Why every academy trust needs a strong investment policy and the advantages of getting it right

Explore the advantages of adopting an effective, up‑to‑date investment policy for your academy trust

With academy trusts continuing to face tightening budgets and increasing demands on resources, the ability to generate additional income, without taking on extra risk, has never been more important. One of the simplest and most impactful ways to do this is through developing and implementing a robust investment policy.

The 2026 Price Bailey webinar on Investment & Banking for Academy Trusts highlighted just how much opportunity exists across the sector. With academy trusts collectively holding billions of pounds in cash at year end, even small improvements in interest rates can translate into significant additional income that goes straight back into supporting educational outcomes.

Below is a high‑level summary of what academy trusts need to know, and the advantages of adopting an effective, up‑to‑date investment policy.

The sector holds significant untapped value

Across the academy sector, trusts collectively hold billions of cash at year end. Despite this cash strength, many academy trusts still earn returns well below market rates. Analysis shows our clients are generating an average of around 2.4%, whereas a broader look at the banking market suggests academy trusts could achieve 3.5%–4% (or higher) with no increase in risk.

For an academy trust with £1.5m in cash reserves, that difference could mean earning £50,000 per year instead of £13,500 a uplift without hiring staff or undertaking any new activity.

Why some academy trusts are cautious

Understandably many trustees still recall the turbulence of the 2008 banking crisis and this risk aversion is one of the biggest barriers to investment.

However, today’s UK banking system operates under significantly stronger regulation, including:

Stress testing against severe economic scenarios
Higher capital and liquidity requirements
Stricter supervisory oversight from the Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA) and Financial Policy Committee (FPC).

This stability underpins the Department for Education’s increasing encouragement for academy trusts to make their cash work harder.

Liquidity concerns and the fear of not being able to access cash in real-time is common and valid, but with proper modelling, it’s entirely manageable.

A strong deposit strategy is built on:

Historic cashflow analysis to identify money that has not been touched for 12 months or more
Clear liquidity tiers, for example:
- Current account: operational cash
- Easy access deposits: funds available with ‘5 working days’ notice
- Notice accounts/short fixed terms: reserves unlikely to be needed imminently

Even modest academy trusts have a level of untouched reserves that could safely be earning more.

Why an up‑to‑date investment policy matters

In line with the DfE Academy Trust Handbook, academy trusts are required to have an investment policy, which is reviewed regularly, to manage and track its financial exposure and ensure value for money. A well‑designed policy provides confidence to trustees, clarity to management, and a defensible framework for making investment decisions.

A good policy should be:

Specific

A policy should clearly define what is permitted, who is responsible, and how decisions are made. In practice, this means:

Permitted investment types are explicitly listed (e.g. bank deposits, money market funds, short-term low-risk instruments), avoiding ambiguity or inappropriate higher-risk investments.
Limits and constraints are clearly set, such as maximum exposure to a single institution, duration thresholds, or minimum credit ratings.
Roles and responsibilities are defined, including who can authorise investments (e.g. CFO, finance committee) and reporting expectations to trustees.
Objectives are stated, such as prioritising security and liquidity over yield.

Measurable

A policy should include monitoring mechanisms, enabling trustees to assess whether it is being followed and whether objectives are being met. Examples include performance metrics, compliance indicators and reporting requirements, such as regular investment reports to the board of finance committee. Measurability enables effective scrutiny, supports informed decision-making, and demonstrates value for money while maintaining financial stewardship.

Achievable

The policy should be realistic and proportionate to the academy trust’s size, resources, and risk appetite. An achievable policy ensures it can be consistently implemented in practice, rather than existing purely as a theoretical framework.

The advantages of a strong investment policy

A well‑crafted and well‑executed investment policy enables your academy trust to:

✔ Maximise income on reserves

✔ Strengthen financial resilience

✔ Demonstrate good stewardship of public funds

✔ Support strategic planning

✔ Increase trustee confidence

✔ Align with DfE expectations

Deposit platforms: a practical solution

Opening accounts with multiple banks is traditionally time‑consuming and frustrating. Deposit platforms (e.g. Insignis) solve this by:

simplifying onboarding
eliminating repeated anti-money-laundering checks
offering access to 40+ UK‑regulated banks
providing competitive interest rates (often higher than going direct)
enabling a single consolidated audit report

The DfE has now reviewed and endorsed savings platforms as suitable for academy trusts, provided funds are held with UK FCA‑regulated banks and are not capital at risk.

Where should academy trusts start?

A simple three‑step roadmap:

Review your cash position
Analyse 12 months of month‑end balances across all accounts.
Update your investment policy
Ensure it aligns with DfE guidance, current interest rates and modern banking practices.
Develop a deposit strategy
Tier your liquidity, explore deposit platforms, and diversify across institutions.

Even if your academy trust is already investing, an annual review is considered best practice and may uncover opportunities you’re currently missing.

Final thoughts

In a funding environment with limited room for manoeuvre, academy trusts cannot afford to overlook the opportunity sitting in their bank accounts. A clear, modern investment policy, combined with a well‑structured deposit strategy, can deliver meaningful additional income with minimal effort and no additional risk. This is not about being bold; it is about being responsible, strategic and financially astute with public money.

All current external and internal audit clients are invited to contact the Price Bailey Academy Helpdesk for support with any investment-related queries.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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