Road in sunset

Academies: looking ahead to 2019

Darren Rigden, Partner, Audit
Road in sunset

It has been well documented that schools and academies are continuing to struggle with rising costs and inadequate funding. Educational faculties have reported difficulty retaining staff, providing quality education and maintaining safe and secure grounds, along with balancing budgets.

2018 Autumn Budget: what did it tell us?

The Chancellor, Philip Hammond, made both direct and indirect moves to ease the financial burden for academies in the Autumn Budget. This included announcing an additional £400 million in funding. Despite this, many in the sector argue this is will not be enough to bridge the gap between funding and costs. So, as we head into 2019, where exactly do academies stand and what can they expect from the year ahead?

It was highlighted that the 2018 Autumn Budget’s £400 million additional funding will equate to approximately £10,000 per primary school, and £50,000 per secondary school. The funding made headlines; not for the gesture, or the amount, but the Chancellor's reference to it being for "the little extras". This means that where and what the money is spent on will be limited to equipment and facilities alone.

While any extra funding is likely to be welcomed by academies, it has been widely expressed that most would prefer the funding to be less restrictive so it can be used where it is most needed - on children and their education. Not only would this have potentially led to the funding receiving a warmer welcome, it would also have helped raise morale in a sector struggling with costs.

Indirectly, there was also some good news for teaching staff as the personal tax allowance will increase to £12,500 from April next year - a year earlier than planned. Teachers and other employees in the sector will see some benefit from this in their take home pay in 2019. For those on higher salaries, the threshold for higher rate tax will rise from £46,350 to £50,000 from April 2019.

Teachers' salaries

In a more direct move, it was announced earlier this year that salaries will increase by up to 3.5%, or between £800 and £1,366, for classroom teachers on the main pay range. Those in the upper pay range will receive a 2% rise and those in leadership positions will get 1.5%.

For now, the deal will be funded by the Department for Education (DfE), but with no real certainty on funding in the long-term, many education faculties are concerned this could lead to another unfunded cost on their budgets that are already overstretched.  

Retaining subject specialists

A maths and physics retention trial was also announced by the DfE, with the government pledging to provide £10 million to undertake a regional pilot to test how to increase the retention of these highly-sought subject specialists. This move will have the potential to improve (and reduce) staff turnover figures, increasing morale and the quality of education by holding on to talented teaching staff.

Pension contributions

Pension contributions are set to increase as of September 2019, with the DfE intending to fully fund the contribution increase for state funded schools and academies. Since 2015, employers have paid 16.48% towards the Teacher Pension Scheme (TPS), a figure which has been confirmed to rise to 23.6%. While concerns over the funding of this are ever-present, the DfE is set to announce decisions on distribution of the additional funding before schools and academies experience pressures in September 2019.

While there has been some good news for the education sector as we edge into 2019, with rising costs and a real requirement for additional funding, much more needs to be done to bridge the financial gap. Academies struggling with budgets should seek specialist advice where necessary.

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Darren Rigden
Darren Rigden
Partner, Audit and Business Solutions