Press Release

Almost half of multi-academy trusts supporting a problem school

The annual Kreston Academies Benchmark Report published last week has revealed that nearly half of all multi-academy trusts (44%) have at least one school in their group that is struggling financially.

According to the report, the deficits in these schools are effectively being covered by other schools in the trust or a central trust fund.

The impact of these ‘problem’ schools appears to be significant as these trusts have on average £51K less left over at the end of the academic year than other trusts – a figure that is equivalent to the cost of funding one additional teacher.

The data also revealed that larger trusts were more likely to be in this position. Multi-academy trusts (MATs) with eight or more schools were more than twice as likely to be supporting a school that was unable to meet all of its costs independently than MATs with four or fewer schools.

Lesley Kendrew, Academies partner at BHP, said: “The figures show that many larger trusts could be being held back by supporting a struggling school. These schools often take up a significant amount of management time and can destabilise an otherwise financially sound MAT.”

The survey also examined the adoption of GAG pooling across MATs, a practice being championed by the government where funds are collated from all schools in a trust and distributed centrally according to need. In the report only 10 trusts (5%) indicated that they were GAG pooling, despite it allowing for a more effective distribution of income.

Philip Allsop, Academies partner at BHP, said: “Although the practice of GAG pooling has grown since last year when just three trusts reported using it, uptake has been slow. Resistance is often down to individual schools in a trust feeling there will be winners and losers financially if implemented. Our findings show a trust supporting a ‘problem’ school is propping it up financially anyway and a move to GAG pooled funds may actually help, by reflecting the reality that the funds are being deployed to maximise the educational performance of the whole trust.”

Leora Cruddas, CEO of the Confederation of School Trusts, said “GAG pooling could help some trusts to provide more targeted support for the schools that need it. But it may not be the solution for all. Care needs to be taken to ensure it is supported by headteachers, governors and other stakeholders across the trust.”

The report, which is published annually by Kreston International’s academies group, is a financial state of the nation survey of more than 360 trusts representing nearly 1,500 schools. The survey covers the 2018/19 academic year.

Overall, the report paints an improving financial picture for all trusts, with results across MATs reportedly moving from a £506K deficit in 2016/17 to a surplus of £196K in 2018/19. Over the same period, primary school results have shifted from a shortfall of £159K in 2016/17 to a £12K surplus last year and secondary schools have seen results move from a £253K deficit to a surplus of £13k. (It should be noted that these figures are all average and there are wide variations within all categories of trust)

Mike Jackson, Academies Partner at BHP, said: “The report indicates that many schools have been extremely effective in cutting costs and receipts such as the government’s ‘little extras’ bonus may have gone some way towards easing the financial squeeze on schools last year. Our conversations with schools reveal that there is no more left to trim back and any further financial pressures could have an impact on school improvement. It is likely that surpluses represent something of a high tide mark.”

Below are some of the other interesting findings from the report:

  • Regionally, variations continue to persist with funding per pupil in a MAT on average around £1,500 higher in a school in the East Midlands (£7,552) than the North East (£6,008).
  • Problem schools – MATs supporting a school that’s struggling financially are 23% worse off, and the schools within these MATs are 60% worse off than those in groups without a problem school.
  • Staff costs have remained steady at 72% of total
  • MATs continue to grow, with 38% expecting growth of more than one school over the next 12 months.

To view a copy of the survey, click here