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Number of academies in deficit has doubled since 2021

| Rachel Barrett | 6 February 2024

A major report, co-authored by Duncan & Toplis, has found that the number of academy trusts spending more than they get in revenue has increased by almost 150% in the last three years.

The Kreston UK Academies Benchmark Report, which surveyed 279 trusts, representing 2,300 schools, shows that 47% are running at a deficit. This compares to 19% in 2021.

Energy costs are a significant factor behind this, with the average cost of heating and lighting having risen by 49% compared to the previous year. If it hadn't been for a series of unplanned government grants, every trust would have fallen into deficit.

Although staffing costs remained fairly controlled across the sector, non-staffing costs increased by 16% per pupil.

“A sense of impending financial doom”

Trusts have been extremely effective in controlling costs, but they simply don’t know what additional income streams they will receive from one year to the next. This makes it impossible for them to accurately budget and plan ahead.

Typically, trusts have to base their future income on current income streams, but this can mean that the reality is wildly off the mark. This leads to an unending sense of impending financial doom, with every decision being fraught with risk, so investments are often delayed due to the uncertainty.

During the 2022/23 school year, the average primary school received an extra £60,000 and the average secondary school gained over £200,000 through the Mainstream Schools Additional Grant (MSAG) and the Schools Supplementary Grant (SSG). Meanwhile, schools also benefited from £447 million of Energy Efficiency Grants. These lifted many schools out of deficit, giving them an unexpected reprieve.

Responding to the findings, Leora Cruddas CBE, Chief Executive of the Confederation of School Trusts (CST) is calling for fairer, more reliable funding for schools:

“CST wants to see a fair per-pupil settlement that is sufficient, sustainable, and equitable that includes weighting for disadvantage. As the Kreston UK Academies Benchmark Report says, we need a longer notice period for funding decisions to enable good strategic planning. It is essential that the next government addresses this.”

MATs are pooling resources and growing in size

Over many years, we’ve seen multi-academy trusts (MATs) deciding to pool either income or reserves so that they can deploy income and reserves to the areas of most need across the MAT, where they will improve educational outcomes.

Once again, this pooling has continued to grow, with 32% of MATs pooling compared to 23% in 2022.

During the 22/23 year, we’ve also seen 50% of the MATs growing in size, with most welcoming an additional two schools on average. However, there has been a reduction in the number of trusts that say they expect to grow, from 92% in 2021/23 to 73% the previous year.

Reacting to this, Leora Cruddas CBE, Chief Executive of the Confederation of School Trusts said:

“Growth is important but not as an end in itself. Growth must be seen in the context of building institutional strength and resilience in the pursuit of excellence. The slowing down of growth is therefore not immediately a matter of concern, but we do need to ensure that regulatory decisions are timely and do not get in the way of trust growth.”

Staff costs are a concern but other costs are rising faster

Staff costs as a percentage of total costs have reduced from 75% in 2021/22 to 72% in 2022/23 for a large MAT and from 74% to 71% in a primary single academy trust (SAT).

This is a significant reduction in what is a major cost for schools, but 93% of trusts said that staffing costs were their biggest concern.

This could be a result of teacher pay disputes which weren’t resolved until July 2023 and a lack of clarity on how pay rises would be funded.

Read the report in full

To download the full Kreston UK Academies Benchmark Report, click here.

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