“Join our MAT and your budget will improve.” Really?

Does joining a multi-academy trust really translate to an improvement in a school’s budget, compared to what it had when operating under the auspices of its local authority?

The question has presented itself in relation to one school I wrote about recently, which is shrugging off the pandemic to embark on a “consultation” about joining a local multi-academy trust – though parents have been told about their school’s “decision” as if it has already been taken.

As I wrote last month, the Charter Schools Educational Trust in Southwark, south London, is planning to expand its number of primary schools four-fold, by taking on a local authority primary – Lyndhurst in Camberwell – alongside two primaries also near its base in Dulwich which are already in their own two-school academy trust.

This is to add to the Charter trust’s single existing primary school and two secondaries. The primary school, Charles Dickens near London Bridge, joined Charter only four months ago.

The moves were revealed to parents at the three primary schools which stand to join Charter in the last week before half-term.

I was particularly interested in the case of Lyndhurst, because of course any decision to leave the local authority is more or less irreversible under current law, and becoming an academy has  remained a choice taken only by a small minority of primary schools across London, including in Southwark.

But one aspect of what parents at Lyndhurst were told as the “decision” was announced particularly jumped out.

A strong impression was given that finances would improve on joining Charter. How could this be, I pondered, when academies and local authority maintained schools are supposed to be funded at exactly the same level?

So I have been doing a bit of digging  into the numbers. This is far from a complete project. But it seems that, at the very least, more public information should be provided on what is clearly an extremely important aspect of decision-making in cases such as this.

The detail

In a series of question and answers appearing below a letter from Lyndhurst’s chair of governors announcing the plans to academise under Charter, some information was given on the possible financial impact of the move.

The school’s answer stated: “Joining the Trust* should have a positive impact on the Lyndhurst school budget.

“At the moment, we have given the Local Authority a percentage of our school budget. Local Authority budgets for schools have reduced in recent years and so the services the LA provides have diminished significantly. These services have limited benefit to our school.

“Although the council retains a portion of our school budget, we still have to buy HR, legal services, finance, school improvement support and professional development externally. In the future, most of these costs will be met by the Trust’s shared services.

“We will also potentially be able to share the cost of specialist teachers or services with other schools within the Trust. This could include education psychology services, speech and language provision, specialist arts teachers and projects.”

This was very interesting. But as a statement, I found it quite confusing. For no mention was made of what Charter as a trust would be charging the school for these shared services, and what the corresponding charge from the local authority currently was.

The statement as written, in saying that “in the future, most of these costs will be met by the Trust’s shared services”, might well be taken to imply to readers that they would be provided free of charge by Charter.

But this is generally not the case in the academies world. Such services have to be funded somehow. As is apparent from trawling through many academy accounts, the vehicle for this is the “service charge”, sometimes known as the “topslice”, which is what the trust’s headquarters charges schools for cross-school services such as these, as well as the cost of trust management.

Trying to find out what these service charges might be at Charter, I therefore looked up the trust’s latest published accounts, for 2018-19.

However, unusually – and I could find this happening in only a handful of academy trust accounts in more than 300 I looked at over the summer – no figures were given there as to how much Charter’s schools were being charged for such services.  

Under “central services”, many academy trusts list a percentage of schools’ core budgets charged, with almost all others then documenting actual amounts levied. Charter’s 2018-19 accounts say only: “Central services for the CEO’s remuneration and buildings projects were provided by the Trust to its academies during the year. Staff working in Finance, HR are recharged [for an unspecified amount] between the schools.”

At the time, Charter had only two secondaries. And its accounts list its part-time chief executive at the time as receiving just £25-£30,000 for what seems like a full year’s work. So its central services operation may have been fairly small-scale.

How much, then, has Charter been charging its schools for these central support services?

Well, an answer then came when I looked up a document provided by the trust, seemingly aimed at parents at schools – the other two are the Belham, a free school in Peckham, and Dulwich Hamlet Junior School, in Dulwich - which were poised to join the trust.

Under “What will the financial impact be on the school?”, this states: “The financial impact on the school should be very positive as schools benefit from shared business and school improvement services and Trust-wide contracts.”

This document then does give an indication of the likely cost, at least within this current financial/academic year.

It states: “Schools are expected to contribute a percentage of their income to the Trust for shared services and the central offer.

“For 2020/21, this is 3.15 per cent.”

This was, then, was interesting. For what it’s worth, 3.15 per cent is towards the lower end of figures I see in academy accounts listed as the service charge, though there is a lot of variation.

The document then goes on to start to offer a comparison with what the school would currently be paying the local authority.

It states that the 3.15 per cent “is in line with the amount that maintained schools (Local Authority-run** schools would pay the local authority each year to fund local authority services”.

It would be hard to square that statement, if left at that, of course, with the suggestion that income would rise under Charter, ie that the financial impact of joining the trust on the school would be “very positive”.

So this document continues: “However, many [local authority] schools also pay additional consultancy fees for various services not covered by the local authority service agreement.”

This is interesting; it suggests a hefty bill for these extra services that schools would have to now be paying to the local authority, beyond the rough-3.15 per cent they are already charged, for that “very positive” financial claim to stack up.

The statement continues, though, by perhaps hinting that costs might shrink, as the organisation expanded.

It added: “For existing academies with a smaller Trust, this financial contribution to shared services should be similar to what is currently in place. However, there will be greater opportunity for cost-saving as a result of being part of a larger group of schools, for example by sharing the costs of resources or training together with the additional benefit of school improvement support within a larger organisation.”

I hear this argument quite a lot from multi-academy trusts. But it seems curious when set into the context of a school such as Lyndhurst leaving a local authority.

For, of course, Lyndhurst is already within a “larger group of schools”: it currently operates under the auspices of its local authority, Southwark, which currently has many primaries (see below). By contrast, as mentioned Charter currently has one primary school, with currently-known-about plans to grow that to four.

If economies of scale are not currently available at local authority level, it would be good to be told exactly why this is not possible – while the argument that it nevertheless would be within what is a much smaller multi-academy trust than the organisation that Lyndhurst is proposing to leave.

To be fair, it is good that parents are at least being presented with a detailed document setting out how this trust operates – something that appears to have been lacking in one other case I have been writing about a lot recently.

In the Lyndhurst case, then, the public has also been offered that figure of 3.15 per cent as a possible central services charge, although it seems from the document is that there is only a commitment that this will last for the coming year. Academy trusts can of course vary such fees unilaterally, in a way that I think is more difficult in the local authority sector, since all finance in the former sits at the level of the trust, rather than at that of the individual school.

Public income datasets offer some comparisons

I remained curious as to how exactly budgets might compare between the two sectors.

Fortunately, there are now public datasets provided by the Department for Education which provide at least a tentative glimpse into the relative finances of academies and maintained schools.

On this webpage, school-by-school data is provided on income and spending for each institution within the academies sector. Via the same page, another spreadsheet provides similar – though not identically-formatted – data on each local authority school. The most recent year for which data is currently provided, in both the academy and local authority schools sector, is 2018-19.

From such charts, it is possible to see the total income of each academy, for 2018-19, and for each local authority school. From there, with total pupil numbers given for each institution, a per-pupil income figure can be calculated.

So I looked at these numbers for the local authority in which Lyndhurst sits: Southwark.

And here’s the thing: the average per-pupil income of primary academies in the borough is actually lower, by my calculations, than it is for primary local authority schools.

So, in this latest year for which figures are available, the average total income per pupil for the 59 local authority primary schools listed for Southwark was £7,250.

For Lyndhurst itself as a local authority school, it was £7,528.

For the eight primary academies*** in the borough, the average total income per pupil was 5.6 per cent less, at £6,847.

Now, these numbers are very raw. Certain aspects of a school’s pupil population, for example, will increase their budgets, such as a large number of children eligible for free school meals.

So I checked whether there was a great difference between schools in the two sectors in Southwark, then, in terms of the percentage of pupils eligible for FSM; the percentage of pupils with special needs; and the percentage of pupils with English as an additional language. The answer was “no”, on average, the two sets of schools were fairly similar on these measures.

Again, this is a very quick analysis, these databases themselves may need to be treated with caution, and readers may argue that for some reason the comparisons are not fair.

But I continue to feel that more information needs to be provided in cases such as this, in terms of the detail of what is paid for, and how much it costs, in either sector.

The underlying picture seems to be that schools in both sectors are meant to be receiving the same amount of cash per pupil (in the local authority sector, this now has to go through to individual school budgets; in multi-academy trusts, it is sent to the trust to distribute to “its” schools). Both trusts and local authorities need to fund support services for schools from this same pot.  

If academies are to argue that they are providing so much better value for money than has been available from local authorities, then they need to offer the detail – in hard cash terms – setting out how this is so, and making clear that this is the starting point: both sectors basically get the same amount of public cash.

And academy advocates need to have more detailed arguments than the one which talks about economies of scale, given that local authorities are generally much larger than multi-academy trusts.

I’ve asked Lyndhurst if there is more detailed information on the financial comparisons, but have yet to receive a response.

I would genuinely love to hear from readers with details as to how leaving a local authority will leave a school better off financially, as this is sometimes argued but I have never been taken through it in depth in any one case.

Meanwhile, the horror stories on the other side of the equation (see here or here) – and I am not suggesting that anything like this will be the case with Charter - nevertheless seem fairly clear.

*I have left in the capital letter, though as a journalist it jars: why do organisations which are not proper nouns need to be capitalised? This wasn’t what I was taught at school, or in journalism training.

**It’s certainly questionable whether local authorities have “run” schools since at least the 1980s, when “local management of schools” gave more  power to individual headteachers and governing bodies; the reality seems to be that LAs operate in the background, overseeing schools.

***I am leaving free schools, which technically are types of academy, out of this calculation, as often they operate with empty year groups after first opening, which can skew per-pupil income figures.