‘Apocalyptic’: 500 per cent energy price hikes plunge schools into winter crisis

Skyrocketing prices force school leaders into 'unpalatable' choices to keep classrooms open this winter

Skyrocketing prices force school leaders into 'unpalatable' choices to keep classrooms open this winter

6 Sep 2022, 12:17

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School leaders face “apocalyptic” energy price hikes of up to 587 per cent, warning of cuts to jobs, books and building work to fill budget black holes.

Others say heating will be turned down and class sizes raised without adequate government aid, as schools embark on energy-saving drives and accelerate net-zero investments.

Schools Week analysis suggests energy will cost trusts hundreds of millions more this autumn and winter than two years ago, with some now unable to find deals at all.

Emma Knights, chief executive of the National Governance Association, said new prime minister Liz Truss and the next education secretary must hand schools a lifeline with “urgency”.

Bills rise sixfold

Simon Beamish

A recent acceleration in already fast-rising prices leaves many schools in an “apocalyptic situation”, according to Leigh Academies Trust chief executive Simon Beamish.

Energy consultants estimate around two-thirds of schools renew each year. More than 350 renewed through one broker, Zenergi, in August alone.

In January, its clients’ average bills doubled on new deals. But by August – after Russia’s Ukraine invasion – they had soared 274 per cent for electricity and 499 per cent for gas.

Leigh Academies Trust expects an £8.7 million rise across 31 schools – up 514 per cent, and that could escalate any time. It is on a variable tariff, with many suppliers ditching fixed deals altogether.

“How do you budget when you don’t know month-to-month costs?” asked Beamish.

Woodbridge High School in London was quoted an eye-watering 587 per cent rise for gas.

John Haw, managing director of Fidelity Energy, said clients have “gone white” when shown projected costs, with record demand for brokers’ help.

Schools Week analysis suggests trusts’ combined energy bills for autumn and winter likely more than trebled on 2020-21 levels – up more than £400 million across 10,000 academies.

With around 12,000 schools still maintained, the whole sector’s extra costs will be far higher.

Deficits and austerity 2.0

Many schools now predict deficits, according to heads’ union NAHT.

Energy bills, unfunded pay deals and wider inflation – all higher than expected months ago – are forcing leaders to tear up budgets. Several call plugging shortfalls “impossible”.

At The Elliot Foundation, energy will cost £1.4 million and wages £1 million more than expected, trebling its deficit to £3.4 million.

Stuart Gardner, CEO of The Thinking Schools Academy Trust, said quadrupling electricity bills and other increases leave a £3.2 million black hole – £1 in every £25 spent.

Coventry cabinet member Richard Brown has similarly warned of “real challenge” balancing its books amid rising costs, with education £700,000 more than planned.

Leaders have gone white when shown projected costs

Without urgent grants or price caps, leaders warn austerity is back.

“Spiralling energy costs will inevitably lead to resource and staffing cuts, unless schools are given additional support,” said Dr Karen Roberts, CEO of The Kemnal Academies Trust.

Karen Roberts, TKAT CEO
Karen Roberts

Aylsham Learning Federation executive head Duncan Spalding has said it could only save enough through “large-scale redundancies, a diminished curriculum [and] stopping vital maintenance work” – which would “eviscerate our provision”.

Lee Mason-Ellis, CEO of The Pioneer Academy trust, said that before long its schools “won’t be financially viable without significantly reducing staffing, visits and resources”.

The NAHT says teaching assistants’ hours could face cuts nationwide.

On Monday, parents across the Saffron Academy Trust received a letter warning of not only job cuts but also bigger classes and asking parents to fund resources. 

Meanwhile Caroline Barlow, head of Heathfield Community College in East Sussex, said trips, clubs, music classes and reading books could prove “collateral damage of universal belt-tightening”.

Some schools are shelving capital projects. David Collins, head of the Knole Academy in Kent, said new playground and astroturf facilities were “off the table”.

 ‘Unpalatable’: Turning down heating

Many leaders’ priority is radically curbing consumption.

“If it’s a choice between switching off lights and turning down heating or paying teachers, it’s not a difficult one,” said Hugh Greenway, The Elliot Foundation CEO.

LED lights at The Pioneer Academy trusts Burnt Oak Junior School

“There’s no reason lights need to be on at 5am or computers left on overnight.” 

His trust will share usage data with pupils and parents, building support for “changing behaviours”.

Chris Felgate, director of consultancy Ginger Energy, reports “mass installations” of solar panels among school clients, as well as LED lights and efficient boilers.

Former government adviser Jonathan Simons recently called for £2.5 billion in solar panel grants for schools, highlighting an opportunity for “progress on net zero”.

Soaring energy costs mean “payback periods” for the panels have dramatically reduced.

But while Mason-Ellis said accelerating The Pioneer Academy’s long-standing green drive through measures like insulation could shave a fifth off consumption, it will “not significantly dent” extra costs.

Collins agreed, with Knole Academy’s existing solar panels only contributing one-twentieth of its electricity.

Caroline Derbyshire
Caroline Derbyshire

John Winter, CEO of the Weydon Multi Academy Trust, and Caroline Derbyshire, CEO of the Saffron Academy Trust, fear more “unpalatable” decisions.

“Limiting the use of heating during the winter” is an option for Derbyshire.

Winter has not ruled out “sticking kids in body warmers” to cut heating bills, or even reducing time in school. “Everything is on the table – we can’t afford not to be able to pay teachers.”

Felgate said clients were considering clamping down on teachers’ fan heaters, and even closing pools, flood-lit sports pitches or under-used classroom blocks.

Sector not ‘awash with cash’

Most trust leaders interviewed by Schools Week expect to use reserves, preventing immediate redundancies.

Savings during Covid lockdowns pushed academy surpluses to £3.96 billion last year. This is enough to pay off combined deficits of £22 million in the sector 178 times over. Maintained schools saw similar record improvements, with a net £2 billion surplus in 2020-21.

While schools may appear “awash with cash” to the Treasury, reserves are “not universal and will run out pretty quickly,” said Stephen Morales, chief executive of the Institute of School Business Leadership.

The DfE has resisted funding pleas for months. A spokesperson said schools received £4 billion more this year, and wide-ranging value-for-money support.

But unfunded hikes in other costs, such as teacher pay, have wiped this out. The Institute for Fiscal Studies recently said the government will no longer meet its promise to restore school budgets to 2010 levels.

This crisis is a market failure. It’s a government’s job to intervene

Hugh Greenway, The Elliot Foundation CEO

Tracy Prickett, head at Howe Dell Primary School, said small and rural schools were especially “vulnerable”.

Greenway noted DfE figures also mask lower per-pupil rises for some schools. “This crisis is a market failure. It’s government’s job to intervene, as it did with bank failures in 2008-2009.”

For Gardner, the DfE risks driving a flawed “culture” longer-term of stockpiling cash, if trusts cannot rely on its help during crises.

Some trust chiefs also warn the DfE risks undermining its MAT drive, with trust or maintained school deficits making both unappealing partners.

Schools’ ability to cut costs varies, too. Weydon MAT includes three special schools, where Winter said scope to cut staffing or temperatures is limited given pupils’ needs. For instance, hydrotherapy pools are energy-intensive.

Not all special schools received recent supplementary grants every mainstream school received. 

The buying dilemma

“We’re praying government might do something. We don’t want to get locked in to high prices too, so we’re staying on variable rates,” said Winter. 

ISBL CEO Stephen Morales
Stephen Morales

Details of Truss’ energy intervention policies are beginning to emerge, but so far only focus on households and businesses – with nothing briefed on public sector relief.

Morales “can’t see Truss prioritising education” when so many households and sectors need help. And Tim Golding, of Zenergi, expects costs won’t fall for at least 12 months.

Brokers say past expectations that prices will fall have worsened many schools’ fate now.

More than usual struck short-term deals or stayed on variable tariffs last autumn and winter, as Covid and a long previous winter had pushed up prices. 

Felgate said such moves were understandable, but then Russia invaded Ukraine, leaving more schools exposed to far costlier renewals this year.

Lots of his clients have now struck expensive three-year deals simply because they can’t afford one-year contracts. “They should be more strategic, but can’t.”

Morales said smaller trusts and primaries are often more “hand to mouth”, whereas larger trusts and councils had more strategic capacity.

Some operate flexible forward buying models. Ormiston Academies Trust constantly monitors markets and buys in smaller chunks, with half its 2023 energy bought for cheaper than this autumn’s.

The trust’s contracts end this month. It predicts a £9.2 million annual rise, but it marks a relatively less severe 186 per cent increase. It has also generated solar energy worth £150,000 this year at current prices.

But Vic Goddard, head of Passmores Academy in Essex, called the timing of contract expiry a “lottery ticket” beyond schools’ control.

“The enormity of the challenge is something I’ve never seen in my career,” said Beamish. “It’s looking slightly dystopian – I don’t think that’s over-doing it.”

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