The 14th annual Kreston UK Academies Benchmark Report published today showed academy trusts of all sizes have achieved their strongest financial performance in three years. Just 37% of trusts reported in-year financial deficits in 2024/25, a dramatic reversal of the state of academy finances in the 2023/24 academic year, when 60% of trusts were in deficit.
However, these buoyant results have done little to boost confidence across the sector as almost all trust types forecasted reserves to plummet over the next two years. This bleak outlook is particularly stark in secondary single academy trusts (SATs), where reserves are expected to fall 43% by 2026/27.
Kevin Connor, head of academies at accountants, Bishop Fleming said: “On the face of it, academy trusts have had their strongest financial year since 2022. However, surpluses have been largely propped up by tighter budgeting and in-year funding trusts were not expecting when they set their budgets, rather than byany easing of underlying financial pressures. Beneath the surface, challenges such as rising costs and continuing uncertainty are already weighing on confidence and limiting trusts’ ability to plan, invest and grow.”
Benedicte Yue, chief financial officer, River Learning Trust, said: “While some trusts manage financial pressures more effectively thanothers, these variations aren't driven by operational efficiencies alone. Regional funding disparities, local demographics, and the specific mix of schools within a trust all play a role, leaving some trusts under significantstrain.”
The size of a trust remains a key factor in determining its financial performance. Larger multi academy trusts (MATs) have returned average surpluses of £1.1 million this year. In SATs and smaller MATs, surpluses were much more modest at less than £50,000 on average.
Reserves told a similar story. Only 25% of trusts overall were holding less than 5% in reserves, the level the Department for Education (DfE) considers may be a sign of financial vulnerability. However, reserves in smalltrusts fell to just under 12% of income (11.5%), down from 13% last year, whilein larger trusts, reserves remained steady at 8%.
Claire Lowe, chief executive officer, Inspire Learning Partnership, said: "Even in a year of relatively strong surpluses, the pressures that schools face have not gone away. Smaller trusts like ours operate with far less margin for error, which is why strong governance, tight controls and disciplined financial planning are absolutely critical, particularly in an environment of funding uncertainty.”
Leora Cruddas CBE, chief executive, Confederation of School Trusts said: “Despite prudent financial management, trusts are increasingly worried about their reserves levels. Some will have little choice but to drawon them just to stand still as financial pressures increase. This is not a good position for the sector to be in and highlights the urgent need for a reassessmentof how education is funded.”
Stalled growth
Multi-academy trusts continued to grow this year, but there are clear signs that the pace of expansion is forecasted to slow across the sector. Trusts now average just under 14 schools, up 8% from just over 11 inthe previous year, but far fewer are planning to add new academies in thefuture. Last year, 61% expected to gain at least one school in 2025/26, rising to 83% by 2026/27. This year, just 36% expect to expand over the next 12 months, a drop of 25 percentage points.
Kevin Connor, head of academies at accountants, Bishop Fleming said: “Low confidence across the sector has dampened growth predictions and raised serious concerns about whether trusts have the funding and resources they would need toturn schools with complex challenges around.”
Benedicte Yue, chief financial officer, River Learning Trust, said: "Larger trusts can help mitigate variations at individual school level by spreading risks and maximising resources, but growth isn't a universal solution. Any expansion requires a careful balance between the benefits of scale, cultural alignment, and the risks of losing agility orbecoming too remote from local communities.”
Increasing pressure from rising staff costs
Costs of teaching and support staff continue to place enormous pressure on academy trusts, with 90% now reporting this as one of their biggest financial concerns, up from 81% last year.
Rising salaries for teaching and support staff, along with additional tax burdens, have made budget planning increasingly difficult. This pressure is particularly evident given that staff costs in 2024/25 accounted for more than 75% of income for all trust types, a commonly used benchmark for financial health and sustainability.
David Butler, executive author of the Kreston UK Academies Benchmark Report and partner at accountants, Bishop Fleming, said: “Increased staffing costs, estate repairs, utilities, and SEND provision are all putting pressure on budgets, leaving trusts to operate under conditions no private sector organisation would be expected to manage. Greater clarity on expected funding in advance, such as a three-year forecast of government funding even on aper-pupil basis, would help. This, coupled with earlier indications of likely staff cost increases, could allow trusts to budget more accurately and potentially free up reserves for investment.”
Benedicte Yue, chief financial officer, River Learning Trust, said: “The number of children with additional needs has reached the point where SEND provision can no longer be regarded as an exception. We need a fully resourced education system designed with all learners in mind and a funding model thatproactively enables high quality inclusive education for all.”
Inadequate funding for school meals
Only 11% of trusts said the funding they received for schoolmeals was sufficient to cover the cost of providing them. Local authorities are increasingly introducing automatic enrolment or opt-out initiatives for free school meals, which could have a significant impact on their ability to supportmore families and ensure trusts receive the funding they are entitled to.
David Butler, partner at accountants, Bishop Fleming, said: “Trusts cannot continue to subsidise short falls in the financial provision for school meals. Year after year, these gaps are eating into budgets and diverting resources away from supporting children’s learning.”
Progress towards net zero
Nearly all academy trusts generated between 0.1 to 0.3tonnes of CO₂ per pupil this year, with trust size having almost no impact on emissions. With little change from last year, the sector’s progress on cutting emissions has plateaued, leaving the prospect of meeting the 2050 net zero targets in doubt.
David Butler, partner at accountants, Bishop Fleming, said: “The current pace of change raises questions abouthow achievable net-zero targets will be for many trusts, particularly as no further grants will be awarded through the Public Sector Decarbonisation Scheme.”
Trusts benefit from interest rate cash boost
Sustained high interest rates over the past four years have been good news for academy trusts, generating significant extra income from financial surpluses.
Large MATs led the way with a return on investment of £39 per pupil, but returns were strong overall, averaging £33 per pupil. This is an increase on last year’s £29 returns per pupil, reflecting trusts’ ongoing commitment to maximising income and strengthening financial resilience.
Claire Lowe, chief executive officer, Inspire Learning Partnership, said: “Even modest financial investments have delivered strong returns for ourtrust. Through a disciplined and deliberate approach, we have outperformed some larger trusts, strengthening our long-term sustainability and our ability to deliver high-quality education.”
Other interesting findings:
Published annually by Kreston UK academies group, a network of accounting firms, the report is afinancial state of the nation survey of almost 250 Trusts representing more than 2,500 schools and almost one fifth of all children educated in academies in England. The survey covers the 2024/25 academic year.
To download the full Kreston Academies Benchmark Report 2026 visit: Click here