{"id":240710,"date":"2026-01-22T22:30:00","date_gmt":"2026-01-22T22:30:00","guid":{"rendered":"https:\/\/schoolsweek.co.uk\/?p=240710"},"modified":"2026-02-09T16:28:29","modified_gmt":"2026-02-09T16:28:29","slug":"trusts-finances-improve-but-leaders-brace-for-more-rainy-days","status":"publish","type":"post","link":"https:\/\/schoolsweek.co.uk\/trusts-finances-improve-but-leaders-brace-for-more-rainy-days\/","title":{"rendered":"Trusts\u2019 finances improve, but leaders brace for more rainy days"},"content":{"rendered":"\n

Dozens of academy trusts have bolstered their reserves by up to 900 per cent, as leaders tighten their belts ahead of the coming financial storm.<\/strong><\/p>\n\n\n\n

But some continue to be saddled with hefty deficits as they count the cost of sudden government funding cancellations, and in one case, a major cyber attack.<\/strong><\/p>\n\n\n\n

Schools Week<\/em> investigates\u2026<\/strong><\/p>\n\n\n\n

Deficit to surplus<\/h3>\n\n\n\n

We analysed the latest accounts for 51 trusts ranging in size from one to 62 schools. The chains in the sample run, on average, 16 schools each.<\/p>\n\n\n\n

Thirty-seven of the trusts registered improved reserves by the end of 2024-25, up from 20 the year before.<\/p>\n\n\n\n

Trusts improve their reserves by running in-year surpluses. Those with deficits have to dip into reserves to pay for them.<\/p>\n\n\n\n

Diocese of Norwich Education and Academies Trust (DNEAT) went from posting a deficit of \u00a3178,000 in 2023-24 to a surplus of \u00a31.4 million by the end of August \u2013 a 900 per cent gain.<\/p>\n\n\n\n

Oliver Burwood, its chief executive, said the MAT \u2013 which runs 40 primaries and one secondary \u2013 \u201coverachieved on its budget this year\u201d.<\/p>\n\n\n\n

He acknowledged the trust had been \u201coveroptimistic in terms of income\u201d predictions in previous years before shifting to a \u201ccautious\u201d approach.<\/p>\n\n\n\n

\u201cWe\u2019ve been on the wrong end of discussions with the DfE around our finances\u2026 you don\u2019t want to be in that position where you\u2019re going to one of your regulators and saying, \u2018We\u2019re not in a surplus position\u2019,\u201d he said.<\/p>\n\n\n\n

First time in years<\/h3>\n\n\n\n

REAch2 Academy Trust \u2013 which runs 62 primaries across England \u2013 added to its reserves for the \u201cfirst time in several years\u201d.<\/p>\n\n\n\n

\"Cathie
Cathie Paine<\/figcaption><\/figure>\n\n\n\n

CEO Cathie Paine said the rebuild was aided by a restructure in 2023-24 that delivered \u201ca more streamlined and efficient operating model\u201d. Her MAT\u2019s reserves leapt 108 per cent, from \u00a32.3 million to \u00a34.8 million.<\/p>\n\n\n\n

The trust also bolstered \u201cthe financial capability\u201d of its heads \u201cthrough strengthened training and support\u201d, which gave them \u201cgreater visibility of budgets\u201d.<\/p>\n\n\n\n

Despite this, both DNEAT and REAch2 remain below target reserves. Paine said her organisation was \u201con track\u201d to reach its goal of 5 per cent of income \u201cover the next couple of years\u201d, while Burwood noted he was \u201cnowhere near\u201d the same level.<\/p>\n\n\n\n

‘Fragile\u2019<\/h3>\n\n\n\n

Research by the Kreston group<\/a>, a network of accountancy firms, found the proportion of trusts racking up in-year deficits more than trebled in three years to 58 per cent in 2023-24. Its study for the latest accounting year is due to be published next month.<\/p>\n\n\n\n

The Department for Education recommends trusts hold reserves of at least 5 per cent of total income \u201cfor contingency to protect cashflow\u201d. Twenty per cent above that level is considered too much.<\/p>\n\n\n\n

Kreston also warned last year that trusts\u2019 financial buffers were collapsing, with 31 per cent falling below the threshold, up from 17 per cent two years earlier.<\/p>\n\n\n\n

But accountancy firm Bishop Fleming\u2019s head of academies Kevin Connor, a report author, said this week that he had \u201cseen a more positive financial performance on the whole this year\u201d.<\/p>\n\n\n\n

\"Benedicte
Benedicte Yue<\/figcaption><\/figure>\n\n\n\n

Trusts have also achieved surpluses \u201cirrespective of their size, which has not been the case for a number of years\u201d.<\/p>\n\n\n\n

Connor said this \u201chas been achieved through a combination of continued efforts to centralise and manage costs, but also from in-year funding\u201d provided via the core schools budget grant, issued by government to help cover previous teacher pay rises.<\/p>\n\n\n\n

But Benedicte Yue, a trust chief finance officer, described this as a \u201cfragile stabilisation rather than a windfall\u201d. This is because \u201cfunding levels are just back where they were 15 years ago in real terms while demands on schools have increased significantly\u201d.<\/p>\n\n\n\n

Strategic teams<\/h3>\n\n\n\n

This could also reflect growing caution among leaders as they brace themselves for further squeezes to budgets, Red Kite Learning Trust boss Richard Sheriff argued.<\/p>\n\n\n\n

Schools are expected to have to find more savings to deliver teacher pay rises over the next three years, which the government has suggested should total 6.5 per cent.<\/p>\n\n\n\n

\"Richard
Richard Sheriff <\/figcaption><\/figure>\n\n\n\n

Meanwhile, per-pupil funding will rise by around 1 per cent in real terms each year until 2028.<\/p>\n\n\n\n

\u201cThe last three years have been absolutely horrible financially for schools and last year was the first time we started to get some greater warning of what\u2019s going to be happening,\u201d Sheriff explained.<\/p>\n\n\n\n

\u201c[Trusts] are building in the resilience they will need financially to cope with these years ahead.\u201d<\/p>\n\n\n\n

Sheriff\u2019s trust \u2013 which runs 16 academies in Yorkshire \u2013 witnessed a 30 per cent rise in reserves in 2024-25, from \u00a33.6 million to \u00a34.6 million.<\/p>\n\n\n\n

Among other measures, Red Kite launched a \u201cstrategic delivery team\u201d of heads and business managers to help tighten belts. One of its decisions was to procure supply and cover teachers centrally, which is expected to save \u00a3200,000. <\/p>\n\n\n\n

What about LA schools?<\/h3>\n\n\n\n

Analysis reveals council maintained schools are faring worse than academies.<\/p>\n\n\n\n

Government figures show 18 per cent of local authority-maintained schools (1,884) were in deficit last year, up 2.5 percentage points on 2023-24.<\/p>\n\n\n\n

Just over half (5,354) registered in-year losses of up to \u00a32.8 million. Sixty-six were over \u00a31 million in the red overall.<\/p>\n\n\n\n

Julia Harnden, of the Association of School and College Leaders<\/a>, said this was \u201csymptomatic of an education system that is hugely underfunded, with schools continually being asked to find further savings\u201d.<\/p>\n\n\n\n

New IFS research, published this week, found that after \u201caccounting for planned spending on SEND\u201d, mainstream school funding per pupil \u201conly grew by 5 per cent in real terms between 2019\u201320 and 2025\u201326\u201d.<\/p>\n\n\n\n

This means it is \u201cabout the same level it was\u201d 10 years ago.<\/p>\n\n\n\n

\u2026 but some trusts still suffering<\/h3>\n\n\n\n

However, some trusts remain in financial difficulty.<\/p>\n\n\n\n

Fourteen of the 51 trusts in our analysis registered in-year deficits, compared to 31 the year before.<\/p>\n\n\n\n

The largest percentage fall in reserves in 2024-25 was seen at the Arthur Terry Learning Partnership, which plunged further into deficit.<\/p>\n\n\n\n

It was previously revealed the trust had racked up seven-figure losses after purchasing iPads as part of an initiative to provide 11,000 devices for all pupils and staff. Now it\u2019s \u00a38.4 million in the red. <\/p>\n\n\n\n

An Arthur Terry spokesperson stressed the \u201cprimary reason\u201d for its debt was \u201csignificant over-staffing\u201d. Returning to a \u201cfinancially sustainable position, therefore, means taking some difficult decisions\u201d.<\/p>\n\n\n\n

It was followed by the Kingsway Community Trust and the Ron Dearing UTC, which both registered 62 per cent drops. Kingsway, which runs three schools in Manchester, saw reserves dip to just over \u00a3286,000.<\/p>\n\n\n\n

Its accounts said it was \u201cconfident that a programme of cost-cutting measures can be implemented over the coming 12 months to ensure \u2026 [It] can continue to operate\u201d.<\/p>\n\n\n\n

Meanwhile, Ron Dearing in Hull said its reserves were hit by a \u00a375,000 \u201creduction in growth funding\u201d.<\/p>\n\n\n\n

The \u201cdecision was communicated mid-way through the academic year by the DfE, leading to the deficit increasing rather than decreasing as previously forecasted”.<\/p>\n\n\n\n

Connor added there were \u201csignificant gaps in the surpluses achieved by single-academy trusts and small MATs\u201d compared to those of larger chains.<\/p>\n\n\n\n

Yue also said the ability of those holding reserves to generate investment income had contributed to this \u201cincreased variation\u201d in finances.<\/p>\n\n\n\n

Three trusts in red<\/h3>\n\n\n\n

Arthur Terry and Ron Dearing were two of only three trusts in the sample that were in an overall deficit.<\/p>\n\n\n\n

The other was the Mayfield Grammar School in Gravesend. While its reserves rose by \u00a323,000, it remained in a deficit of \u00a3345,000.<\/p>\n\n\n\n

Its issues stem, in part, from a \u201cmajor cyber-attack\u201d in 2023.<\/p>\n\n\n\n

It required \u201csubstantial expenditure to restore all IT networks, coupled with a negative impact on self-generated income and a substantial increase in staffing, supply, and overtime costs to recover and rebuild all systems\u201d.<\/p>\n\n\n\n

In accounts, the trust noted it was \u201cregrettable that there is no central government funding to assist schools when such events occur \u2026when all DfE cyber-attack protocols were in place\u201d.<\/p>\n\n\n\n

The financial storm<\/h3>\n\n\n\n

A Confederation of School Trusts study found around 60 per cent of trusts expected to draw from reserves to tackle immediate increases in costs in 2025-26.<\/p>\n\n\n\n

\"Leora
Leora Cruddas<\/figcaption><\/figure>\n\n\n\n

They are also \u201clooking at cuts to classroom staff to balance the books in the longer term\u201d, CST CEO Leora Cruddas said.<\/p>\n\n\n\n

Yue noted the \u201cpost-election honeymoon is over\u201d, with the sector \u201cnow entering a period of intense fiscal tightening\u201d.<\/p>\n\n\n\n

Harnden said the struggles of some trusts were \u201cindicative of the continuing reality of severe pressures on school funding\u201d.<\/p>\n\n\n\n

\u201cWhat we can say with certainty is that the funding situation is not easing and seems likely to get worse over the next few years, leaving trusts with more tough decisions to make,\u201d she added.<\/p>\n","protected":false},"excerpt":{"rendered":"

Some chains boost reserves by up to 900%, but others remain in deficit as leaders warn of tough times ahead<\/p>\n","protected":false},"author":311204,"featured_media":240659,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[4],"tags":[324],"post-theme":[2425],"class_list":["post-240710","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-funding","post-theme-school-funding"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t