Multi-academy trusts warn of worsening finances for 2025-26

The latest MAT CFO Insights Survey highlights growing financial pressures facing multi-academy trusts, with concerns increasing for the 2025-26 academic year and beyond.

IMP Software's 2025 MAT CFO Insights Survey gathered responses from 153 multi-academy trust finance leaders, spanning trusts of various sizes and types, including primary, secondary, mixed, and those with special or alternative provision. The findings indicate a mix of current stability and looming financial challenges within the sector.

Financial perspectives

Currently, 78% of MAT representatives rate their trust's general financial position as healthy or very healthy, with 35% forecasting an in-year surplus and 22% expecting to break even for 2024-25. In addition, 69% of respondents stated that their financial forecast for the year is better than projected at the start of the period.

However, the outlook for the next academic year is less optimistic. Of those surveyed, 67% expect their surplus or deficit forecast to change in 2025-26, and 62% of these anticipate their financial position will deteriorate. Financial vulnerability remains a significant issue, with 48% considering their trust as financially vulnerable. For the current year, 43% of trusts are forecasting an in-year deficit.

Relying on reserves

Many trusts reported a reliance on reserves to meet financial obligations. Some 65% of finance leaders said their trust had dipped into reserves in the past 12 months to cover costs. While 86% affirmed this had been planned, 88% noted it was more pronounced than in previous years, and 80% expect this practice to continue.

The majority of respondents (69%) conveyed that the funding announced for 2025-26 is not sufficient to support their trust, with 80% specifically identifying insufficient funding for the provision required for pupils with Special Educational Needs and Disabilities (SEND). Additionally, 76% reported required capital works they are currently unable to afford.

Rising costs are also impacting budgets, with 82% of respondents stating that changes to National Insurance contributions have negatively affected their financial plans. Looking ahead, 56% said they are 'Not at all optimistic' about the outlook for MAT finances under the new government.

Pressures and strategies

The survey identified staff costs as the most significant financial challenge for 2025-26, cited by 36% of respondents. Other issues include falling pupil numbers (28%), changes to pupil profiles such as an increase in SEND pupils (21%), and rising supply costs (11%).

Despite these challenges, most trusts currently feel able to afford a 2% or greater pay award for teachers (79%), and just over half (54%) believe they can support a 3% or greater pay award for support staff.

In response to the situation, the main strategies being implemented to improve financial positions include the reduction of education support staff (71%), the use of Integrated Curriculum and Financial Planning (ICFP) tools (65%), and centralising operations (61%).

Potential reductions

If further unfunded pay awards arise, finance leaders expect to balance budgets through significant staffing reductions - particularly amongst teaching assistants, administrative, pastoral, and SEND support staff. Some schools are already restructuring, or considering redundancies in both support and leadership roles, with a review and reduction in non-contact time also under consideration. Certain schools are preparing to combine classes or increase teacher workloads by introducing out-of-subject teaching and reduced planning, preparation and assessment (PPA) time.

Further anticipated cuts include narrowing curriculum options, especially at Key Stage 4, with reductions or eliminations being considered for GCSE options, enrichment activities, music, educational trips, sporting events, and support for lower-attaining or vulnerable pupils. Some schools highlighted the need to split year groups due to declining pupil numbers. Deferrals of capital projects, reductions in IT investment, and centralised procurement combined with strict spending controls are also being proposed.

Views from IMP Software

"As was the case in our MAT CFO Insights Survey 2024, the majority of MATs still describe their trust's financial position as healthy or very healthy. This is undoubtedly due to the strategic approaches taken by expert MAT finance leaders to ensure their forecast is better than projected at the start of the year. However, as we look into 2025-26, change is afoot and many anticipate their financial position will worsen. Trusts are using reserves to balance 2025-26 budgets, but these are unsustainable long-term, especially with falling pupil numbers. There remain concerns about the ability to fund pay awards. We asked MAT CFOs 'Is the current funding that has been announced for 2025-26 enough for your trust?' Before the 22nd May pay award announcement, only 25% said 'Yes', and following the announcement this only rose to 34%, so whilst this additional funding is of course welcome, it is simply not enough to make a dent in the ever increasing financial struggle that MATs are facing. The broader impacts being reported around rising SEND needs versus falling support capacity; larger class sizes and reduced pupil/student support services, and increased workload risks impacting staff wellbeing and educational standards, are concerning."

The responses in the survey point to a challenging period ahead for the multi-academy trust sector, with leadership teams focused on identifying efficiencies and adapting to constrained funding in order to maintain services and fulfil statutory obligations.