Academies Face Tough Decisions

20th March 2015

Sheffield based BHP Chartered Accountants has worked with Kreston International, an association of independent accountancy firms, to produce a report on the financial performance of Academy schools in 2014.

Philip Allsop, partner at BHP explains -The report considers the results of around 300 Academy trusts throughout the UK. It reveals some interesting patterns. Many Academies are in a stronger financial position than last year, and are reserving funds for future expansion and also to help cover significant cost increases which are in the pipeline. Partner Mike Jackson adds -Academies know that their staff costs will increase by around 5% over the next 18 months purely as a result of changes in the rates of pension and national insurance contributions. This is before they even consider giving pay rises to their staff, and there is no indication that government funding will increase to cover this, so a large number of Academies need to make some tough decisions. This is a very significant financial challenge to Academies. Another trend highlighted by the report is for the creation of Multi-Academy-Trusts (MATs). Jackson explained -this is enabling neighbouring schools to reduce their overheads by sharing common costs. That certainly fits with the greater efficiencies that politicians want to see. Let's just hope these reductions can help in some way offset the new cost pressures on the horizon.