Number of secondary schools in deficit trebles

Research by the Educational Policy Institute (EPI) has found that the number of state secondary schools falling into deficit has almost trebled in the last four years to more than a quarter.

School funding pressures in England finds that the number of local authority maintained secondary schools in deficit reduced from 14.3 per cent in 2010-11 to 8.8 per cent in 2013-14, with the proportion of local authority secondary schools in deficit nearly trebling over the period of four years up until 2016-17, expanding to over a quarter of all such schools – or 26.1 per cent.

Additionally, the average local authority maintained secondary school deficit rose over the last seven year from £292,822 in 2010-11 to £374,990 in 2016-17. Moreover, two-thirds of council schools spent more than their income in 2016-17, while 40 per cent have had balances in decline for at least two years in a row.

The research, which adds to growing evidence of the financial struggles faced by a significant minority of schools, shows that ‘being able to meet the cost of annual staff pay increases from a combination of government funding and their own reserves looks highly unlikely, even in the short term’ for a significant proportion of schools.

Analysing the cost pressures for schools, the EPI found the funding allocated by the government through its new National Funding Formula for schools (NFF), fails to meet pressures on budgets produced by the annual one per cent pay settlement for school staff, despite an extra £1.3 billion in funding for schools by Whitehall in July 2017.

Jon Andrews, EPI's director for school system and performance, said: "We are seeing an increasing number of schools spending more money than they have coming in and our analysis shows that increasing costs on staff are going to add to that pressure, even with the additional funding being delivered by the National Funding Formula."

Richard Watts, chair of the Local Government Association’s Children and Young People Board, said: “Council-maintained schools are under significant funding pressures as a result of cuts to local authority budgets, an increase in wages and the additional costs of paying the Apprenticeship Levy. The introduction of the national funding formula for schools and reforms to high needs funding have exacerbated things further, by making it more difficult for councils to ‘top-up’ high needs funding in response to rising demand.

“Councils are clear that the government should provide additional and ongoing funding to meet this need, otherwise councils may not be able to meet their statutory duties and children with high needs or disabilities could miss out on a mainstream education. As a minimum the government needs to launch a fundamental review of high needs funding in order to ensure we meet the needs of our most vulnerable children.”

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