'Local authority schools overspend more than academies'

Education Policy Institute study also says local authorities could cover 90 per cent of English schools' deficit by redistributing 'excessive' surpluses

Caroline Henshaw

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Maintained schools are more likely to overspend than their academised peers, according to new analysis that one education body said showed schools "have hit the financial cliff edge".

The Education Policy Institute found that during 2016-17, 38 percent of primary academies spent more than their income, compared to 51 per cent of maintained schools.

Among secondaries, half of academies overspent compared to almost two-thirds of maintained schools. In special schools, the stats were 38 per cent and 47 per cent.

“Academies were, on average, less likely to have expenditure that exceeded income than local authority maintained schools,” EPI's Jon Andrews wrote in the report.

EPI also found larger, more established academy trusts were less likely to be in the red – once any reserves or deficits from previous years were taken into account – than their smaller, newer peers.  

National primary trusts, for example, were half as likely to be in deficit for 2016-17 as maintained primaries and single academy trusts with 1,200 pupils or fewer.

The thinktank did not speculate why, only pointing out that larger “trusts have the ability to move funding around to best meet the needs of their individual academies”.

The analysis is also based on DfE data from December that showed rising number of maintained schools in England are falling into debt.

Nearly a third of secondaries and one in 12 primaries posted deficits during 2017-18, which grew in size by more than 10 per cent from the previous year.

Geoff Barton, general secretary of the Association of School and College Leaders, said the data showed "many schools have hit the financial cliff edge".

"The current trend is one of increasing deficits and unless action is taken to improve the level of funding it is highly likely that educational standards will deteriorate," he said.

This week England’s largest teaching union, the NEU, accused the government of breaking a promise to ensure all schools would get a cash increase this year.

Despite the squeeze, EPI pointed out the overall surplus balance of English maintained schools (£1.794 billion) far outstripped the total £233 million deficit.  

The thinktank estimated local authorities could cover all but £50 million of the deficit by redistributing “excessive” surpluses between schools – a policy once backed by the DfE.

NASUWT teaching union general secretary Chris Keates said this approach was often used by local authorities to help schools in difficulty in the past.

“Unfortunately, since 2010 the government has abandoned these and other important financial controls in its drive to give excessive freedoms and flexibilities to schools," she said.

"The result has been in too many cases the stockpiling of public money, often at the expense of the children and young people whose education such funding was intended to support."

But NEU joint general secretary Kevin Courtney argued that the DfE's definition of an "excessive surplus" as over 5 per cent is too low a bar.

"This is not ‘excessive’, as any business leader would tell you, and represents less than 10 days of a school’s running costs," he said.

A Department for Education spokesperson highlighted that the report found 94 per cent of academy trusts and almost 90 per cent of maintained schools in surplus or breaking even.

“Whilst the core schools and high-needs budget is rising from almost £41bn in 2017-18 to £43.5bn by 2019-20, we do recognise the budgeting challenges schools face," they said. 

"That is why the education secretary has set out his determination to work with the sector to help schools reduce the £10 billion they spend on non-staffing costs and ensure every pound is spent as effectively as possible."

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Caroline Henshaw

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