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Latest benchmarking survey reveals tough year for academies

27 January 2017

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Seven out of ten academies are operating with accounting losses, as budgets are being squeezed and schools seek to find cost savings, according to an independent survey of academies.

The Kreston Academies Benchmark report, one of the leading reports on the health of the sector, raises concerns about the future viability of a number of academy schools, as the government seeks to encourage even more schools to become academies.

The report reveals that existing cost-cutting and cash-strapped independent academies are being increasingly forced to merge with larger Multi-Academy Trusts in order to survive and to generate economies of scale, in response to the postcode lottery of government funding.

Rising staff pension, auto-enrolment costs, increases in National Insurance and the National Living Wage were also identified as contributing to the tough environment. And with an extra 450,000 pupils expected to be in the system by 2020, the report states that many more academies anticipate running at a deficit. Those schools which are still reporting a surplus, are reporting much lower figures than before.

The survey of more than 600 Academy schools responsible for over 300,000 children, conducted by the UK Academies Group of Kreston International – the global network of independent accountancy firms – highlights cash shortages, buildings maintenance being delayed, and experienced teachers leaving the profession.

The report warns that in the absence of any significant extra government funding, academies may need to reduce teacher numbers, impacting on the quality of education and the scope of subjects being taught.

Mike Farwell, Audit and Assurance Partner who also heads the charities and education team at James Cowper Kreston, said: “The report highlights many of the financial challenges faced by academies and whilst schools are being encouraged to become academies, it is essential that they consider these issues at an early stage.

“However, we shouldn’t lose sight of those academies which are doing well. We have worked closely with numerous schools which have converted to academies and we would like to commend them on their continued success in such a challenging financial environment.”