Despite years of cost-cutting, growing numbers of academy schools in England are being forced into mergers because of financially unsustainable deficits, a report reveals.

The schools are merging into large academy chains in a bid to reduce costs and manage their deficits more easily.

A report from Kreston academies group has highlighted that more than half of schools last year had an operating deficit.

Resource sharing within multi-academy trusts

From a study of 1,000 academies, they say that only severe cutbacks and resource sharing within multi-academy trusts prevented this figure from being much higher.

The group says that the average deficit fell in 2018, compared with the year before and further spending cutbacks are going to be harder to achieve.

Also, schools are facing financial uncertainty due to higher pension contributions, crumbling school infrastructure and increased teacher pay.

The group’s chair, Pam Tuckett, said: “Schools across England say that the easy savings have been made already and we are now seeing reductions in learning support assistants with an increase in staff contact ratios to save costs.

“In theory, this means that teachers will be spending longer in the classroom so schools will not need as many teachers.”

She added that after several years of cost-cutting, trusts say there are now no more areas where significant costs can be made without leading to an impact on the provision of education.

‘Unsustainable’ for academy schools to run deficits

She says it is ‘unsustainable’ for academy schools to run deficits every year as many are now being forced to do – as school reserves for achieving this will run out eventually.

The report comes after the government revealed that 50% of state school pupils in England are now being educated in academies.

However, researchers say in their report that the financial pressures facing schools are driving standalone establishments as well as small trusts to join with larger multi-academies to continue existing.

The researchers say that the average trust size has grown over the last two years from 3.5 schools per trust to the current figure of 5.6 schools.

Some multi-academy trusts are operating on a commercial basis

The report also highlights that some multi-academy trusts are operating on a commercial basis and while this may be ‘uncomfortable for many’, it is necessary for efficiencies.

The report also highlights: “To enable financial governance to improve it’s important that MAT’s become centralised more.”

Also, researchers found that just 5% of MAT’s are looking to pool their schools’ funding despite being urged to do so by government ministers.

The system would work by the trust collecting the money for each school centrally and then sharing the cash between the schools rather than taking a proportion to help pay for the trust’s costs.