Member Article

National academies report warns Covid recovery costs will eat into surpluses

A report into the funding of academies in England has revealed most have amassed surpluses during the last year which will help them recover from the effects of the pandemic. The 10th Kreston Academies Benchmark Report focuses on how academies have fared financially during the 2020/21 academic year. The headline finding is that the average in-year financial surplus for a multi-academy trust (MAT) doubled to more than £460,000 – up from £221,000 in 2020. Overall, this equates to a 94 percent uplift per academy – representing the sector’s highest ever surplus. Chris Beaumont, partner at Darlington-based accountancy firm Clive Owen LLP, which acts for more than 100 educational establishments in the North-east, is a co-author of the report, which paints a complex picture. Cash balances have been bolstered by the injection of government funding earmarked for Covid testing, education catch-up programmes and other Covid-related costs that schools have not yet had the time or capacity to spend due to pandemic. Also contributing to the uplift in reserves have been reduced costs caused by the cancellation of exams, and lower outgoings on utility, staffing and maintenance due to schools not being fully open during lockdown. Mr Beaumont said: “While, on paper, it looks like Academies are in a favourable financial position, the situation is much more complicated with balance sheets distorted because of the effects of the pandemic. “There are going to be considerable challenges ahead as schools recover from the toll Covid has taken on their management and operation.
“The rise in surpluses is largely due to expenditure being put on hold and it will need to be spent as schools play catch-up following the unprecedented difficulties of the last two years.” Other key facts highlighted by the report include: • Staffing costs, as a percentage of total costs, remained static for the 2021 academic year, with the average across all schools only moving up by 0.1 percent to 75 percent. The average for secondary schools continued to edge up, as it has done for the last eight years. • Multi-Academy Trusts (MATS) have continued to grow in the last year with the average size increasing from 6.8 schools last year to 7.5. Nearly 65 percent said they expected to grow in 2022/23, with 57 percent forecasting up to three additional schools joining their group. • Sixty-one percent of Trusts predicted their reserves would be lower in three years’ time with just 14 percent confident they would remain the same. • Ninety-seven percent of Trusts now are partly or fully centralised, where tasks such as finance, HR, estates, and school improvement are managed by the Trust rather than individual schools. Dame Maura Regan, chief executive of the Bishop Hogarth Catholic Education Trust, said: “The Academies Benchmark Report shows that the sector is generally in robust financial health, which it will need to face the considerable challenges ahead. “Trust leaders continue to respond to immediate pandemic-related issues, with a firm eye on the horizon as the impact of staff absences and the price tag associated with the recovery effort come to bear. We may well have seen the highpoint in terms of trust surpluses.” Published annually by Kreston International academies group, the report is a financial state-of-the-nation survey of more than 300 Trusts representing more than 1,500 schools.

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