As we enter the audit season, Boards will be asked to explain their assessment of the going concern position for their Trust. In recent times, this has become a more challenging process, with reducing reserves and funding squeezes. Do the recent announcements help Boards in this process?
The starting point will be a review of the forecasts, which are likely to be helped by the recent funding announcements. We are all aware of the headlines, but what will it mean for you?
The funding package for English schools for students aged 5 to 16 includes an extra £2.6 billion for 2020 to 2021, £4.8 billion for 2021 to 2022, and £7.1 billion for 2022 to 2023 compared to 2019 to 2020. The amounts are cumulative, so the extra £7.1billion in 22/23 is £2.6billion in 20/21, an extra £2.2bilion in 21/22 and a further £2.3 billion in 22/23. The commitment to increase minimum funding to £5,000 per secondary pupil and £4,000 per primary pupil will be welcomed by the worst funded schools, but full details of how the funding will be allocated are yet to emerge and it is possible some income streams will cease or be reduced.
Some of this funding reflects increases that would have flowed from increases in pupil numbers and inflation, so it is important that schools assess the impact on their underlying financial position. In addition, there are some cost increases coming that will need to be covered by this funding, such as the commitment to increase starting salaries for teachers to £30,000 by 2022, and the increases for those already in the profession.
There was good news however in the confirmation that the previous funding commitments to cover the increase in employer pension contributions for State schools until the next spending review remain and are not included in the £14 billion.
The prime minister has confirmed that there will be no additional funding until next year. The Department for Education has said academies will get the cash from September 2020, when their financial year begins.
The additional funding announcements will provide a degree of comfort in many trusts, although of course at a time of such political volatility planning for the medium term remains extremely challenging.