Laragh Jeanroy at PEM says: “This highly regarded report reveals that, for a number of academies, financial gain was one of the main reasons for converting. Hopes that spending on schools may increase in the run up to the next election, however, clearly seem to have been overly optimistic.
“The data illustrates that overall income per pupil is down 2% year-on-year;
Spend and buying power
The report reveals that staff costs represent the largest item of expenditure by far for all academies; “It is a difficult cost to control, given that pay rates and rises are set centrally”, says Laragh. “Secondary converters spend the highest proportion of their total costs on staffing (73.9%), whereas sponsored academies spend the least (68%).”
This is undoubtedly a reflection of the higher depreciation charge in sponsored academies as most have new premises, and is also indicative of the more generous funding regime allowing greater discretionary spend.
When it comes to non-staff costs, academies have greater flexibility to drive efficiencies and various options open in order to increase their buying power. For example, being part of a federation or a Multi Academy Trust (MAT) and entering into buying arrangements or sharing services. “Expectations were that more schools would take advantage of such options than has been the case”, continues Laragh, “but looking to the future, it seems likely that more and more academies will want to improve the way they buy.”
While the number of MATs is currently small, the available data reveals that their carry-forward balance as a percentage of income is higher than other converters. Says Laragh: “This reflects, we believe, their economies of scale. It is likely therefore that the movement for existing trusts consisting of one academy embracing other converting schools will continue as they seek potential cost savings.” Laragh concludes: “It will be interesting to review next year’s report once we have more information from MATs to see if this trend will continue which, in my view, it will.
- Ends –
Notes to Editors
PEM provides specialist financial services for the academy sector http://www.pem.co.uk/
Peters Elworthy & Moore (PEM) is one of the leading independent firms of accountants, tax and business advisers in the East Anglia region, with 11 Partners and 140 staff www.pem.co.uk
PEM is within the top 60 in the UK, providing financial strategies for success
PEM has a large and varied client base including: Owner Managed Businesses, Charities and Not-for-Profit sector, Technology, Property, Agriculture including Farming and Bloodstock as well as many Professional Firms, Partnerships and Private Clients in the region.
Kreston International Limited is a global network of independent accounting firms. Currently ranking as the 14th largest accounting network in the world, Kreston now covers 95 countries with 700 offices providing a resource of over 18,500 professional and support staff. Founded in 1971, the Kreston organisation offers reliable and convenient access to quality services through its member firms located around the globe. Visit, www.kreston.com
PEM was awarded the Kreston International Member Firm of the Year Award, reflecting the firm’s extensive range of international work
Laragh Jeanroy, Audit Partner, Head of the Corporates Team and member of the Charities Team, is available for interview