Skip to content

Latest News Finance – A Christmas Carol

Finance – A Christmas Carol

Finance – A Christmas Carol

As we approach Christmas let us reflect on one of the best known accountants of the festive period, and the impact of the past, present and future in relation to Schools Finance.

The ghost of Christmas past

The good old days when schools were getting above inflationary increases representing real term increases in funding. This by and large led to a significant increase in the number of support staff that schools employed, moving to a reliance of having more than just a teacher in each class. This also saw school balances increase significantly resulting in healthy contingencies to mitigate any emerging pressures. Schools also invested heavily in the premises and ICT ensuring schools were well maintained and had high quality resources for learning.

The ghost of Christmas Present

Six years of austerity and real term funding cuts of £3bn nationally (representing 8% reduction in funding through to 2020) led to some of the following headlines and challenges:
• Move to a National Funding Formula that was never fully implemented leaving some schools well below their expected level of funding
• Special and Alternative schools having to push Local Authorities for additional funding at a time when most of them are overspending on out of area placements
• Headlines of teaching staff having to clean schools
• Headlines of school staff fetching their own toilet rolls
• Restructures and reduced levels of staffing
• Under investment in premises, ICT and other equipment
• Eroding reserves with many schools moving into a deficit position

The ghost of Christmas Future

• The Government have announced 3 year increases in school funding as follows:
o £2.6bn 2020/21
o £4.8bn 2021/22 (additional £2.2bn)
o £7.1bn 2022/23 (additional £2.3bn)
• This is starting to deliver increases in funding for schools below their NFF level
• There is an expected move to a fully implemented National Funding Formula from 2021/22
• This includes funding for High Needs passed to Local Authorities but with no hard lever for ensuring any of the money finds its way into schools
• There is still a large unknown in relation to Brexit and what impact that would have on the economy
• Actuarial valuations are seeing pensions contribution rates rising
• Other cost increases covered by short term grants
• Both political parties are talking about increases in minimum wage, pay for teachers and other public sector workers

Christmas Morning

So as we awake and embark on our next planning cycle let’s take stock and consider how we can author our own future moving forward.
• Stop focusing on how much money we have lost and focus on how much money we still have. In many cases there are still millions of pounds to spend. We just need to ensure it is spent in the most effective way possible.
• Ensure there is a clear understanding of overall needs across the school and what would have greatest impact on outcomes
• Evaluate the impact of all spend areas relative to outcomes against financial cost
• Ensure invest in maintenance of premises, ICT and other equipment to avoid greater costs in the future
• Understand how proposed spend compares with other similar schools and if this presents an opportunity to consider spending differently
• Consider opportunities for collaborative working and sharing resources across schools
• Consider use of apprenticeship levy and alternative funding sources including partnership working
• Ensure getting value for money through all procurement activity

The Trust will be developing and rolling out a revised service and financial planning framework in the new-year that will support schools through achieving all of the above.