The 10th annual Kreston Academies Benchmark Report published today has revealed that the average in-year financial surplus for a multi-academy trust (MAT) in London and the South East doubled to more than £460k in 2021 up from £221k in 2020.
Overall, this equates to a 94% uplift per academy from 2020 to 2021 - representing the sector's highest ever surplus.
Academy trust cash balances have been bolstered through the injection of government funding earmarked for Covid testing, education catch-up programmes and other Covid-related costs which schools have not yet had the time or capacity to spend due to the pandemic.
The surpluses have also been strengthened by the cancellation of exams and the reduced costs associated with utilities, staffing and maintenance due to schools not being fully open during lockdown. These surpluses will be needed to fund the recovery effort.
Peter Manser, Partner and Head of Academies and Education at Kreston Reeves said: "Our report shows that academies have strengthened their balance sheets with a strong financial performance during 2020/21 and that is down to prudent financial management. This financial respite is, we believe, temporary.
"We see increases to headline inflation coupled with energy prices hikes that will feed through to salary expectations. Additionally, future educational challenges caused by the pandemic's disruption will inevitably result in further cost pressures.
"Trusts that have posted in-year surpluses are best placed to face these future pressures but a significant number of trusts still recorded in year deficits. This could be a driver for further consolidation with trusts having to merge."
Leora Cruddas CBE, chief executive of the Confederation of School Trusts, said: "The Academies Benchmark Report shows that the sector is generally in the robust financial health 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 absence and the price tag associated with the recovery effort come to bear. We may well have seen the high point in terms of trust surpluses."
The report shows primary academies in London and the South East have fared less well than secondary trusts or MATs, with average surpluses at just £14k in 2020/21. It is likely that this smaller surplus reflects the costs primary schools have incurred in managing the administrative burden of Covid-19 and being open to more pupils for a longer period of time during the pandemic.
Staffing challenges ahead
Academy schools across London and the South East are also facing staffing challenges and a "skills drought" as schools rush to spend catch-up funding, says Peter.
"Schools face difficulties in finding suitable staff with shortages likely to result in higher salaries, particularly for learning support staff and supply cover.
"There's also the potential for an education skills drought as all schools rush to spend catch-up funds on a limited pool of highly skilled people needed to support pupils' mental health, academic and physical needs as the recovery programme ramps up."
