Following last week’s spring budget, the reality is sinking in that we face more years of treasury restraint and escalating costs. But the sector is missing a trick – one I brought to my school, and that I hope many more will learn to make use of.
I work in asset management. I know my way around a budget. So when my local primary school was hit by extreme financial difficulties in 2020, I joined them as a governor in the finance committee. I’m now chair of governors in a financially stable school, and leasing was a key factor.
My aim was to work with the school’s leadership to turn their financial challenges around and to make best use of the financial solutions available to them. I wanted to lend my expertise to developing a planned approach that would upgrade resources and safeguard staffing ratios.
What surprised me from the outset in this endeavour was the general lack of understanding about leasing – here and in many other schools I went on to speak to
Though there isn’t a photocopier in a school that isn’t on a lease, this form of finance is an area shrouded in mystery for the sector. I’d go so far as to say my school leader colleagues approached the idea with deep scepticism.
So my first job was to convince them of its full potential as a robust funding method that would allow them to overcome critical constraints and access essential resources – without substantial upfront costs.
Over time, I was able to show my headteacher and business manager how a planned approach to leasing and working with trusted partners can make school assets more affordable and accessible. This applies to everything from computers and whiteboards through to CCTV and door entry systems.
This form of finance is somehow shrouded in mystery
Ultimately, the key was encouraging my colleagues to treat the school like a business. In this, Grenke’s recent New Lease of Life is revealing about the state of play for education compared to the nation generally:
- 55 per cent of education respondents say they are operating suboptimal equipment, above the national figure of 53 per cent.
- But the uptake of leasing as a finance option in schools (39 per cent) is lower than the national average (44 per cent for SMEs).
- When asked to identify the areas of their organisation that have suffered or stagnated over past 12 months because of a lack of investment due to financing, 33 per cent of SMEs cite hiring staff. For education, this figure is 46 per cent.
For me as a school governor, this final point is the key message and opportunity for the sector: leasing unlocks budgets to be directed back where they’re needed most – people.
Indeed, my school had had to make staff redundancies. And all the while, they were trying to release capital to fund photocopiers, IT and a new door access system.
Finance leasing meant freeing up budget capacity for teaching salaries, ensuring we could still give our pupils the best in teaching.
In short, asset finance means better cost-management; lease payments are distributed over the asset’s useful life. This aids budget planning and cash flow because you spread costs across a number of years (in our case, across three budgets).
I was able to work with the school leadership team to find the best deal available to them in a transparent and ethical way. The result was that they could access these assets and sustain their staffing despite budget restraints and increasing financial pressures.
Being able to spread the costs against very challenging fiscal budget windows was key for our school.
And, because of the end-of-lease options available to them, once the lease terms are up, we have the option to renew the lease, return the asset, or upgrade to newer technology.
This means the school can get the most value from the technology and equipment they’ve leased, ensuring resources stay refreshed and up to date.
Our school was able to meet evolving educational demands while adhering to budgetary constraints and, vitally, protecting teachers’ salaries.
Repeated sector-wide, it could be an important cushion against continuing financial pressures.
Your thoughts