An academy trust loaded with a £9 million deficit has been ordered to slash costs, as it banks on government bailouts to keep it afloat.
The St Ralph Sherwin Catholic MAT also broke academy rules after signing off on a £5,000 payout, accepting a £200,000 loan and misusing buildings cash.
This week, ministers tightened up their oversight of the 25-school chain by issuing it with a second notice to improve (NTI) over its “weak financial position” and “continued” breaches.
This comes amid upheaval at the under-fire Arthur Terry Learning Partnership, which is also millions of pounds in deficit and the subject of government scrutiny.
Ballooning deficit
Schools Week revealed in October that St Ralph in Derbyshire was one of 75 trusts which raised concerns about their ability to continue operating in 2023-24, after registering an overall deficit of £5.9 million.
Government data suggested this was the largest deficit in the country.
The MAT had already been given an NTI in 2023 over “financial management, compliance and governance concerns”.
But after latest accounts, published last month, showed St Ralph ended 2024-25 with a £9.2 million deficit, it was issued with a new one on Tuesday.
The document stated that officials have assessed its “continued breaches of the academy trust handbook relating to financial management are significant enough to warrant a revised notice”.
‘Blunt’ NTIs
They also remain concerned “about the trust’s weak financial position”.
The notice ordered St Ralph to add “new independent trustees” with “suitable skills and experience” to its board.
Just days earlier, Arthur Terry, which runs 24 academies in the Midlands, announced that Richard Gill, its CEO, had stepped down.
Despite being issued with an NTI two years ago, its finances have continued to worsen. It is now £8.4 million in the red.
Stephen Morales, CEO of the Institute of School Business Leadership, called the notices a “blunt instrument” which “fails to address the structural problems that have caused trusts to be in such a bad place”.
Work with ‘finance experts’
St Ralph CEO Kevin Gritton said all his employees were “aware that collectively… we are in a financially challenging situation”.
The new NTI said St Ralph “must ensure all financial recovery proceeds at pace”. It has been told to “provide evidence it is expediting efficiencies to bring in-year savings, including staff restructuring”.
Gritton said the changes have been proposed for “some schools and our central team”. The trust is consulting with those affected.
Compulsory redundancies “would always be a last resort”, Gritton stressed.
Loans and breaches
Research by the Kreston group, a network of accountancy firms, found all trust types except medium-sized MATs are forecasting reserves to fall by up to 43 per cent over the next two years.
The Confederation of School Trusts’ annual survey revealed many CEOs were looking at cutting classroom staff and leadership redundancies to balance the books.
Auditors noted that St Ralph’s ability to continue running is “predicated on the expectation that additional funding and cash flow support from the DfE would be made available”.
Accounts suggest the trust has already received £468,000 in government “cash-flow loans”. It was given a further £200,000 loan – which is “interest-free and with no fixed repayment term” – by the Diocese of Nottingham last year.
However, accounts show that St Ralph broke academy rules after failing “to obtain the prior approval” of the DfE for the payment.
Previously unspent and current year capital funding was used to support “its operational activities and cash flow” – which is not allowed. It has received over £3.5 million over the last two completed financial years.
St Ralph also broke the terms of its NTI after making “a special severance payment to a member of staff for £5,000” without government consent.
Trusts too big to fail?
Like St Ralph, Arthur Terry has been given additional funding to stay afloat. In all, it has been loaned £3.5 million. It has also struck an agreement in principle with officials for “an additional £1 million of repayable funding”.
School business manager Hilary Goldsmith previously said the Arthur Terry case highlighted that some trusts have become too big to fail, as trying to re-broker so many schools at once “would be virtually impossible”.
Morales agreed it was “more likely” that smaller trusts would be re-brokered, with larger MATs instead primed for leadership and governance changes, “particularly if pupil outcomes are where they need to be”.
“[But] no trust should ever be too big to be dismantled if it is not serving the community of learners well and others could do a better job.”
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