A series of “undeniable truths” make it “impossible for most schools to remain financially viable” without drastic cuts, the body for school business leaders has warned education secretary Gillian Keegan.
In a letter to Ms Keegan, the Institute of School Business Leadership (ISBL) said that unless there was a “material change in income”, many schools could become “technically insolvent” by spring 2024.
The letter, signed by ISBL chief executive Stephen Morales, chair Stephen Lester and patron Robin Bevan, warns that it has, for “many years, supported the government’s argument that some schools can manage their resources more effectively”, but now that approach did not reflect a true picture of school financial stability.
It adds that financial stability is uneven across the sector, but that this is “not because some academies/schools are reckless and others prudent.”
And it warns ministers need to stop “relying on aggregated data” to understand the true picture of school finances, which are now faced with the “undeniable truths” of soaring energy bills, unfunded teacher pay increases and “hyperinflation.”
The letter , which has also been copied to the Education Select Committee, asks Ms Keegan three questions.
The first is whether she has confidence that the minimum guarantee of a 0.5 per cent uplift in school budgets between 2022-23 and 2023-24 “will be sufficient to ensure there is no detriment to the educational (academic and pastoral) provision for pupils in our schools?”
The letter warns that many schools are expecting to have to spend about 2 to 5 per cent more than they receive this year (2022-23) and that, unless there is a material change in income, “a similar level of deficit would wipe out many schools’ reserves completely by spring 2024, leaving them technically insolvent”.
The second question asks: “What level of ‘reserves’ would the Department for Education expect an academy (or multi-academy trust) to hold on account?”
It adds: “The department seems to think that reserves can be spent without consequence, whereas the system of academies must hold a fairly high level of reserves to cope with annual fluctuations in outgoings, to meet payroll each month”.
The final question asks if reserves are “evenly” distributed across the sector, to which it says the answer is “clearly no”.
“Varying levels of reserves are the consequence of a funding model that fails to take into account all the cost pressures at an institutional level”, the letter adds.
The letter will add to mounting pressure from schools over squeezed budgets on the government in the run-up to next week’s Budget, when government departments could face further spending cuts.
A survey from the NAHT school leaders’ union earlier this week outlined some of the cuts schools would have to make in the face of cost pressures.
A new analysis of budget information and survey data by the Confederation of School Trusts released yesterday showed that, without further financial support, more than half of academy trusts could be in deficit by 2024-5, with the remainder down to “worryingly low reserves”.
