Academy trusts’ financial reserves have risen by almost a third in one year to a combined £3.9 billion, new data reveals.
The average revenue reserve across all academy trusts was £1.48 million at the end of the 2020-21 academic year.
This is 29 per cent higher than the previous year’s £1.15 million.
The figures come amid questions over why some academy trusts are building up reserves while cutting spending on pupils.
But Leora Cruddas, chief executive of the Confederation of School Trusts, said academies’ financial position would not be sustained over the next few years, and was down to delays in spending during the pandemic.
The statistics, released by the Department for Education today, show that nearly all trusts (97.4 per cent) had a cumulative surplus or a zero balance at the end of the last academic year - an increase from 95.9 per cent of trusts in 2019-20.
Total surplus rises to nearly £4 billion
The total cumulative surplus across all academy trusts was £3.96 billion.
In contrast, the total cumulative deficit was £22.24 million.
Just 2.6 per cent of trusts had a cumulative deficit - a significant fall from the 4.1 per cent of trusts that had a deficit at the end of the 2019-20 academic year.
And average academy trust reserves as a percentage of total income stood at 12.9 per cent at the close of 2020-21, compared with 11.4 per cent in 2019-20.
The total number of trusts reduced by 2.4 per cent between 2019-20 and 2020-21, even though the number of academies increased by 3.9 per cent. This is because the average size of each trust grew - from 3.45 to 3.68 - during that period.
Last year, the National Audit Office said an official investigation should be launched into why more than a fifth of academy trusts were building up reserves worth 20 per cent or more of their annual income and spending less on their pupils.
Spending put on hold
Ms Cruddas said that the increase in average reserves reflected the fact that many trusts had had to delay planned expenditure, for example on building projects, and she said that some trusts had put recruitment on hold for some positions as well.
She added: “Cost pressures over the next three years will be significant - including, for example, the costs of education recovery and rising energy bills - so we would not expect to see this reserve position sustained over the next period.”
Similarly, Geoff Barton, general secretary of the Association of School and College Leaders, said that it was ”very likely” that the uncertainty and disruption caused by Covid-19 would have led to building projects being delayed.
“This may account for the increase in the overall level of reserves”, he added.
A trust’s revenue reserve is calculated by taking the school’s total reserve at the start of the academic year and then adding income and taking away spending for that year. A ‘surplus’ is used to refer to positive cumulative revenue reserves, whilst a deficit is a negative reserve.
Directly comparing the financial position of academies with maintained schools is problematic because academies report in line with the school year whereas maintained schools report on a financial year timetable, which runs from April to April each year.
But in the 2020-21 financial year, 91.1 per cent of maintained schools had a surplus revenue balance.
