Financial pressure is nothing new for the education sector. For academy trusts, which are responsible for managing their own finances, this challenge is particularly pronounced.
However, the latest Kreston Academies Benchmark Report 2026 offers a more encouraging picture. At headline level, academy trusts have delivered their strongest financial performance in three years, with surpluses returning to levels last seen in 2022.
Despite this improvement, confidence across the sector remains fragile. While many trusts have outperformed budgets, the report highlights a more cautious outlook when it comes to growth, reserves and ongoing financial sustainability.
So what is really happening beneath the surface, and how can trusts respond?
The report reinforces the importance of scale. Larger multi-academy trusts continue to outperform smaller organisations, with average surpluses of £0.4m for medium trusts and £1.1m for larger groups.
However, this stronger financial position has not translated into increased confidence. Growth ambitions have slowed considerably, with only 36% of trusts expecting to expand in the next 12 months, compared to 61% the previous year.
This shift reflects a more cautious mindset. While the benefits of scale are clear, uncertainty around future funding and rising costs is leading many trusts to pause expansion plans. Even those in a stronger financial position appear to be prioritising stability over growth.
Although 2025 represented a positive financial year, the outlook for reserves is less encouraging. Many trusts expect reserves to fall over the next two years, despite improved short-term performance.
This is a critical issue. Reserves underpin financial resilience and play an important role in supporting both day-to-day operations and long-term planning.
Guidance makes clear there is no fixed level of reserves that trusts must hold. Instead, trustees are expected to set a level that reflects their individual circumstances and risk profile. In practice, many trusts aim to hold reserves equivalent to around one month of expenditure to maintain sufficient flexibility.
Where reserves are under pressure, careful prioritisation is essential. Estate maintenance is often a significant cost, particularly for trusts without access to School Condition Allocation funding. In these cases, focusing on urgent and essential works can help protect both safety and functionality, while allowing more strategic planning for future investment.
Alongside reserves, the ongoing funding gap for special educational needs and disabilities remains a major challenge.
Demand for SEND support continues to increase, placing sustained pressure on trust budgets. At the same time, the system is undergoing significant reform. The government’s 2026 Schools White Paper sets out a major programme of change, backed by substantial investment to improve support for children with additional needs.
This includes new funding streams and reforms designed to strengthen mainstream provision, alongside increased access to specialist support. The direction of travel is clear, with a stronger emphasis on inclusion and earlier intervention.
For academy trusts, this creates both opportunity and complexity. Leaders must carefully assess how new funding allocations will impact their budgets and ensure they have the right resources in place to meet future requirements.
Workforce costs continue to represent the largest area of expenditure for most academy trusts. Rising salaries and changes to payroll-related costs are adding further strain to already stretched budgets.
Investment in people remains essential to delivering strong educational outcomes. However, it also requires disciplined financial planning.
Trusts should be reviewing their cost base regularly and exploring opportunities to improve efficiency. This may include benchmarking supplier costs, reassessing service contracts and identifying areas where savings can be achieved without compromising quality.
Workforce planning also plays a key role. Succession planning, cross-skilling and reviewing recruitment decisions can help trusts maintain operational resilience while managing costs more effectively over the longer term.
The latest benchmark results provide welcome evidence of improved financial performance across the academy sector. However, they also highlight that these gains have been driven largely by cost control and short-term factors, rather than a fundamental shift in the underlying financial environment.
As a result, confidence remains cautious. Pressures around funding, reserves, SEND provision and workforce costs are all expected to continue.
For academy trusts, the focus must remain on strong governance, robust financial planning and a clear long-term strategy. While the headlines are positive, sustainable success will depend on how effectively trusts navigate the challenges that still lie ahead.
To find out more about Duncan & Toplis and how our team can help your academy trust, contact us here.
