Academy School Trusts – Forecasting the Future

22nd March 2018

“It is important to distinguish between an in-year deficit—what a trust might choose to do with its resources in a particular year—and its underlying financial position….. The situation is different trust by trust, and we can explore individual cases, but for us it is more interesting to look at the cumulative position: are they cumulatively in surplus or deficit?”

Those comments were made by Jonathan Slater, Permanent Secretary for the Department for Education, as he gave evidence to the House of Common’s Public Accounts Committee in January 2018. Although the Committee was ostensibly reviewing the consolidated accounts for the academy trust sector for 2015-16, the Committee’s questions were wide ranging as they sought not only to look back but also to build a picture of financial strength within the academy trust sector on an ongoing basis.

Their concerns were no doubt prompted by failures in 2017, not least that of the Wakefield City Academies Trust which in September 2017 announced that it was divesting control of 21 academy schools. With more than half of all secondary schools and a fifth of primary schools in England now run as academy trusts, the Committee’s concerns over the future of the sector are perhaps understandable. Particularly so as Jonathan Slater also commented that he expected the number of academy trusts facing financial challenge to rise from 5.5% in deficit in 2015-16 to 10% by the end of 2016-17. [1]

Given this background it is perhaps unsurprising that the finances of academy trusts are increasingly coming under scrutiny. To this end, the budget forecasting return requirement (BFR) for trusts is being extended from one year to include an additional three. This extended forecast will require academy trusts to provide selective income and expenditure rows, with some capital lines and non-cash elements. It is expected that year-one information will be pre-populated from other fields within existing reports with trusts being required to manually add information in respect of the subsequent years.

It is acknowledged that this lengthier reporting period will require some additional work on the part of academy trusts; but it is anticipated that the additional information gleaned will not only help trusts to pre-empt budget pressures but also enable the DfE to identify potential funding shortfalls across the sector. Commenting on the new BFR requirements Thompson Jenner specialist education partner Dave Tucker said; “It is understandable that academy trusts will view this level of extended scrutiny with some nervousness as forecasting ahead will undoubtedly emphasise the continuous financial challenges facing academy trusts.”

To explore the challenges facing academy trusts further, Thompson Jenner invites trust Business Managers, Chief Operating Officers and Chief Finance Officers to a one day academies seminar on 23 March. A number of experts will be providing an in-depth update on the important changes and developments that have occurred over the last 12 month.

Thompson Jenner is one of Devon’s leading independent chartered accountants , offering business advice for small to medium sized owner managed businesses and financial services in Devon. With offices located in Exeter and Exmouth, the firm employs a professional team of over 60 personnel each having different skills and backgrounds bringing a wealth of experience and specialist knowledge.



If you would like to find out more or meet to discuss the Education services which we are able to provide, please contact Dave Tucker on 01392 258553 or to arrange a free initial meeting.



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