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Seven out of ten academies operating with financial 'losses', accountants warn

"Tough" picture of potential cuts in teacher numbers, cash shortages and delayed building maintenance highlighted in study.

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"Tough" picture of potential cuts in teacher numbers, cash shortages and delayed building maintenance highlighted in study.

Seven out of ten academies are operating with accounting losses because of squeezed budgets, an independent survey by accountants has concluded.

According to the Kreston Academies Benchmark report, the findings raise concerns about the future viability of a number of academy schools.

The survey of more than 600 academies responsible for over 300,000 children, conducted by the UK Academies Group of Kreston International - a global network of accountancy firms – states that many more academies anticipate running at a deficit.

Those schools which still have surpluses are reporting much lower figures than before.

The report highlights cash shortages, buildings maintenance being delayed, and experienced teachers leaving the profession.

It says that academies are increasingly being forced into “arranged marriages” with larger multi-academy trusts to generate economies of scale and protect against a “postcode lottery” of funding.

Increasing staff pension and auto-enrolment costs, rises in national insurance, the national living wage, asset depreciation, and the imminent apprenticeship levy are also highlighted as key risks.

The report warns that unless there is extra government funding, academies may have to cut teacher numbers.

Joe Scaife, chair of Kreston's Academies Group and a partner at Bishop Fleming, said: "The latest survey reveals staff costs and pupil numbers are not being covered by government funding alone, meaning academies have to look for cost savings on top of those they have already achieved.

“Academy schools have achieved significant cost savings over previous years but now have limited options on how to deal with the imminent danger: they can dip into their dwindling reserves, further tighten their belts, join a MAT or seek to diversify their income.

He added: "Whilst it is not all doom and gloom, I do expect to see a continuing trend of fewer, less experienced teachers in place, with academies having to use ageing technology and with buildings that are not being properly maintained. It's a tough picture for academies at the moment."

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