School funding in Wales involves a multi-layered system of grants and formula allocations involving the Westminster Government, the Welsh Government, local education authorities and schools.

However, not all of the money earmarked for the maintained education system goes to schools. A substantial sum of money is creamed off for the ‘middle tier’.

Where does the money come from and where does it go?

The bulk of the taxation raised from the people of Wales goes to the Westminster Government.

Therefore, it follows that the bulk of the formula-allocated money for public services in Wales comes from the Westminster Government.

This is calculated using what is known as the Barnett Formula.

How much money it is depends upon how much money the Westminster Government decides to spend on education.

The Barnett Formula was introduced as a temporary fix in 1978 but is still being used.

The formula is calculated on a population and comparability-based method. It is therefore logical to think that proportionally schools in Wales get the same as England, but this is not the case.

Once Wales receives the ‘Barnett consequential’ as it is known, it becomes part of the block grant.

This money is not ring-fenced and therefore the Welsh Government can spend it as they like. For example, in the 2025 Autumn budget the Westminster Government boosted education funding in England.

The Barnett consequential to Wales was £339 million, but only £39 million found its way into core school budgets in Wales.

The Welsh Government sets the overall education budget and allocates this money to local authorities via the local government settlement.

The Welsh Government also holds money back to fund its own priorities. Therefore, there are separate funding streams such as the Pupil Development Grant and grants for Additional Learning Needs transformation and school improvement.

There are no academies or free schools in Wales, so local authorities have a bigger role to play in education in Wales than they do in England.

Once they receive the core funding from the Welsh Government, they are free to decide how this money is distributed based on their own local funding formula.

Every local authority will have a schools forum (sometimes known as a budget forum) that will agree the formula and police it.

The money is not just transported to schools. A significant sum is kept back for such things as school transport, ALN support and school improvement.

There is a significant variation across Wales as to how much money local authorities translate to schools.

In 2025, the most generous LA was Blaenau Gwent, which paid £6852/pupil with Monmouthshire the least generous, with £5781/pupil.

Challenges and pressures

Staff pay is inevitably the biggest part of education spending and schools are therefore sensitive to pay uplifts if they are not fully funded.

This is why NASUWT will campaign robustly for pay uplifts to be fully funded.

However, teachers’ pay in real terms in Wales has dropped by about 20% since 2010 so the education budget has benefited significantly through austerity.

Schools in Wales now face teacher shortages in significant areas and crisis is only being averted by demographic changes.

Therefore, schools in Wales are making redundancies at the same time as there are certain staff shortages.

This leads to poorer conditions for teachers in Wales who face an increase in class sizes which increases stress and workload and also an increase in non-specialist teaching in the secondary sector.

Money and the ‘middle tier’

The ‘middle tier’ is the collection of bodies that work with schools to deliver the Welsh Government's national education priorities.

As well as central support staff in local authorities, it includes such bodies as the Education Workforce Council, Qualifications Wales and Estyn, the Inspectorate.

A conservative estimate puts the ‘middle tier’ as costing Wales about £500 million per year. Local authorities also keep back money for central services, but this ranges across the LAs from £600 to £1,500 per pupil.

NASUWT is concerned about the purpose and value for money of some of the ‘middle tier’ and the Welsh Government has, in the past few years, looked more critically at this spending.

Reserves

A significant amount of money is held in school reserves in Wales. The latest figure is about £66 million. This is concerning because it undermines campaigning for the very real need to increase school funding in Wales.

It is important to note that there has been a significant drop in secondary sector reserves and the reserves are not consistent between schools.

Local Management of School (LMS) has made it difficult for local authorities to use this money for the benefit of all learners.

This is a significant failing of funding and, indeed, governance of the education service in Wales.

NASUWT Cymru has been calling for the dismantling of LMS for a number of years.

Transparency and reform priorities

In 2020, the Sibieta Report focused on school funding and called for:

• more consistent LA formulae;

• a need for better data on costs; and

• spending patterns and clarity in decision-making processes.

The Welsh Government accepted the report but, apart from the weakening of the ‘middle tier’, there have been few discernible changes.

The role of NASUWT

NASUWT lobbies at all levels to ensure as much funding as possible goes into education.

In Wales, NASUWT has a seat on the Pay Partnership Forum and the Schools Social Partnership Group.

At local authority level, NASUWT activists sit on Joint Negotiating Committees and Schools Forums.

At school level, NASUWT successfully lobbied for the Welsh Government to push for ‘Engagement Committees’ in schools to ensure better allocation of funds.

NASUWT will continue to campaign for fully funded pay uplifts and appropriate funding for schools in Wales to ensure a world-class education service.