Schools in England are merging into larger academy chains and slashing costs in a bid to manage “unsustainable” deficits, according to an authoritative survey of more than 1,000 academies.
The report by the Kreston academies group found that half of the schools had an operating deficit last year, with only stringent cuts and the sharing of resources within multi-academy trusts (Mats) stopping the figure from being higher.
The group said that while the average deficits at academies fell in 2018 compared with 2017, further spending reductions would be much harder to achieve, and uncertainty was being caused by higher pension contributions, increased teacher pay and crumbling school infrastructure.
“Our clients across England are telling us that the ‘easy savings’ have already been made,” said Pam Tuckett, the group’s chair. “We are seeing reductions in learning support assistants, and staff contact ratios will be increased to save costs. This means teachers spend longer in the classroom so, in theory, schools wouldn’t need as many teachers.
“There have been several years of cost-cutting and the trusts that we work with are telling us that there are no more areas where they can save significant costs without impacting on the way in which education is provided.”
Tuckett said it was “unsustainable” for schools to keep running deficits year after year, as many were now doing. “Eventually the reserves will run out,” she warned.
The report comes days after the government celebrated the news that 50% of England’s state school pupils were now educated in academies – schools outside local authority oversight that were first established under the last Labour government but were greatly expanded in England under Michael Gove as education secretary.
The survey found that financial pressures were driving standalone schools and small trusts to seek shelter within larger multi-academy trusts, and the average trust had grown from 3.5 schools per trust two years ago to 5.6 schools now.
Tuckett predicted that the trend for consolidation into larger trusts would continue while financial pressures remained. “With the weak financial position of schools in the maintained sector, it is likely that more schools and single academies that are failing financially will convert to become an academy as part of a Mat. Fortunately, there are many Mats that take this responsibility seriously and are willing to help.
“The trend of mergers and rebrokerage is likely to continue until trusts have achieved a size that enables them to take advantage of the economies of scale of a larger organisation,” Tuckett said, introducing the report.
“We continue to see a shift in the way a multi-academy trust is run, with some now operating on a far more commercial basis. While this may feel uncomfortable, it is a necessity if more efficiencies are to be found.”
Kreston, a network of independent accounting and business advisory firms in the education sector, compiled its survey from 370 academy trusts in England that manage 1,000 schools between them.
The findings match a report published by the Education Policy Institute at the start of the year, which estimated that half of all secondary academies and 60% of maintained secondary schools – those overseen by local authorities – were spending more than they were receiving, forcing them to dip into their reserves.