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Academy trust 'faces insolvency' unless DfE gives it more money

Brook Learning Trust in Kent expects that its reserves pool will be exhausted by September

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Brook Learning Trust in Kent expects that its reserves pool will be exhausted by September

An academy trust that runs three secondary schools has warned it will go insolvent after September 2018 unless it receives more government funding.

Brook Learning Trust, which is based in Kent, blames real-terms cuts in Department for Education grants, and a funding system that delays by a year extra funding to cover the costs of growing pupil numbers.

Its latest financial accounts for 2016-17 say: “The academy trust has been very concerned for some time about funding limitations and, despite having discussed it at length with the ESFA [Education and Skills Funding Agency] over some years, no resolution is in sight.

“So whilst these accounts have been prepared on a going concerns basis, the board of trustees is concerned that, unless 2018-19 funding is higher than expected, the trust may not have sufficient funds to continue to operate for that academic year.”

The trust’s independent auditor adds that this indicates “the existence of a material uncertainty that may cast significant doubt about the academy’s ability to continue as a going concern”.

The accounts say that the principal risk the trust faces is that “ongoing pressure on funding results in a risk that deficits may be experienced”, and that this is “becoming more acute as funding from the DfE continues to reduce in real terms”.

The accounts say that all three of its schools currently face funding problems because of a shortage of pupils, although all three are listed as currently having surpluses, as is the trust’s central service.

But the document adds that an expected increase in rolls in future years will leave it with a budget shortfall because each year’s funding is "lagged" – based on the previous year’s pupil numbers.

The trust says its academies can currently use money from its reserves to fund increasing rolls, but “it is expected that the reserves pool will be exhausted by September 2018, after which the trust will require additional funding from the ESFA in order to remain solvent”.

The academy trust said the DfE is aware of its "financial challenges" and said it had been pro-active in bringing the situation to their attention. A spokesperson added: "We continue to work closely and constructively with them in the best interests of pupils, parents and staff."

A DfE spokesperson said: “The Education and Skills Funding Agency monitors all academies’ financial positions. The Brook Learning Trust is taking action to balance budgets – we are working closely and constructively with it to ensure there is no disruption for pupils, parents and staff.”

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