This National Audit Office (NAO) report has found that the financial health of the mainstream school system has held up well in recent years despite funding and cost pressures. Most maintained schools and academy trusts are in surplus, although some maintained secondary schools are under significant financial strain.
The school system has faced considerable financial pressures in recent years. The Department for Education estimates that cost pressures on mainstream schools exceeded funding increases by £2.2 billion between 2015-16 and 2019-20 Local authorities have also reduced support services for children and young people due to the financial pressures they have experienced. The COVID-19 pandemic has had a significant impact on the school sector, but its impact on schools' financial health is not yet clear as most data are not yet available for 2020-21.
Despite these financial pressures, most maintained schools were in surplus from 2014-15 to 2019-20, although the proportion reporting a deficit more than doubled. In 2019-20, 88% of maintained schools reported a cumulative surplus and 11% reported a cumulative deficit, up from 5% in 2014-15.
A larger proportion of maintained secondary schools have been in deficit than primary schools. The proportion of maintained secondary schools reporting a cumulative deficit peaked at 30% in 2017-18, falling to 27% in 2019-20. In contrast, the proportion of maintained primary schools in deficit was 10% in 2019-20, although this was up from 4% in 2014-15.
Some academy trusts have built up substantial reserves, meaning they are spending less than their annual income on their pupils. In 2019/20, 93% of trusts reported a cumulative surplus, up from 88% in 2017/18. In 2019/20, 22% of trusts reported surpluses equivalent to 20% or more of their annual income.