New report reveals growth of multi-academy trusts frustrated by pandemic

The ninth annual Kreston Academies Benchmark Report published today (28 January 2021) has revealed that the significant growth multi-academy trusts (MATs) have achieved in recent years has been stifled by the Covid-19 pandemic during 2020.

According to the report, the growth of the academy sector has slowed from 10.8% in 2019 down to 7.8% in 2020, a fall of three percentage points.

The report also points to a complex picture in terms of trust finances. Schools did see a significant reduction in costs for staffing, maintenance and utilities resulting from fewer pupils being in school during lockdown, with nearly three quarters of trusts (70%) saving money on the cost of supply staff. However, much of these savings will need to be invested in technology and other resources to support and enhance the sector’s remote learning capability in the coming year.

The majority of trusts (85%) plan to continue investing in IT in the future, draining financial reserves further and suggesting a more permanent shift in the edtech infrastructure in education.

Pam Tuckett, chair of Kreston International’s academies group and head of education at accountants Bishop Fleming, said: “On the face of it, the report suggests the financial picture for the sector is relatively strong as school closures have cut many of the costs traditionally associated with running a school, such as staffing, heating and lighting classrooms that would typically be full of pupils.

“However, this masks the budgetary pressures relating to the increased cost of deep cleaning and the heavy investment that is being made in technology to limit the impact of disruptions to pupils’ education. The findings show that the impact of the pandemic will be felt for many years to come.”

Leora Cruddas, chief executive of the Confederation of School Trusts, said: “The Academies Benchmark report is a very important resource for our sector. Although the financial picture is reported to be relatively strong, the impact of Covid-related costs cannot be assessed in a single financial year. The education, social and economic impacts of the pandemic will affect children and families for some time yet. This will undoubtedly impact on school and trust budgets.”

Michael Larsen, vice-chair of the Aspire Academy Trust, said: “A must-read analysis of school and academy finance during these challenging times. The report highlights examples of best practice where the more effective use of both human and financial resources is not only achievable, but an imperative and can lead to better outcomes for students.”

Overall, the findings paint a positive financial picture for the sector, with results across all MATs reportedly moving from a £196K surplus in 2018/19 to a £221K surplus in 2019/20. Over the same period, primary school results have shifted from a £12K surplus to a £25K surplus. The most significant increase was seen in secondary schools, where the average in-year surplus increased by around £130K, to £147K, due to additional savings generated by secondary schools generally being closed for the longest periods during the pandemic.

GAG Pooling figures double

The survey revealed that although the percentage of MATs collating funding from all their schools and distributing it centrally (GAG pooling) has more than doubled since the previous year – from 5.2% in 2019 to 11% in 2020 – the vast majority have not made the move.

Pam Tuckett, head of education at Bishop Fleming, said: “The uptake of GAG pooling remains slow across the sector with many trusts still not doing it. As MATs emerge from the current crisis, centralised funding could be one way to weather the additional costs that some schools encountered throughout the pandemic.”

Supply teaching moving in house

Almost one in seven schools surveyed (14%) revealed plans to employ cover teachers directly once pupils return to the classroom, rather than relying on agency staff, presumably to cut costs and help counter the financial impact of the pandemic.

Pam Tuckett, head of education at Bishop Fleming, said: “The cost of supply teaching for some trusts can amount to tens of thousands of pounds per school. Our report suggests that the pandemic has sparked a rethink of how trusts can meet their staffing requirements in the months and years ahead as they navigate their way through this situation to return to previous levels of financial stability.” Published annually by Kreston International’s academies group, the report is a financial state of the nation survey of over 300 trusts representing 1,400 schools. The survey covers the 2019/20 academic year.

Below is some of the other interesting data from the report:

• The percentage of trusts in cumulative deficit has fallen from 8% to 5% over the last year.
• Nearly 60% of trusts submitted claims for additional funding for the 2019/20 academic year.
• 67% of trusts with at least 8 schools had 1 or more schools in an individual deficit position. When compared, the percentage of trusts with 4 or fewer schools that had 1 or more schools in deficit was 29%.
• The growth of MATs has occurred primarily in the most centralised trusts. As at December 2020, there were a total of 9,399 academies compared to 8,721 in December 2019. The annual rate of growth has however slowed, from 10.8% in the year to December 2019, down to 7.8% to December 2020.

Click here to download the full Kreston Academies Benchmark Report.