Schools in deficit on the rise

An increasing number of schools are unable to balance their books.
An increasing number of schools are unable to balance their books.
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An increasing number of schools in Leeds are unable to balance their books, according to the latest data from the Department for Education (DfE).

Of 224 schools maintained by the local authority in Leeds, 18 ran a deficit budget in the 2016-2017 financial year.

That’s eight per cent of all state schools, excluding academies and free schools, which do not have to report their finances in the same way.

A school may run a deficit if it spends more than usual on large projects such as building works. However, the National Audit Office, a body which scrutinises public spending, said in a report in 2016 that the increasing number of secondary schools in year-on-year deficit across the country was a sign that they may be struggling financially.

If a school is unable to balance its books it must notify the local authority, which will generally offer a short-term loan. Headteachers will often have to cut back on staff and equipment to get back in the black.

In Leeds, the number of schools in deficit has increased in the last three years. The figures show six more schools ran at a loss in the last financial year compared to the same period in 2014-2015.

The number of schools in deficit has also been increasing nationally. The most recent data show nine per cent of all local authority maintained schools ran at a deficit, a figure which has almost doubled from five per cent in 2014-2015.

Schools are funded mainly through a grant from the DfE, which allocates funds to each local authority based on demographic factors such as pupil numbers, deprivation and additional language needs. The local authority then decides how to divide the money between individual schools.

Leeds received £4,528 per pupil in the last financial year - up from £4,265 in 2014-2015. But overall real terms spending on schools in England by the end of the decade will have been cut by nearly five per cent, according to the Institute for Fiscal Studies (IFS).

The DfE has stressed that it is investing an additional £1.3bn in schools funding with money for core schools rising from almost £41bn in 2017-18 to £43.5bn in 2019-20.

A spokesperson said: “The IFS has confirmed that our additional investment means that across the country the total schools budget will now be maintained in real terms per pupil through to 2019-20.

“Our new national funding formula will mean that school funding will be distributed according to a formula based on the individual needs and characteristics of every school in the country. Under the formula, Leeds will receive an additional £18.8m for their schools.

“We trust schools to manage their own budgets and only a small percentage are operating with a cumulative deficit. The latest published figures for England’s schools showed an overall cumulative surplus of more than £4bn, against a cumulative deficit of less than £300m. We continue to provide support to schools to help them use their resources in the most efficient way.”