Over £70 million of school funding is being lost annually across Westmorland and Furness Council due to undersubscription.

The deficit comes against a background of declining pupil numbers in schools across the area.

A report prepared for the council’s audit committee on Friday, June 12, reads that, in the 2025/26 school year, 4,173 of 18,279 primary school places were empty – over a fifth of places, 22.8 per cent of them.

But director of children’s services, Milorad Vasic, who authored the report, says the empty places are forecast to increase to 5,596 by 2029/30 – almost a third of places, at 30.6 per cent.

The council says that this equates to a loss of funding of £33.5 million to primary schools each year, with each primary school place given around £6,000 in funding.

In secondary schools, of 17,286 available places, 5,182 were empty in 2025/26, with the surplus capacity predicted to rise to 5,252 – just over 30 per cent of places.

Each secondary school place gets around £7,000 in funding, equating to a loss of £36.7 million of funding yearly.

This comes as school balances are in deficit across Westmorland and Furness, with the council saying there is an overall deficit of £9.16m.

The report reads that only five local authorities in the country have overall deficits on their school balances, and that deficits ‘must be recovered within three years’.

Schools cite challenges in their budgets including falling pupil numbers and a ‘high proportion’ of SEN pupils.

Other factors in deficit

But the author said that, while the fall in pupil numbers is a ‘key factor’ in the deficit, that there are other factors too.

The council also said in the report that it acknowledged there is ‘high anxiety’ amongst headteachers regarding school finances and deficits.

Another issue reads: “Prior to local government restructure there was a culture that when schools went into deficit, no action was taken and the school deficit balance policy was not fully adhered to.

“This meant that the school system was aware of large deficit balances against two schools which have been there for years with no action. This is highly unusual.”

But the author said that since restructure, the council has changed the relationship between it and schools, including improving communication systems and the ‘effectiveness’ of its statutory duties.

It added that a school deficit policy was implemented for the first time in 2024, having since been ‘reviewed and strengthened’.

The two schools with ‘exceptionally high deficits’ mentioned are said to have had them for a ‘number of years’.

The report reads: “One of these schools has a small sixth form and challenges with their building, the other has an exceptionally large sixth form but again challenges with their building.”

The author added that the size of schools contributes, with many being of a small capacity due to their rural location, resulting in reduced economies of scale – meaning it is harder to increase funding by increasing size.

Other issues considered included the fact that if a school which is in deficit is closed and children moved to other schools, though it will increase funding at those schools, the deficit would be transferred to the council.

 

By Zachary Harrison (Local Democracy Reporting Service)