31 University Technical Colleges owe £14 million to the Education Skills Funding Agency
Forced to hand back cash due to insufficient pupil number
Just nine out of 40 University Technical Colleges (UTCs) are operating within budget, according to research by Price Bailey, the Top 30 accountancy firm.
Price Bailey analysed the accounts of 40 out of a total of 50 UTCs and found that 31 owe money to the Education Skills Funding Agency (ESFA), totalling £14,261,294, and only nine are running within their resources.
Of the 40 UTCs owing money to the ESFA, the largest group (25) have been requested to pay back £8,652,967 due to them overestimating pupil numbers, representing £346,119 per school. A further 10 UTCs owe £4,664,825 in general loans to cover running costs (£466,483 per school). The remaining three have working capital loans totalling £943,502 to cover future VAT claims (£314,501 per school).
Price Bailey was unable to analyse the accounts of the remaining 10 UTCs. Eight are a mixture of brand-new schools yet to file accounts or else their financial position is obscured within multi-academy trusts. The remaining two have not published 2018 accounts yet.
According to Price Bailey, the General Annual Grant (GAG) income schools receive from the Government in the start-up phase is based on estimates of pupil numbers. Many of these schools have failed to attract pupils in sufficient numbers and so are having to pay money back which may have already been allocated elsewhere.
Gary Miller, Head of Education at Price Bailey, comments: “When actual pupil numbers don’t match estimates, excess funding is clawed back. This can create problems for schools if that money has already been spent or allocated elsewhere. Eight UTCs have already closed and two further closures are imminent so unless UTCs can boost pupil numbers and performance, more will follow.”
“UTCs with tight cash-flow could be seriously affected by these claw backs. After salaries, which often make up 70-80% of the budget, there isn’t a lot left. £350,000 per school is the equivalent to seven or eight teachers, so in some cases cuts to staff numbers may be necessary, which could impact educational standards.”
He adds: “The problem with brand new schools, particularly specialist UTCs, is that they are not tried and tested, which can make parents and pupils wary. Faced with a choice between a new UTC with little or no track record and the local school which might have served a community for generations, the latter often wins out.”
According to Price Bailey, UTCs have benefited from substantial opening capital investment but with the Government tightening funding and lower than planned GAG income based on pupil numbers reserves are quickly used up, leaving many UTCs with a significant shortfall. These shortfalls are then being deducted by ESFA from future GAG payments meaning further difficulty in operating a balanced budget.
Gary Miller says: “The government is encouraging UTCs to fold into multi-academy trusts so that they can benefit from greater financial efficiency. With the majority of UTCs running a deficit the pressure on them to either be subsumed by a larger trust or to close entirely is mounting.”
NOTES TO EDITORS
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About Price Bailey
Price Bailey is a top 30 accountancy practice specialising in providing accountancy and business advice to enable the growth of regional, national and international businesses. In addition to traditional accounting services, the firm has a range of specialists in many areas, which combine to provide a complete, integrated business offering. These include tax consultancy, corporate finance, strategic planning, insolvency & recovery and employment law.
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