Academy budgets are in an even worse state than those of council-run schools with eight out of 10 in deficit, suggest figures from their accountants. Two more years like this and the entire sector could face insolvency, says a report from the Kreston UK accountancy network which looked at 450 schools. It follows data published on Friday which showed over a quarter of council-run secondary schools were in deficit.
The government disputes the findings of both reports. The 450 schools analysed in the Kreston UK report are all audited by accountancy firms in the network and are a representative sample of academies in England, say the authors.
The figures, for the year ending 31 August 2017, show that of these academies:
- 55% were in deficit before the effect of depreciation of assets like buildings, equipment and furniture was taken into account
- this rose to 80% when the accounts were adjusted to include depreciation.
The report, co-authored by accountants Duncan & Toplis, calls for more money to be put into schools to avoid staff cuts. Staff make up 72% of costs in these academies, say the authors.
The report warns that cutting staff numbers and finding enough money for redundancy payments could accelerate some schools towards insolvency. On Friday, research by independent think tank the Education Policy Institute found the number of council-run secondary schools falling into deficit had trebled to 26.1% in the four years to 2017.
The EPI analysis, which is disputed by the government, also found a significant increase in the number of primary schools in deficit. But the think-tank data excludes academies, which make up about 60% of secondaries and 20% of primaries in England, and that makes the Kreston UK data particularly significant.
Of the primary academies in the Kreston UK report, almost three-quarters were in deficit before the effect of depreciation was taken into account, according to their accountants. The authors emphasise that they are accountants with "no hidden agenda and no political allegiance.
The government says its own figures suggest that schools "hold surpluses of more than £4bn and we are providing support to help them get the most out of every pound they spend".
