More than half of multi-academy trusts are forecasting an in-year deficit this academic year, according to an analysis of trust finances.
The report, shared with Vlog, says that 55 per cent of trusts expect to run a deficit this year, up from 34 per cent in last year’s forecast, which it calls a “sharp deterioration”.
The MAT Finance Sector Insight Report 2025, based on budget data from 274 trusts covering more than 3,300 schools, warns that there are “growing financial pressures” across the sector.
A third of trusts are also expected to hold reserves below 5 per cent of their income this year, according to the report. This is a level that the Department for Education considers “financially vulnerable”. Half of trusts predict they could fall below this threshold by 2028, the report warns.
Vlog revealed last year how there had been a large rise in the number of trusts falling below this reserves threshold.
Today’s analysis highlights that financial vulnerability is increasingly widespread among trusts, with MATs “consolidating around” the 5 per cent mark in reserves and fewer holding larger surpluses. Only 2 per cent of trusts in the sample are projected to have reserves above 20 per cent of income.
Will Jordan, co-founder of IMP Software, which published the report, said the sector was under “growing strain” from converging cost pressures, including pay rises, national insurance increases, falling pupil numbers and unfunded demand for special educational needs and disabilities provision.
“The financial outlook MATs have forecast for the next three years is another wake-up call for an overhaul of funding to better reflect the reality they face,” he said.
Staffing costs and SEND pressures
The report also says that teaching costs were increasing faster than national pay awards due to increments and other factors, leaving trusts absorbing higher expenditure. Primary trusts appeared to be hit particularly hard.
Teaching assistants are forecast to fall at nearly three times the rate of pupil numbers in primary schools, while secondary trusts expect student numbers to hold steady, the report says.
Lower-funded trusts face the “dual challenge” of higher pupil-teacher ratios and a larger share of their income being spent on teaching costs, the analysis shows.
Variation in SEND funding also remains a major concern, with special-school settings receiving “markedly different” funding depending on the local authority. This creates disparities even among schools with similar pupil needs, the report warns.
Leora Cruddas, chief executive of the Confederation of School Trusts, said the findings set out “quite starkly” the situation for schools.
“We have seen exceptional events in recent years - a pandemic, high inflation, unparalleled energy costs - and reserves can be a crutch to get through them. But this is not sustainable year after year, and falling reserves eventually hit the bottom,” she said.
Differences in MAT centralisation
The report also highlights that just over one in five MATs now centralise all key functions such as IT, finance, HR and procurement, while smaller trusts face higher per-pupil finance costs when these functions are not centralised.
Pooling practices are also becoming more common, according to the report, with 55 per cent of trusts now pooling reserves and 21 per cent pooling General Annual Grant (GAG) funding.
The report finds that pooling correlated with improved short-term financial positions, but it notes this may simply reflect its adoption by trusts already under pressure to stabilise budgets.
The report concludes that the next three years will test trusts’ ability to “allocate resources efficiently, manage SEND demands and adopt appropriate centralisation and pooling strategies” to maintain operational stability.
The MAT Finance Sector Insight Report 2025 will be officially launched today at the CST Annual Conference in Birmingham.
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