Some secondary schools face ‘significant’ financial pressures, watchdog says

A larger proportion of secondary schools have been in deficit than primary schools – with more than a quarter (27%) reporting a cumulative deficit in 2019-20, according to the National Audit Office (NAO).

The watchdog is calling on the Department for Education (DfE) and the Education and Skills Funding Agency (ESFA) to establish why council-run secondary schools are under “particular financial pressure”.

Overall, the report concludes that the financial health of the school system has “held up well” in recent years despite funding and cost pressures.

But the data does not yet reflect the impact that the Covid-19 pandemic may have had on the sector.

The report says: “Most maintained schools and academy trusts are in surplus, but there are significant pressures on some maintained secondary schools.”

Despite the pressures, most maintained schools were in surplus from 2014-15 to 2019-20, although the proportion reporting a deficit more than doubled.

In 2019-20, 88% of maintained schools reported a cumulative surplus while 11% reported a cumulative deficit, up from 5% in 2014-15, the NAO found.

The proportion of maintained secondary schools reporting a cumulative deficit peaked at 30% in 2017-18, falling to 27% in 2019-20.

In contrast, the proportion of maintained primary schools in deficit was 10% in 2019-20, according to the report.

The watchdog suggests that the steps schools have taken to remain financially sustainable “may adversely affect aspects of their provision”.

Some schools reported that they have reduced staffing levels by not replacing staff who had left, by reducing the hours of staff and by making redundancies.

Meanwhile, other schools reported making changes to the support provided to pupils with special educational needs and disabilities (Send) because of financial pressures, while others said curriculum breadth had been reduced.

The NAO is calling on the DfE to develop its performance management systems so that it can monitor and evaluate the effectiveness of its programmes to support schools’ financial sustainability.

Gareth Davies, the head of the NAO, said: “A financially sustainable school system is vital to the learning and development of the country’s children.

“The Department for Education implemented a range of sensible programmes in recent years that have helped schools to achieve savings.

“However, until it improves the reliability of its data, it will not be able to make fully informed decisions about the support it offers to schools.”

Meg Hillier, chair of the Public Accounts Committee (PAC), said: “There are worrying signs that this surplus has come at the expense of services. Many schools have been forced to tighten their belts by cutting back on staff, or reducing support for pupils with specialist needs.

“Government needs to understand whether this surplus genuinely shows better financial sustainability, and isn’t just a ticking timebomb in the education system which will end up failing children – particularly those with the greatest needs.”

She added that the “true impact” of the Covid-19 pandemic on school finances is still not yet known.

Geoff Barton, general secretary of the Association of School and College Leaders, said: “Schools have worked very hard to manage their finances under extreme pressure because of the Government’s woeful underfunding of the education system. This has necessitated making cuts to their provision, and in an increasing number of cases deficits have been unavoidable.

“Since 2020, the Government has improved funding to schools, which we very much welcome. However, we are not convinced this will be enough to reverse the damage that has been done, and the financial situation remains extremely challenging.”