{"id":225176,"date":"2025-02-06T00:01:00","date_gmt":"2025-02-06T00:01:00","guid":{"rendered":"https:\/\/schoolsweek.co.uk\/?p=225176"},"modified":"2025-02-05T16:43:25","modified_gmt":"2025-02-05T16:43:25","slug":"trusts-on-verge-of-going-bust-accountancy-report-claims","status":"publish","type":"post","link":"https:\/\/schoolsweek.co.uk\/trusts-on-verge-of-going-bust-accountancy-report-claims\/","title":{"rendered":"Trusts on verge of going bust, accountancy report claims"},"content":{"rendered":"\n

Academy trusts could be on the verge of going bust, a major report has warned, with even the biggest MATs taking a financial hit.<\/p>\n\n\n\n

However, the Kreston group<\/a>, a network of accountancy firms, study found that CEO pay among the largest trusts is rising again after a period of \u201cstagnation\u201d.<\/p>\n\n\n\n

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Kevin Connor<\/figcaption><\/figure>\n\n\n\n

Bishop Fleming head of academies Kevin Connor, a report author, said the research shows trusts \u201care heading towards a financial cliff edge as they grapple with costs\u201d from  teacher pay rises and the SEND crisis.<\/p>\n\n\n\n

\u201cThis creates massive problems for the future which, without action, could become a silent stranglehold on the sector.\u201d<\/p>\n\n\n\n

The academies benchmark report studies the accounts of more than 260 trusts.<\/p>\n\n\n\n

Here\u2019s what you need to know\u2026<\/p>\n\n\n\n

1. More in-year deficits…<\/h3>\n\n\n\n

The proportion of trusts racking up in-year deficits has more than trebled since 2021, from 19 per cent to 58 per cent.<\/p>\n\n\n\n

Secondary single-academy trusts were worst-hit, according to the analysis, as their overall reserves fell from an average surplus of \u00a36,000 in 2023, to a deficit of just over \u00a3160,000 by the end of the last reporting period.<\/p>\n\n\n\n

Large MATs \u2013 those with more than 7,500 pupils \u2013 had on average more than \u00a31.5 million in their reserves in 2022. But latest accounts suggest these have shrunk more than 90 per cent to \u00a399,000.<\/p>\n\n\n\n

King\u2019s Group Academies CEO Nick Cross noted: \u201cToo many trusts are being forced to dip into reserves just to keep the lights on. This is not sustainable long-term.\u201d<\/p>\n\n\n\n

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2. \u2026so \u2018trusts could run out of money\u2019<\/h3>\n\n\n\n

The ESFA recommends trusts hold reserves of at least 5 per cent of total income.<\/p>\n\n\n\n

The report warned trusts\u2019 financial buffers are collapsing, with 31 per cent falling below the threshold, up from 17 per cent two years ago.<\/p>\n\n\n\n

Kreston believes reserves of 5 per cent \u201cis not a sufficient level\u2026to invest in capital expenditure and renew the buildings and infrastructure\u201d.<\/p>\n\n\n\n

It recommends trusts aim for 10 per cent instead, as that would offer \u201cmore flexibility to fund this investment\u201d.<\/p>\n\n\n\n

In 2023, 49 per cent held reserves at this level. The figure has now fallen to 35 per cent.<\/p>\n\n\n\n

Bishop Fleming partner David Butler, the report\u2019s executive author, said the numbers \u201care sliding in the wrong direction\u201d, with there being \u201ca very real danger smaller trusts could run out of money completely\u201d.<\/p>\n\n\n\n

3. Trustees mull \u2018difficult\u2019 staffing decisions<\/h3>\n\n\n\n

When asked about their biggest financial challenges, just over 80 per cent of trusts referred to the cost of teaching and support staff.<\/p>\n\n\n\n

The report noted this was \u201chardly surprising after another year of uncertainty over both the awards for teaching and support staff and the level of top up funding that continued through another budgeting season\u201d.<\/p>\n\n\n\n

Kreston\u2019s analysis shows large trusts\u2019 average staff costs per-pupil in 2023-24 stood at \u00a35,682, up from \u00a35,132 the year before, an 11 per cent rise. Minimum per-pupil funding levels rose by just 3 per cent over the same period.<\/p>\n\n\n\n

\u201cFor many years the staffing structure in the classroom has not been questioned,\u201d the report added.<\/p>\n\n\n\n

\u201cHowever, we have been hearing, with increased frequency from trustees, that they may soon have to make difficult decisions to secure the long-term sustainability of their trust.\u201d<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

4. MAT growth funding \u2018stifled\u2019 sector<\/h3>\n\n\n\n

A Kreston survey of its clients found more than 50 per cent said their growth plans had been impacted by the removal of the trust capacity fund, a support grant for expansion bids, in November.<\/p>\n\n\n\n

Most of them expected to grow more slowly as a result.<\/p>\n\n\n\n

The report noted the \u201clack of government funding and squeeze on finances is stifling actual growth in the sector\u201d.<\/p>\n\n\n\n

This is despite the study showing over 60 per cent of big MATs are confident about their viability.<\/p>\n\n\n\n

5. But CEO pay back on the up<\/h3>\n\n\n\n

The previous Kreston report, published last year<\/a>, showed the pay of CEOs in medium and large MATs had only increased by about 2 per cent, amid wage \u201cstagnation\u201d. But this time, their salaries rose by between 5 and 6 per cent, on average.<\/p>\n\n\n\n

The report\u2019s authors said this \u201clooks to be an element of catching up\u201d, after trusts shied away from giving bigger rises amid the \u201cnear-constant spotlight on executive pay, especially those paid more than \u00a3150k\u201d.<\/p>\n\n\n\n

The teacher pay rise for the year the accounts relate to was 6.5 per cent.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

6. \u00a31m from investments<\/h3>\n\n\n\n

Meanwhile, capital income per-pupil has fallen for most trust types. Primary SATs received just \u00a346 per child in 2023-24, compared to \u00a3464 two years earlier.<\/p>\n\n\n\n

For large MATs, the figure stood at \u00a3342 per pupil, which was down on the year before but higher than 2021-22 levels.<\/p>\n\n\n\n

The report said that, for larger MATs, \u201ccapital funding is more predictable\u201d as they receive automatic allocations, whereas SATs must apply for money for particular projects<\/p>\n\n\n\n

Kreston said \u201cmany trusts are now depositing surplus cash not required for day-to-day operations through secure online platforms\u201d across \u201cmultiple savings accounts\u201d with higher interest rates.<\/p>\n\n\n\n

This has allowed some to make \u201cover \u00a31 million in the year 2023-24\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"

Kreston Group study finds even biggest MATs have taken financial hit \u2013 but CEO pay is rising again<\/p>\n","protected":false},"author":311204,"featured_media":225180,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[4],"tags":[32],"post-theme":[2381],"class_list":["post-225176","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-academies","post-theme-academies"],"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