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How Leigh Academies Trust is facing up to the financial challenges ahead

piggy-banks-1024Steve Avis FCMA, Finance Director, Leigh Academies Trust, writes…

Leigh Academies Trust (LAT) is a multi-academy trust based in Dartford, Kent. It currently has 7,200 students in four secondary academies, five primary academies, one special academy and a university technical college. With 1,000 staff in Dartford (and 300 in Greenwich and Maidstone) and a budget of nearly £50 million, LAT is the second largest employer in the area.

If we thought the last five years had tested us in balancing the budget, then the next few years seem set to challenge us all on a different level. Just before the general election, the Institute for Fiscal Studies reminded us that schools’ funding had risen by 0.6% in real terms since 2010 but warned that in the next five years, schools and academies would face at least a 7% reduction in real terms funding.

But don’t be too downcast. The economic and educational environment presents some great opportunities for achieving that elusive A* in the Balancing the Budget exam!

Don’t be too downcast. The economic and educational environment presents some great opportunities for achieving that elusive A* in the Balancing the Budget exam!

Rising student numbers

The last five years saw an 8% rise in the number of students in our primary schools and academies, and this is expected to rise by a further 5% in the next five years. Secondary numbers are expected to rise by 10% in the period to 2020. So, demand for places in our schools is most definitely out there.

Leigh Academies Trust has been working in collaboration with Kent County Council to help the local authority find places for additional students in 2015-16. Places have been found for more than 30 students whose current school will close; Wilmington Academy will take an additional 20 students in September, funded from Kent’s basic need growth fund; a new ASD unit will also open at Wilmington; and a speech and language provision will open at The Leigh Academy. New places means more income.

Of course not all schools and academies can expand to take new students, but all can focus on achieving full capacity and meeting their published admission number.

Post-16 student numbers and efficient delivery

Another area for all secondary schools and academies to focus on is maximising the number of post-16 students on roll. The raising of the participation age again provides schools and academies with the demand for sixth form places. The competition is tough, with the FE sector and apprenticeship schemes fighting for post-16 funding, but there is much that we can do to encourage GCSE leavers to come to our academies.

At Leigh Academies Trust we have developed a trust-wide strategy, with strong collaboration between all secondary academies, to broaden the curriculum offer, but with value for money in mind. Key strands of this strategy are:

  • developing common option blocks containing academic and vocational courses across academies to support greater choice and economies of scale
  • sharing of students where numbers are low to enable less popular courses to be viable, with transportation between academies provided
  • creating more personalised programmes of study, with a reduction in the number of students following four AS level courses, thereby driving a reduction in the number of teaching hours per week
  • bespoke tutor groups and pastoral programmes
  • no lessons on Wednesday to compete with local colleges (allows intervention work to take place)
  • trust-wide marketing strategy drives applicants through a bespoke post-16 website, a widespread presence on social media and targeted leaflet drops
  • open tours and taster sessions ongoing throughout the year.

This strategy was developed after a detailed cost analysis of post-16 provision which the trust commissioned in 2014. Looking at teaching hours for each course, the cost of individual courses, student uptake, group sizes and funding, the analysis concluded that the costs of delivering post-16 provision were greater than the post-16 funding allocation received, with pre-16 funding effectively subsidising post-16. The analysis also indicated that the breakeven average class size was 14 for post-16 as a whole.

Cost awareness

Comparative cost data between schools has been around for a while, but an individual school’s ability to improve value from its suppliers using this information is very limited.

One of the great advantages of being part of a multi-academy trust is the trust’s ability to use its purchasing power to deliver support services at an economic cost. A single trustwide support contract covering seven academies will certainly be more economical than individual contracts procured by the seven academies. Leigh Academies Trust has negotiated significant savings from centralised contracts for cleaning, catering, grounds maintenance, facilities management and energy. And we are continuing to drive our efficiencies from collaborative approaches to the procurement of resources for teaching and learning.

Leigh Academies Trust has negotiated significant savings from centralised contracts for cleaning, catering, grounds maintenance, facilities management and energy.

The provision of centralised services is also key to making our money go further. Leigh Academies Trust provides centrally-managed IT, HR, finance, payroll, business and governance services to its academies. Specialist staff provide day-to-day support in academies while benefiting from the sharing of good practice collected at the centre. The trust has ambitious plans to develop these central services into income-generating opportunities by creating a centre of excellence for service delivery to other schools and academies outside the group.

Additional sources of income

Maximising income from the hiring of facilities to third parties has long been a revenue generation favourite of schools and academies, but achieving a good return may not be as easy as it seems. There are two key challenges involved: generating the lettings in the first place, and accounting for the profit without upsetting the tax man.

Without careful planning, schools and academies may find themselves liable for paying corporation tax on profits from hiring facilities. In general, academies will have to pay tax unless they can demonstrate that any of the following three exemptions apply:

  • The academy’s Objects (contained in the Articles of Association) enable the raising of income from lettings to be regarded as a primary purpose of the academy. All academies have education as a primary purpose, but not all enable income generation.
  • The letting is for land and/ or space only, and does not include services and equipment, including sports equipment. Be careful as artificial sports pitches can be regarded as equipment.
  • The first £50,000 of net income is free from tax.

To successfully navigate through this, Leigh Academies Trust has established a commercial arm – LAT Enterprises Ltd – which brings all lettings income together in a separate legal entity. LAT Enterprises then Gift Aids all of the income to the trust on an annual basis generating a tax liability of zero.

The trust centrally manages a network of business managers who are based in each academy with responsibility for (among other things) selling facilities to third parties. This approach enables academies’ individual needs to be met while maximising the opportunities for major trust-wide events.

To successfully navigate through this, Leigh Academies Trust has established a commercial arm – LAT Enterprises Ltd – which brings all lettings income together in a separate legal entity. LAT Enterprises then Gift Aids all of the income to the trust on an annual basis generating a tax liability of zero

Whichever political party had won the general election, the future funding for schools and academies would have been challenging. The maxim ‘more for less’ has never been more apt, and school and academy leaders will need to think innovatively to ensure that every pound received is deployed to best effect – and that the number of pounds is as high as it can be.


triumph-in-adversity-cover-widrop-shadow-300This piece is taken from Triumph in adversity – an SSAT and Arcadis publication that explores the many different ways in which schools are overcoming financial constraints. You can download the full publication here [PDF].

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