The Department for Education will cap profits made by supply agencies through a new framework as part of a savings drive announced today.

Schools will be expected to use this framework, but the DfE has not set out how this will be enforced or operate in practice.

The government will also roll out a new digital tool to help schools benchmark interest rates on their reserves, although it has not provided any estimate for how much additional income schools could earn as a result.

The new measures form the first phase of the Maximising value for pupils programme, which ministers say will help schools reduce avoidable costs and reinvest savings.

Supply cost cap

A new Crown Commercial Service (CCS) framework will set caps on the mark-up that supply agencies can charge schools. The government said schools spent £1.4 billion on agency staff in 2023-24.

The caps will apply to agency overheads and supplier fees rather than teachers’ day rates, according to the DfE. It added that this will require transparent pricing for supply teacher agencies so schools, trusts and officials can see exactly what supply teachers are paid.

Tes understands that the caps will be set nationally rather than varying by region, although the rates will differ depending on the type of role, with separate caps for teachers and support staff.

The tender for the new CCS framework has already been launched, with the full framework due to go live in June 2026.

Officials said they had carried out pre-market engagement with major supply providers and multi-academy trusts that run their own supply arrangements, and believe the caps have been pitched at a level that will not lead agencies to withdraw from the sector.

The DfE also said it would expect schools and trusts to use the new framework unless they can demonstrate better value elsewhere, but the department could not clarify how this expectation would be applied or monitored.

Officials are working with the sector to decide how this requirement will operate across different supply models, but could not outline how it will be enforced.

Tool to make the most of reserves

The new programme will also help schools make better use of the combined £6 billion held in reserves across the sector, including through a new tool designed to show schools the interest rates available from different banking providers and products, the DfE said.

The tool will use real data provided directly by major Financial Conduct Authority-regulated banks offering school-appropriate products, and will show schools the top savings deals based on the amount and time period they enter, officials said.

Tes understands that the DfE previously modelled how much interest schools may be missing out on, but has not released figures, and officials said they could not confirm whether those estimates will be published.

More measures to be announced

The programme will also include the previously announced national energy deal, which the DfE said has already delivered average savings of 36 per cent for schools that took part in a pilot.

However, the department said it could not model national savings because deals depend on contract end dates and the level of take-up when the scheme expands.

The department is planning further initiatives to help schools save money, including through management information systems, learning resources and technology procurement.

Georgia Gould, minister for school standards, said: “This programme will lift some of the pressures that have built up on schools in recent years and build on major steps we have taken outside the classroom, like scrapping the two-child benefit cap.

“I know just how hard schools and trusts are already working to seize opportunities to maximise value from their budgets. We want to share that best practice and support them to go even further - with government action to tackle the national drivers of costs, alongside local action from schools and trusts, so every penny is invested in children to achieve and thrive.”

The DfE said it would begin supporting schools and trusts to use the new tools and services from early in the new year.

Improving recruitment and retention

Pepe Di’Iasio, general secretary of the Association of School and College Leaders, said that while the support was welcome, “schools already move heaven and earth to ‘maximise value for pupils’”.

He said the real problem is that many schools are having to make cuts because of not enough funding. He added that the government could solve the issue of supply agency costs by improving recruitment and retention rates so that schools are not so reliant on supply staff.

ASCL also warned that many schools have had to use spare cash in reserves to fund in-year deficits caused by funding shortages.

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