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HCR Law Events

12 December 2023

Multi-academy trusts: are your long-term finances secure?

Despite the withdrawal of the White Paper which explicitly drove academisation of all schools by 2030, there is still a sense that it remains on the government’s agenda. However, whilst a mandatory drive would force schools who have not yet converted to do so, it seems that financial concerns amongst some schools is equally driving conversions.

The Department for Education’s South West Regional Director has reported that there is currently a five year high in schools which are looking to convert to academy status owing to concern in respect of the ‘viability’ of smaller schools. Like all sectors, schools are currently facing increasing financial pressures, with the rise in energy costs, staff wages and high inflation impacting day-to-day costs of school management. It’s therefore unsurprising that a number of schools are seeking to benefit from joining strong multi-academy trusts.

A survey carried out by the Confederation of School Trusts and Edurio across England’s academy trusts found that less than half of the nearly 400 academy trust Chief Executives who took part in the survey felt ‘very’ or ‘quite confident’ in their trust’s financial sustainability, with 19% saying they were ‘not very’ or ‘not at all confident’.

This is a stark increase from last year, when less than 5% of Chief Executives reported they felt ‘not very’ or ‘not at all confident’. In addition to a depleting confidence in financial sustainability of trusts, more than two-thirds of trusts reported that they have buildings which are either past their economic life, or are at risk of failure.

Despite the financial pressures there is a clear focus across the sector to improve the quality of education, which remains the key priority of school trusts, together with ensuring financial sustainability, growth, and workforce development.

Next steps

With increasing financial pressures, you may wish to consider whether there are additional streams of income which you could take advantage of. Many trusts are finding that making extensive use of their existing facilities by hiring them out can help to create an additional stream of income. This can be a fairly straight-forward way of bringing additional funding into your trust by, for example, hiring out your sports hall or drama studio.

We recommend that, if you are considering hiring out your school’s facilities, you ensure that a robust hire facilities agreement is in place to not only protect your school from a commercial perspective, but to ensure that updated safeguarding requirements are covered. You can listen to our podcast discussing this topic here.

In addition, funding is available for existing trusts which are seeking growth, or schools which are seeking to create a multi-academy trust, with schools in areas of education investment being prioritised in respect of applications to the Trust Establishment and Growth Fund.

Whilst schools across the sector are facing increasing financial pressures, it’s clear that chief executives and business managers of academy trusts continue to ensure that they strive for educational excellence and improved outcomes for pupils.

If you would like support with exploring options for additional funding streams, such as putting in place a trading subsidiary and/or hire facilities agreement, please do get in touch.

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About the Author
Emma Swann, Partner, Head of Academies

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