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Report reveals the impact of COVID-19 on school finances

| Duncan & Toplis | 28 January 2021

A report that we have co-authored has revealed the impact that COVID-19 has had on school finances.

The Kreston Academies Benchmark Report is an annual publication which assesses the finances of almost 1,400 academy schools in 300 academy trusts. This represents 15% of all academy schools in the UK.

After the 2018/19 academic year saw academies turn a budget surplus for the first time in four years, this year’s report shows growth in the sector slowed from 10.8% to 7.8% due to the COVID-19 pandemic.

While schools did see a significant reduction in costs for staffing, maintenance and utilities resulting from fewer pupils being in school during lockdown, much of this money was invested in technology and other resources to enhance the sector’s remote learning capability for the current academic year.

Other key figures from the report include:

  • 70% of academy trusts saved money on the cost of supply workers
  • 85% planned to continue investing in IT in future, partly to support distance learning
  • The number of trusts in cumulative deficit has fallen from 8% to 5% over the last year
  • Nearly 60% of trusts submitted claims for additional funding for pandemic related costs in the 2019/20 academic year
  • Larger multi-academy trusts (MATs) with eight or more schools were more likely to have at least one school in an individual deficit position (67%), compared to trusts with four or fewer schools (29%)

Unlike other state-funded schools, the finances of academy schools is often not included in government figures. As a result, the Kreston Academies Benchmark report gives a valuable insight into the finances of academies, which constitute 35% of all UK state-funded schools.

Pam Tuckett, chair of Kreston International’s academies group said:

“On the face of it, the report suggests the financial picture for the sector is relatively strong as school closures have cut many of the costs traditionally associated with running a school, such as staffing, heating and lighting classrooms that would typically be full of pupils.

“However, this masks the budgetary pressures relating to the increased cost of deep cleaning and the heavy investment that is being made in technology to limit the impact of disruptions to pupils’ education. The findings show that the impact of the pandemic will be felt for many years to come.”

Rachel Barrett, who leads the academies team at Duncan & Toplis said:

“This report gives us our first detailed insight into the impact that the pandemic has had on academies across the country. While many schools have succeeded in maintaining a budget surplus for the 2019/20 academic year, it remains to be seen what the situation will be for schools in the current year when they’ve had to face many more challenges. A risk based robust internal scrutiny programme going forward will mitigate some of the risks associated with these challenges alongside making sure the governing body has the correct skills to understand, scrutinise and challenge performance.

“While schools were closed to most pupils between March and June last year, this year, they’ve largely remained open while having to maintain Covid-secure conditions and providing in-person teaching and remote learning, often simultaneously. Now that schools are closed again, except to the children of key workers and those who are vulnerable, they might make similar savings to the ones we see in this report, but that may not be enough to counter the significant costs they’re likely to have incurred.”

Leora Cruddas, chief executive of the Confederation of School Trusts, said:

“The Academies Benchmark report is a very important resource for our sector. Although the financial picture is reported to be relatively strong, the impact of COVID‐related costs cannot be assessed in a single financial year. The education, social and economic impacts of the pandemic will affect children and families for some time yet. This will undoubtedly impact on school and trust budgets.”

Overall, the findings paint a positive financial picture for the sector, with results across all MATs moving from a £196K surplus in 2018/19 to a £221K surplus in 2019/20. 

Over the same period, primary school results have shifted from a £12K surplus to a £25K surplus. The most significant increase was seen in secondary schools, where the average in‐year surplus increased by around £130K, to £147K, due to additional savings generated by secondary schools generally being closed for the longest periods during the pandemic.

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