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

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Some local authority secondary schools face “significant” financial pressures and have cut or changed the aid provided to students with special educational needs, an expenditure watchdog has found.

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According to the National Audit Office (NAO), a greater proportion of secondary schools have been in deficit than primary schools – with over a quarter (27%) reporting cumulative deficits in 2019-20.

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

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Overall, the report concludes that the financial condition of the school system “remains well-maintained” in recent years, despite funding and cost pressures.

Many schools have been forced to tighten their belts by reducing their staff, or by reducing support for pupils with specialist needs.

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But the data does not yet reflect the impact that the COVID-19 pandemic may have on the region.

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

Despite the pressures, most maintained schools were in surplus from 2014-15 to 2019-20, although the proportion reporting losses was more than double.

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

The proportion of secondary schools reporting a cumulative deficit fell to 27% in 2019-20, reaching 30% in 2017-18.

In contrast, according to the report, the proportion of loss-making primary schools stood at 10% in 2019-20.

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

Some schools reported that they had reduced staffing levels by not replacing the laid-off staff, by reducing staff hours, and by creating redundancies.

Meanwhile, other schools reported changes to the aid provided to students with special educational needs and disabilities (SIPs) due to financial pressure, while others said the breadth of the curriculum had narrowed.

NAO is calling on DfE to develop its own performance management system so that it can monitor and evaluate the effectiveness of its programs to support the financial sustainability of schools.

NAO chief Gareth Davis said: “An economically sustainable school system is critical to the learning and development of a nation’s children.

“The Department of Education has implemented a number of sensible programs in recent years that have helped schools achieve savings.

Schools have worked very hard to manage their finances under extreme pressure due to the low financial support of the education system by the government.

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

Public Accounts Committee (PAC) chair Meg Hillier 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 reducing their staff, or by reducing support for pupils with specialist needs.

“The government needs to understand whether this surplus actually reflects better financial stability, and is not just a ticking timebomb in the education system that will end up failing children – especially those in greatest need.”

He said the “true impact” of the Covid-19 pandemic on the school’s finances is still not 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 caused by the government’s poor underfunding of the education system. This made it necessary to cut their provision is, and the deficit has become unavoidable in the increasing number of cases.

“From 2020, the government has improved funding to schools, which we very much welcome. However, we are not convinced this will be enough to reverse losses, and the financial situation remains extremely challenging.

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