School debt climbs nearly fourfold, warns think-tank

By Joe Lepper

| 11 January 2019

The proportion of council maintained secondary schools in debt has rocketed over the last five years with almost one in three in the red, analysis of school budgets has found.

The average maintained secondary school has a deficit of nearly £500,000

In 2017/18, 30.3 per cent of local authority-run secondary schools were in deficit, which is almost four times 2014's proportion of 8.1 per cent,  according to Education Policy Institute analysis.

The average maintained secondary school deficit is now £483,569, with one in 10 having a debt that is more than 10 per cent of their total income.

The financial plight of special schools is also deteriorating. Since 2014, the proportion operating at a loss has almost doubled, to 10.1 per cent. The average special school is £225,298 in debt.

The percentage of maintained primary schools in debt is also climbing, from four per cent in 2013 to eight per cent last year.

The Education Policy Institute is calling on the government to look at whether an increase in per-pupil funding or efficiency savings can help address the current shortfalls among schools. This should have a particular focus on secondary schools.

Offering extra advice and support to schools facing large deficits should also be considered.


The report found that academy trusts have lower levels of "in year" debt and urges the government to explore why this is.

A possible reason is that trusts are able to move funding around their academies to meet their needs, says the report, which adds that there is currently a lack of transparency around such funding decisions.

Anntoinette Bramble, chair of the Local Government Association children and young people board, said: "These findings are further evidence of the funding pressures schools and councils are under, including support for children with special needs, which faces a shortfall of £472 million this year alone.

"Council-maintained schools can if absolutely necessary, run up a deficit on licence from the local authority, providing there is a full plan to show how the finances are going to be brought back into balance as soon as possible.

"This tends to happen if, for example, maintained schools have had to expand to meet demand for school places in their areas and are waiting for government funding to catch up with increased numbers of pupils.

"However, as the report shows, it is important to note that there are more schools with positive balances than in deficit."

Across all maintainted schools, 45 per cent had a surplus in 2016/17 which then increased in 2017/18.

According to research published in July 2018 by the Institute for Fiscal Studies overall school spending fell by eight per cent per pupil in real terms between 2009/10 and 2017/18.

A Department for Education spokeswoman said: "Whilst the core schools and high needs budget is rising from almost £41bn in 2017/18 to £43.5bn by 2019/20, we do recognise the budgeting challenges schools face.

"That is why the Education Secretary has set out his determination to work with the sector to help schools reduce the £10bn they spend on non-staffing costs and ensure every pound is spent as effectively as possible to give children a great education."

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