We are delighted to be involved in the preparation of the latest Kreston UK Academies Benchmark Report.
The new 2025 Kreston UK Academies Benchmark Report surveyed 260 trusts representing almost 2,300 schools, revealing that the number of academy trusts reporting in-year financial deficits has tripled since 2021, from 19% to just shy of 60% based on the 31 August 2024 accounts.
Additionally from the survey, indications are that the removal of the Trust Capacity Fund, a financial aid to support academy trusts taking on more schools, will see more than half of trusts expect growth to slow for 2024/25.
Rachel Barrett, Head of Academies and Business Services Director at Duncan & Toplis, said:
“Academy trusts are under extreme pressure to provide the best service and results with limited resources, but we’re approaching a pinch point that could see some academies re-evaluate their options.”
These options could include joining a larger multi-academy trust (MAT) to work more collaboratively with other academies; a business-like decision that could benefit from professional input from an experienced accountant or adviser.
According to the report, larger MATs returned, on average, a surplus on their free reserves this year, while smaller MATs have just about balanced the books and single academy trusts (SATs) are reporting free reserve deficits. These figures could well encourage further movement into larger MATs in future years, just to preserve the future of some cash-strapped academies.
The overwhelming majority - 81% - of trusts said the cost of teaching and support staff is the biggest factor in this, citing the government funding model for teachers’ pay and its struggle to keep up with rising costs.
The constant uncertainty of the extent to which teacher’s pay rises are funded or unfunded is a headache for academy trusts to deal with, probably their largest concern as this is the biggest cost for any trust.
There are also inflationary pressures on the school academy sector. Per-pupil costs rose around 8% during 2023/24, representing a much higher inflation rate than the wider economy last year.
Figures shown in this report pinpoint the financial stress the education sector is under and highlight a potential crisis on the horizon.
Some 31% of academy trusts are now reporting less than 5% reserves as a percentage of income, which the Education and Skills Funding Agency (ESFA) considers a potentially vulnerable financial situation.
ESFA guidance suggests that trusts should aim to have at least 5% of income as a reserve, but also states that this figure is unlikely to deal with capital expenditure and infrastructure renewal.
With well over 40% of large and medium multi-academy trusts now pooling income or reserves together in some form, is this the new conservation plan for the education sector?
Find out about our support for academy schools.
To download the full Kreston UK Academies Benchmark Report, click here.
