Schools have received “limited” government support to manage the risks of falling rolls to educational performance and value for money, the spending watchdog has warned. The National Audit Office estimated a forecast drop of 56,300 primary pupils in the system in 2027 “could mean that schools receive £288 million less in per-pupil funding”. Julia Harnden, deputy director of policy at the ASCL leaders’ union, warned there had been “no government strategy to mitigate that risk and there’s a real danger that more communities will lose schools which have been a feature of those communities for decades”. Geoffrey Clifton-Brown, the Conservative MP who chairs the Parliamentary public accounts committee, said: “It is deeply concerning that, despite pupil numbers declining since 2018, DfE has been slow to respond to the challenge and has not assessed the implications for education quality, particularly for the most disadvantaged pupils. “As pupil numbers are expected to continue to fall, DfE must make better use of its information and insights across the sector to support schools, clarify what a resilient and effective school estate looks like, and ensure children’s education is not compromised.” The Conservatives were in charge of schools policy until July 2024. 1. Numbers fall nationally, but rise in some areas The report noted that demand for primary places fell by 3 per cent between 2018 and 2025, and that last academic year, 14 per cent of primary places were unfilled, compared to 10 per cent in 2018-19. National projections predict a further 7 per cent fall in primary pupil numbers by 2030, while demand for secondary places will start falling consistently from this year. However, despite the national trend of falling numbers, 16 per cent of local authorities saw increases in primary school pupil numbers between 2018-19 and 2024-25. Sixty-six per cent of councils expect increases in certain areas. 2. Free schools may have created unnecessary capacity The report warned that “as part of DfE’s earlier response to increasing pupil numbers, the free schools programme may have created more school places than were needed”. “Between January 2010 and July 2025, 625 free schools opened, with 51 of these closing during this period. It is unclear whether a school closes because of, for example, unfilled spaces, financial viability or educational quality.” The report noted the government’s recent decision to cancel some free school projects. 3. £288m reduction could hit poorer pupils more With 90 per cent of school funding following pupil numbers, the NAO predicted schools could receive £288 million less in per-pupil funding in 2027, based on a decrease in primary pupil numbers of 56,300. The report warned the DfE “has not assessed the impact of falling pupil numbers on educational quality”. It noted that on average, lower-performing schools have a higher proportion of unfilled places. If those schools close, more children could be educated in higher-rated schools. But in the short-term, “these schools may experience financial challenges from falling pupil numbers which, if unmanaged, could affect educational quality”. “Certain groups could be disproportionately affected as, for example, disadvantaged children are more likely to attend a lower-performing school.” 4. No research on education quality impact The report warned that the DfE “recognises a correlation between school occupancy and educational quality but has not carried out any research or assessment of the possible impacts”. The department has “reflected on the inherent uncertainties with national pupil projections but has not fully considered how it could support the sector to respond to different scenarios”. “Although DfE has considered various scenarios, it has not fully considered how it could support the sector to respond to them and whether it needs to provide additional support to manage uncertainty.” The DfE “could make better use of the information it collects from local authorities to help identify good practice or target support”. 5. Poor use of data The NAO found the DfE’s data assurance processes “to be largely proportionate but with some weaknesses, including a lack of detailed sensitivity analysis”. The DfE “assumes the sector will respond to falling pupil numbers, given their responsibilities for school place planning, but does not currently use school capacity or other data sources to monitor how schools respond or understand the extent of value for money risks”. “This limits its opportunities to identify good practice and prioritise support across the sector,” the report warned. 6. ‘No clear approach’ to helping schools Despite primary school pupil numbers falling for several years, “there is no clear approach to help the sector to decide when to respond. DfE has focused on ensuring that local authorities meet their statutory duty to provide enough school places. “However, despite primary pupil numbers falling since 2018-19, it is unclear how this duty applies to unfilled places. DfE has not clearly communicated expectations to the sector and does not yet have a clearly defined approach for helping the sector understand the places it needs.” This is borne out in responses to the NAO’s survey. Sixty-six per cent of responding councils described “a lack of visibility over government policies impacting school places, such as housing and migration, as one of their main challenges”. “Almost a third were unhappy with DfE’s support and guidance on managing school places. It is unclear how DfE’s regional pupil-place planning advisers, who support the sector to provide enough places, cover unfilled places.” 7. ‘Use falling rolls to fund smaller classes’ Since 2019-20, the DfE has issued funding for some schools expecting temporary drops in pupil numbers, allocating £141,890 per eligible area within a local authority for 2025-26. But the falling rolls crisis has led to repeated calls for the government to maintain the overall level of school funding and increase per-pupil cash. Paul Whiteman, general secretary of the NAHT, which largely represents primary heads, said there was a “real opportunity here for the government to use these population changes to deliver positive benefits, like smaller class sizes and its ambition of more SEND inclusion in mainstream”. 8. ‘No timely action’ The report also noted the government had “also considered how its wider policies can help use available space”, for example through its school-based nursery programme. The DfE has also set out its ambition that more pupils with SEND will be educated in mainstream schools, “although how this may influence the number of places needed remains unclear”, the report said. The report concluded that the DfE’s “approach, support and funding for school places has focused on schools having enough spaces, in line with local authorities’ statutory duty. “However, it has not taken timely action to set out how it will support the sector to respond to falling pupil numbers.” 9. The NAO’s recommendations for the DfE Determine how many places may not be needed and how it can be resilient for future changes Make better use of information provided by local authorities by using their narrative comments describing how they plan to manage unfilled and additional places needed, reviewing data on unfilled places, and setting a framework for deciding where it should be providing more support Consider the potential wider impact that falling pupil numbers may have on educational quality and outcomes for children, including those from a disadvantaged background Build its evidence base for which approaches work most effectively, drawing on learning from across local authorities and previous experiences Establish clear processes and opportunities to identify and disseminate good practice across the sector Work across government to ensure any wider initiatives consider the impact on school places and, alongside encouraging local collaboration Work with the government to support the sector to make best use of spare space arising from falling pupil numbers