Trust that ploughed reserves into school improvement slips £3.4m into deficit

The bosses of a cash-strapped academy trust have blamed its £3.4 million deficit on a strategy that considered hoarding reserves “inappropriate” and saw them plough resources into securing ‘good’ Ofsteds.

The ailing Brooke Weston Trust in the east Midlands has slashed “non-educational” budgets and green-lit dozens of voluntary redundancies in a bid to balance the books.

Stephen Morales, the chief executive of the Institute of School Business, warns that the case shows that “anything” can tip trusts “over the edge” if they’re already close to their “fiscal limit”.

“If you’re operating so close to the wire… you have to recognise there are uncertainties about the extent cost pressures are going to be covered [by government funding].

“You need to create enough headroom to deal with any headwinds that may come in your direction.”

Surplus disappears

Latest accounts for Brooke Weston, which runs 12 schools, show it ended 2024-25 with a £3.4 million deficit, having sat on a small £720,000 surplus 12 months earlier.

They noted the trust’s “strategy over recent years has been to utilise cash reserves to invest in resources” for its academies.

It felt “some time ago that holding high levels of reserves was inappropriate when we still had much school improvement to do”.

This helped all its schools secure ‘good’ or better Ofsted judgments, accounts said, but also “depleted” reserves. Its finances were “further impacted when increased staff and utility costs were only partially covered” by the government.

But Nigel Brunning, a former trust chief financial officer, stressed many trusts had “achieved significant and rapid school improvement whilst maintaining a balanced budget, even in the most challenging situations”.

“School improvement’s got to be a priority, but that doesn’t mean you’re going to have to go into a massive deficit. You’ve got to live within your means.”

DfE recommendation

The Department for Education recommends trusts hold reserves of at least 5 per cent of total income. Twenty per cent above that level is considered too much.

Brooke Weston had set itself a target of maintaining reserves of between 3 and 5 per cent.

A report by the Kreston Group, a network of accountancy firms, found 26 per cent of trusts are sitting on reserves that represent less than 5 per cent of income, down from 35 per cent in 2023-24.

But Morales noted slipping below recommended levels risked trusts left in a “precarious position”.

Brooke Weston hoped to “realise significant cost savings” last year, but some were “taking longer than expected”, accounts continued.

Among other things, it “reduced budgets for non-educational areas not controlled directly by schools”. Ahead of this academic year, its academies “revisited their curriculum models”.

A voluntary redundancy and staff redeployment exercise led to almost £1.3 million in “exceptional” costs. In all, the trust agreed 50 redundancy applications.

Andrew Campbell, its chief executive, said its “prompt action on cost” had secured “long-term viability for our schools and, importantly, means that our new chief executive will inherit a strong and sustainable outlook when they start in the new school year.

“We are ahead of schedule to return to a positive reserves position and then to achieve our target of 3 to 5 per cent as per our reserves policy.”

Brooke Weston’s accounts also show Tim Coulson, who now leads the DfE’s regions group, resigned as a trustee last summer.

Catholic MAT’s £9m deficit

It is the latest high-profile case of a trust racking up multi-million-pound losses.

The St Ralph Sherwin Catholic MAT in Derbyshire ended last August £9.2 million in the red. The year before, government data suggested it had the largest deficit in the country (£5.9 million).

And in the Midlands, the Arthur Terry Learning Partnership’s deficit grew from almost £4 million in 2024 to £8.4 million last year.

However, Kreston found the proportion of trusts racking up in-year losses dropped from 60 to 37 per cent last year.

Kevin Connor, a report author, said this showed “continuing uncertainty is already weighing on confidence and limiting trusts’ ability to plan, invest and grow”.

Morales added: “Even the department’s best efforts to fund schools appropriately don’t mitigate against things like the geopolitical situation that we now find ourselves in.

“If you’re very close to your fiscal limit, anything can tip you over the edge.”