There’s no doubt about it, the financial situation facing Britain’s academies is a very real concern.
As associate director of academies at one of the midlands largest independent accountancy firms, I’ve witnessed first hand the scale of the financial constraints that schools are facing. This month, we published our findings from a survey of 450 academies in the UK and it makes for uncomfortable reading. All the evidence suggests that academies are quickly approaching insolvency.
As schools battle rising costs, 55% of academies are showing an in year deficit, rising to nearly 80% after depreciation. The situation is particularly troubling for primary schools, 74% of which are making deficits before depreciation.
Between the schools within our survey, this adds up to a £100 million combined deficit. This amounts to 42% of combined reserves which are currently just £240 million. We estimate that if these conditions continue, academies will only be on the verge of insolvency within just two more years.
This sounds alarming, but the Kreston Academies Benchmark Report is an authoritative, independent study authored by trustworthy accountants using data from a very large sample of schools. Its authors have no hidden agenda and no political allegiance; all we do is report on the facts in our report which is published each year.
These deficit figures mean that what little money schools have to help them through times like these is disappearing very quickly and I can see only two ways out: The first possible lifeline would be an increase in government spending per pupil, the second would be for schools to carry out widespread staff cuts on an unprecedented scale.