The Educator Magazine U.K. September - December 2025 issue. - Magazine - Page 44
Asset finance specialists can help
schools do the maths on spending
and wider-reaching tool for schools looking to
address their capital spending challenges and
manage budgets.
The principles and provisions of IFRS 16
obviously extend much more widely than
the world of education, but for schools the
introduction of the amended regulation is
exciting on three different fronts.
Firstly, a much wider range of equipment
is now available to them through finance
leases, helping them to ease cashflow, manage
budgets and minimise paperwork. As the UK
Government itself says in its guidance to
academies, taking out leases to support
day-to-day operations can “be a sensible
value-for-money approach as an alternative to
buying assets outright”. [https://www.gov.uk/
government/publications/leasing-foracademy-trusts ]
The range of asset types that schools can lease
under the new arrangements is broad, and
includes:
• Temporary classrooms and structures
With the education sector facing critical
pressures and choices on budgets, the
International Financial Reporting Standard 16
opens up welcome opportunities to manage
budgets and invest in vital equipment.
In the face of rising costs, the job description
of today’s headteachers now entails coming up
with innovative ways to raise money for their
schools and find additional sources of funding
[https://www.bbc.co.uk/news/articles/
cy09e7w6jleo] So they may have been dismayed
to read the Institute for Fiscal Studies’ (IFS)
assessment that the schools settlement in the
Spending Review amounted to a “real-terms
freeze in the budget” if the cost of expanding
free school meals was stripped out. [https://ifs.
org.uk/articles/spending-review-2025-initialresponse]
New leasing opportunities
School managers and headteachers may want
to turn their attention to some different
reading matter this summer – or at least a
summary of it.
The amended International Reporting Standard
(IFRS) 16 can help ease budgeting pressures
on headteachers and finance managers. That
is because its introduction into maintained
schools and academies in England in 2024,
along with the associated general consent
documents granted by the Secretary of State
for Education, has made leasing a much simpler
• IT & telephony systems – from whiteboards
and tablets right through to door entry
security systems and CCTV systems
• LED lighting systems
• Vending, catering & cleaning equipment
• Furniture
• Bathroom/sanitary items
• Gym equipment
• Grounds-keeping equipment
• Minibuses and other vehicles for the use of
the school
All of these asset types can now be leased
without schools needing to seek approval from
the Department for Education (DfE) and / or
the Education and Skills Funding Authority.
Secondly, the inclusion of IT in the list of asset
types above means that schools can now using
lease financing plans to make technology
upgrades. This is helpful for keeping pace with
shifts in tech capabilities and meeting the
needs of pupils and their future employers.
Thirdly, schools can now make use of the
flexible financing periods offered by finance
companies, giving them more options to align
budgets with vital equipment requirements by
scheduling payments over a longer time period
if they wish.
The role of finance specialists
We said above that IFRS 16 could provide some
much-needed support for headteachers’
budgets. In reality, it could be easily lost based
on many other daily challenges that schools
face. After all, experts and commentators point
to a number of weighty issues that are currently
occupying England’s schools, such as
expanding free school meal and breakfast
club provision, managing essential repairs to
buildings, addressing the issues of RAAC
(reinforced autoclaved aerated concrete) in
schools, implementing more provision for
children with special educational needs and
disabilities (SEND), and budgeting for teacher
pay rises. [https://www.bbc.co.uk/news/
articles/cy09e7w6jleo; https://ifs.org.uk/
publications/annual-report-educationspending-england-2024-25] In addition, headteachers say they have to spend time going out
into the local community to find private donors
to fund activities, equipment and basic
curriculum resources.[ https://www.bbc.co.uk/
news/articles/cy09e7w6jleo]
But hearing about these demands on their time
returns us to the third benefit of IFRS 16 listed
above – the fact that asset finance specialists
can now offer schools flexible financing
arrangements for investing in equipment.
It is not just the added flexibility that is so
important here, it is also the expertise on offer.
Experienced funders will be familiar with the
issues schools and academies face, both
day-to-day and in their longer-term investment
planning. Technology evolution, and the need
to upgrade IT infrastructure and equipment,
has added to these issues.
By allowing specialist financiers to offer a
broader range of finance products and advice,
through the adoption of IFRS 16, the UK
Government has provided schools and colleges
with a powerful tool for navigating their
complex financial landscape.
Obviously, IFRS 16 does not provide an instant
catch-all solution for every maintained school
or academy. They will still need to maintain
rigorous internal financial management
disciplines. Leases will need to be reviewed
from a value for money perspective. And
there’s a learning curve involved for schools
and academies on making use of leasing
solutions.
However, asset finance specialists can support
on this process. In particular, they can make
leasing arrangements accessible and
streamlined for teams coming to them for the
first time, and offer guidance for schools to
make informed choices about their contractual
arrangements and terms.
When done in this way, specialist leasing
finance can be a win for both schools and their
pupils – with the former gaining a new level of
financial choice, and the latter gaining access
to facilities and equipment that better support
their ability to learn, develop and prepare for
future career routes. With the UK Government
saying it’s going to be “asking more from
schools”, this IFRS 16 change is more welcome
than ever.
