Schools are being hit with “astronomical” gas and electricity bills that are swamping their budgets, Tes has learned.

In one particularly shocking example, Tes has seen bills sent to a school totalling £50,000 for one month’s electricity use and £13,000 for gas - a staggering £54,000 higher than the amount the school budgeted for energy each month.

One school said its energy bill had increased by £67,000 for the current financial year, while another is bracing for costs to double from £85,000 to £170,000 when it finalises a new deal.

Headteachers in these schools are already planning to cut back on teacher recruitment to offset these huge rises - to the detriment of the children they are teaching at a time when catch-up efforts are a national priority.

And with the CEO of Centrica, which owns British Gas, warning that energy price volatility could last for two years, there is a concern that schools still in tariff on cheaper rates with many months left to run are not immune from this situation, risking budgets across the sector being devastated by energy bills.

Commenting on the huge price hikes, Paul Whiteman, general secretary of school leaders’ union the NAHT, said the situation was a “huge concern” for leaders and posed a major threat to the smooth running of many schools. “The additional costs we’re hearing about so far could cripple many school budgets,” he added.

Rising energy bills ‘could cripple school budgets’

The huge bills of £50,000 for electricity and £13,000 for gas referred to above were received by a school that had joined the East Midlands Education Trust (EMET) but was outside of the tariff that other schools in the trust are on.

EMET chief executive of Rob McDonough, who also serves as chair of the Confederation of School Trusts, told Tes that the trust had hoped to secure a new deal for the school when it joined.

However, when the trust went to market, the only deal it was offered came to £30,000 a month.

“We only had three companies that were prepared to offer us a price and while we were sat discussing the prices, two of those energy companies sent us a text withdrawing those prices, because the energy prices had risen by 8 per cent within the hour,” he explained.

“So we were left with only one offer on the table [the £30,000 offer], which we couldn’t commit to because the school in question simply could not afford it.”

As such, it had to move to a variable tariff in order to buy time to find a better deal.

“We took the decision to remain on the variable rate over the Christmas break while the school was closed for two weeks in the hope that things might settle down and that more companies might offer contracts on more favourable rates,” Mr McDonough explained.

Since then, he has agreed a “tariff pooling” plan with the 17 other schools in the trust to help dilute the impact of the bill shock and any future tariff agreed - something that he says has been the saving grace of the situation.

“The way in which we have solved this demonstrates the power of a group of schools working together because we have the means to support one another, as opposed to those schools which are on their own,” he added.

Leora Cruddas, CEO of the Confederation of School Trusts, said that the plan demonstrated how the “scale and collaborative structure” of trusts can solve problems like this when they arise - but acknowledged that the sheer scale of the energy price rises means that no school or group is immune to the threat.

“Rising energy costs will affect all of us - and will have a significant impact on public sector budgets, including schools and trusts,” she added.

Bills doubling even on fixed tariffs

Underlining this point, Sharan Matharu, headteacher of Elizabeth Woodville School in Deanshanger, Milton Keynes, told Tes that it has seen its energy costs rise by £67,000 to reach £205,000 for the current financial year.

“We were shocked when we heard it was going up by £67,000,” she said, although she added that, given how much prices have risen since the deal was agreed, the school was pleased with the deal it found.

“In hindsight, had we not agreed that deal, we would be in a much worse position,” she added.

One school still trying to find a new deal is Wales High School, in Sheffield, with Pepe Di’Iasio, its headteacher and the president of the Association of School and College Leaders (ASCL), saying he is expecting a major financial hit whatever deal is secured.

“Our initial research is showing that we are looking to incur price increases for each month from what is now an average of £5,000 each month to almost £9,800, [while] for gas we have an anticipated increase of an additional £1,700 each month [to around £5,000],” he said.

This could mean that the overall spend on energy next year for the school is around £170,000 - twice what it has been paying at around £85,000. However, Mr Di’Iasio noted that this is only based on indicative costs at present as contracts are still being discussed.

Whatever the final bill, though, he added that the school is looking at doing what it can to make its site more energy efficient.

“We have pulled together a ‘green’ section to our capital development plan, which will see the school investing in energy-saving strategies connected to full LED lighting throughout the school and the investment in a solar panel scheme following this,” Mr Di’Iasio said.

He admitted, though, that if this were to deliver a saving, it would still be “a long way off”.

“Unfortunately, our school buildings were designed in the 1960s and energy efficiencies have certainly moved forward since that time. As a consequence, we see the vast majority of our heating literally go straight through a flat roof that has no insulation,” he said.

Cutting costs on teacher recruitment

Meanwhile, Mark Chatley, trust leader at Coppice Primary Partnership in Kent, told Tes that he, too, had seen a huge increase in its energy prices recently and that was impacting heavily on the trust’s finances:

“We started a new contract fairly recently - thankfully for us - prior to the real hike in prices, [but] we have still seen significant increases to both gas and electricity prices,” he said.

He warned that he was already having to divert funding away from frontline resources to cover these rising costs.

“This is having a negative impact on our budgets and therefore taking the funds away from being able to directly support children,” Mr Chatley said.

Mr McDonough is also concerned that the money to pay off the huge bills can only come from reducing recruitment plans. “This is not money that has been taken into account in schools’ budgets so this means I have to find it from somewhere - that’s less teachers, it’s less TAs, it’s cancelling an activity because it’s got to come from somewhere,” he said.

Ms Matharu also said she was having to think about how she could pay the huge new energy bills and the reality was the cash would have to come from cuts to other core services - chiefly teachers.

“You cannot save that money by just trimming down. School budgets are already on the wire anyway so the only way we can cut is to say, ‘We’re not going to recruit to this post and we’re going to try and backfill it as much as we can,’ or say, ‘We’re not going to able to provide that service any more,’” she explained.

“That’s not where you want to be. But it’s the only way we can save the money,” she added.

Making a bad situation a whole lot worse is the fact that schools are currently being advised to improve ventilation by leaving windows open - meaning even more is being spent on heating buildings.

“We are finding that our spend is higher even than we budgeted, mainly due to having the heating on for longer as we have doors and windows open for ventilation,” Mr Chatley said.

“Our concern is that, if the weather stays cold for a long period of time, then we will have to continue to use more of our funds on keeping the school warm enough to be comfortable for children and staff to learn and work in.”

Ms Matharu said she was doing the same and that it feels like “burning money”, while Mr McDonough said the “astronomical increase in heating costs while being told to keep windows open is a perfect storm” to devastate school budgets.

Mr Whiteman noted, too, that this situation could distort the true energy use of schools, which could “be a problem when energy companies come to estimate new tariffs” for schools.

Longer-term concerns

Some schools are somewhat shielded from this situation because they are on long-term energy deals lasting many years into the future - for example, Gary Jelks, school business leader at Highlands Primary School, in East London, said his school is under contract until 2027.

“If I had to renew my contracts now, I know the cost that I was quoted was double what I purchased in 2020,” he added.

However, schools on more medium-term deals with around 18 months or fewer left to run may not be so lucky, after Chris O’Shea, chief executive of Centrica, warned last week that the huge price rises could last throughout 2022 and beyond.

“The market suggests the high gas prices will be here for the next 18 months to two years,” he told the BBC.

Tina Button, school business manager at The Wyvern School in Kent, said: “We signed up to a two-year contract in September 2020, meaning that our prices are currently fixed and we know roughly what our expenses are due to be through to September.

“However, with the volatile market currently and wholesale prices having increased so dramatically, it is going to be hard to set a budget for April as we don’t really know what position the market will be in by September.”

Given this, she said that any school business leader with a contract that ends within the next 12 months or so is likely to be watching nervously.

“With school budgets being quite tight, what could be a potentially large increase in energy costs is going to be a concern to every school business leader,” Ms Button added.

This point was echoed by Hayley Dunn, business leadership specialist at the ASCL: “Business leaders will inevitably be concerned by the continuing uncertainty regarding energy pricing and the alarming forecasts from industry experts warning of inflated prices for a lengthy period to come.”

Time to act

Ms Cruddas said that, in response to the rising prices, the Confederation of School Trusts was talking to government because schools and trusts can’t be left to navigate the situation alone.

“We believe that collective action is needed to address cost increases and volatility going forward,” she added.

Ms Dunn also urged the government to do whatever it can to tackle the situation.

“The government needs to recognise the potential impact on budgets for schools and colleges caused by the uncertain state of the energy marketplace and provide them with practical help to reduce their energy consumption and bills,” she said.

She also said the situation underlined the need to improve the energy efficiency of school estates for the long term: “Investment in modern technology to replace outdated and dilapidated heating systems would provide a more efficient and sustainable greener option, with lower running costs as a result.”

In response to the issues raised, the Department for Education said it recognised that rising energy prices means “schools may be facing cost pressures this winter” but said that a boost in funding in the next financial year should help to offset this.

“In 2022-23, core schools funding will increase by £4 billion compared to 2021-22; a 5 per cent real-terms per-pupil boost. This additional funding will provide support to schools to meet wider cost pressures, including those from energy prices.”

It also noted that there are resources available to schools - such as “Find a DfE-approved framework for your school” - that should help to secure the best deal possible for energy.

“All schools can access a range of school resource management tools to help them get the best value from their resources, including two recommended deals for energy costs and services relating to energy.”