Member Article

Darlington co-author of a major education report highlights challenges and opportunities within the sector

A report into the funding of Academies in the United Kingdom has revealed a marked increase in the number of Academies and Trusts dipping into their reserves to keep up with the significant cost increases that have hit the education sector.

The 12th Kreston UK Academies Benchmark Report focuses on how academies have fared financially during the 2022/23 academic year.

Chris Beaumont, partner at Darlington-based accountancy firm Clive Owen LLP, which acts for more than 100 educational establishments in the North East, has been a co-author of the report for more than 10 years and believes the latest release paints a complex picture.

Trusts running in-year deficits – where they are spending more than their allocated revenue for that year – has more than doubled since 2021, jumping from 19% in 2021 to 47%* for the financial year ending in 2023. 

Key findings of the report include:

Non-staffing costs have seen a big leap with rises of 16% per pupil
Reflecting the current energy crisis, average heat and light costs per pupil increased by a minimum of 49% against the previous year
Ongoing uncertainty around funding has impacted heavily on the sector in the 2022/23 financial period with many trusts reporting that they have been unable to make investment decisions 
The sector received £447 million of Energy Efficiency Grants, which gave a much-needed boost to the financial results
Two key additional one-off components of income that were awarded were the Mainstream Schools Additional Grant (MSAG) and the Schools Supplementary Grant (SSG). This provided an income of about £60,000 for an average primary school and over £200,000 for an average secondary school based on the Kreston UK Academies Group data.
Chris Beaumont said: "Despite the initial gloomy outlook, the sector has actually outperformed many expectations. Academy Trusts have demonstrated remarkable resilience in navigating financial challenges by effectively managing their expenses, prioritising staff costs, and delaying significant investments in infrastructure. This approach, coupled with unexpected financial support from the government, has provided a buffer that prevented many from falling into financial shortfall, presenting a scenario more optimistic than anticipated. Without such support, the majority of Trusts would have faced deficits within the year.”

He continued: "The unpredictability of future funding, including additional allocations for energy costs and contributions towards salaries and pensions, leaves Trusts in a precarious position. They often project their financial health based on existing funding streams, leading to a confident outlook for the current year, but anticipating substantial deficits in the second or third year. This uncertainty fosters a financial climate shadowed by potential crisis, causing hesitancy in committing to major capital expenditures and investment decisions. It's not uncommon to see vital projects postponed due to these financial uncertainties."

This was posted in Bdaily's Members' News section by News Gathering .