Uncertainty and rising costs affecting financial confidence across academy sector, reports academies survey

Uncertainty and rising costs affecting financial confidence across academy sector, reports academies survey

The 11th annual Kreston Academies Benchmark Report published today by accountants, business and financial advisers Kreston Reeves highlights growing nervousness in academy trusts about what the future might hold for the health of the sector's finances.  

Although significant surpluses are being reported in the sector, per pupil income has increased by just 1% in the last year against a backdrop of inflation rates of more than 10%, increased energy costs and teacher pay hikes. As a result, 88% of trusts are expecting future reductions in surpluses and reserves.

Whilst the sector has seen in-year financial surpluses once again, these surpluses are lower than the previous record-breaking year. However, a significant proportion of single academy trusts (SATs) in the primary sector (47%) have reported in-year deficits for 2021/22, suggesting larger trusts are faring better financially.

This is the first time in four years that on average, in-year deficits have been seen in primary SATs. This is due to a small number of primary SATs with very large deficits, resulting from capital and maintenance expenditure that has dragged the overall average down.

Peter Manser, a partner and head of the Academies Team at Kreston Reeves said: "This annual survey of 2,700 academy schools' points to healthy surpluses that together with the £2.3bn of support provided by the government will help with short term costs. But with soaring energy costs and inflationary pressures, academies and academy trust leaders face a challenging 12 months.

"Payroll remains the single largest cost for schools and academy trusts. The current strikes by teachers across England will put sharply into focus the budgetary challenges facing the sector."

Primary SATs reported a significant jump in per pupil energy costs, which climbed from £58 in 2020/21 to £84 per pupil - a rise of 45%. While average gross teacher salaries in secondary SATs increased by 14% since 2021/22.

Other costs have risen substantially too. Some schools have seen food prices increase by 20% in the last year, which completely outstripped funding for free school meals in two thirds of trusts.

Average total staff costs per pupil increased for all trusts in this year's report. However, many trusts submitted their three-year budget forecasts before the end of term in July 2022, prior to the DfE announcement on teachers' pay. Adjustments may therefore be required to reflect this and the subsequent £2.3 billion in government funding announced in the Autumn statement.


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