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Largest MATs most likely to be in deficit, despite economies of scale

The findings follow DfE claims that bigger MATs are more likely to make savings

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Larger multi-academy trusts are significantly more likely to be in deficit than the smallest ones, new research shows.

The findings, from the National Foundation for Educational Research, appear to contrast with previous suggestions by the Department for Education that bigger MATs are better able to take advantage of economies of scale and are more financially sustainable.

The analysis found that 59 per cent of "starter" MATs with up to five academies were in deficit in 2015-16.

This rose to 73 per cent of MATs with over 30 academies – defined as "system leaders" by national schools commissioner Sir David Carter. 

The figures were 70 per cent for "established" MATs with between 6 and 15 academies, and 67 per cent for "regional" MATs with between 16 and 30 academies.

The analysis is based on Department for Education data released last week, which showed that MATs were more likely than standalone academy trusts to have overspent in 2015-16.

In a blog, researcher Claire Easton said: "We wanted to see if smaller MATs were more likely to be in deficit than larger ones because they are less able to achieve economies of scale."

Instead, they found that "around seven in 10 Established, Regional and System trusts are in deficit compared with around six in 10 of Starter Trusts".

This was "despite the findings from the DfE’s Academy trust survey 2017", Ms Easton said, quoting the survey report, which states: "The majority of MATs, especially those that are larger [those with six or more academies], can provide examples of efficiencies achieved, with trusts able to articulate areas where they have made significant savings including payroll, catering, and grounds maintenance."

The DfE has previously briefed academy sponsors that MATs start to benefit from economies of scale after acquiring around 10 trusts, at which point "the financial risks lessen".

However, some MAT leaders have claimed that trusts need to be made up of around 20 academies in order to make back office savings.

Sir David has said the minimum size of a MAT should be 1,200 pupils, and that many trusts will need to expand or merge to take in up to 20 academies.

Speaking to Tes, an NFER spokesperson said that it was possible that larger MATs may have accrued deficits after taking on more challenging schools than smaller MATs, or expanding more quickly, requiring a greater upfront investment.

The DfE has been contacted for comment.

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