The Educator Magazine U.K. May-August 2026 issue. - Magazine - Page 50
Why good financial data
isn’t giving academy leaders
confidence for the future
plans for the next 12 months. Although the withdrawal of growth
funding may have had a small impact, the scale of the drop off
in growth plans would suggest that, even for larger trusts with
more income, uncertainty about ongoing costs and funding
plans appear to be outweighing the perceived benefits of
growth.
Reserve levels
With ever-increasing costs and uncertainties surrounding
income, it’s no surprise that reserve levels are one of the main
barriers to growth for academy trusts. The report shows that,
whilst 2025 was a strong financial year, with the percentage of
trusts with deficits falling, most trusts still predict a reduction in
reserves throughout 2026 and 2027.
Interestingly, large MATs anticipate the biggest reduction, despite
previously outperforming predictions - reinforcing a cautious
approach to long-term finances, regardless of the size of trusts.
It’s a well-known fact that underlying financial pressures
pose a constant challenge in the education sector - and this is
particularly true for academy trusts which manage their own
finances.
But according to the Kreston Academies Benchmark Report 2026,
things are looking up. At first glance, the financial position of
academy trusts appears stronger than it has been in recent years.
Performance has exceeded expectations, with average surpluses
climbing up to figures last seen in 2022.
Yet, despite these headlines, confidence across the sector
remains low. While many trusts outperformed financial budgets
and improved outcomes, the findings point to caution around
growth and continuing structural pressures.
So, what complexities are academy trusts facing beyond the
headline figures? And how can they effectively manage finances
to cope with these complexities?
Low growth expectations
The size of a trust is often key to its financial performance.
According to the report, Single Academy Trusts (SATs) and small
Multi-Academy Trusts (MATs) returned modest surpluses this year,
whereas medium and large MATs reached an average surplus of
£0.4m and £1.1m respectively, highlighting a stronger financial
capacity.
Despite this, plans for future growth have slowed. While 61% of
academies expected to gain at least one school last year, this
dropped to 36% for the next 12 months.
Although scale continues to support stronger financial
performance, it’s clear that trusts have downsized their growth
With this in mind, academy trusts must maintain a reserves policy
to ensure financial resilience. Typically, this equates to one month
of normal expenditure, but trustees should determine a level that
suits their trust’s circumstances and document it in the annual
financial statements.
Trusts should also consider steps to mitigate risks if their reserves
are low. When it comes to spending, estate maintenance often
eats up a large portion of budgets. This is a particular challenge
for trusts not eligible for SCA funding, so those trusts should
focus on essential maintenance by addressing the urgent issues
that could risk safety or functionality in the short term. They
should then make plans for the longer term, making sure they are
putting themselves in the best position for CIF applications at the
right time. Trusts in receipt of SCA funding are in a better position
to plan their maintenance more long term, another benefit of
being part of a larger trust.
SEND pressures
Alongside reserves, the ever-increasing Special Educational
Needs and Disabilities (SEND) funding gap remains a key concern
for academies. Funding shortfalls and increasing demand
continue to strain budgets, with many trusts identifying the
SEND system as a financial risk.
The government has now published its 2026 Schools White
Paper, announcing that mainstream schools will receive direct
funding to support SEND children as part of a £4 billion package,
to make the system more inclusive. £1.6 billion will be provided
to early years, schools and colleges over the course of three years
through an “inclusive mainstream fund” and a further £1.8 billion
over the same period will be used to create an “experts at hand”
service - focusing on support from specialists such as SEND
teachers and speech and language therapists.
