning, whether that is a reduction in provision of additional academic support or limiting school-funded trips.

It’s not all bad news

Among all this, we must remember that big changes are on the horizon that could make a real difference for families and young people.

From April 2026, the two-child benefit cap will be lifted, giving around 560,000 families a financial boost.

Then, in September 2026, free school meals will be extended to every child in a household on universal credit, supporting over half a million pupils and saving families money.

I’m also looking forward to finding out more about the opportunities for students to learn and work locally, as metro mayoral combined authorities in some parts of the country work together, tackling inequality and giving young people the best shot at success in school and beyond.

Historically, we have been quick to call out where government departments don’t appear to be working together, so this is one to watch with interest.

Julia Harnden is deputy director, policy at the Association of School and College Leaders

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