Peter Manser FCA DChA
- Head of Audit and Assurance, and Academies and Education Partner
- +44 (0)330 124 1399
- Email Peter[email protected]
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Many of you in education are no doubt sitting there thinking “did I miss something?”. Unfortunately, you didn’t. There really was not much to report from today’s Budget announcements for those in the sector. It seems to be more a case of “let’s get the schools open next week (8 March)”.
But this is perhaps exactly what the country needs to help reinvigorate the economy in the eyes of this Government. The red book highlights the fact that during April and May 2020 education output fell by nearly a third compared to February 2020. In turn it then highlights this impacted upon those parents working from home with their output halving in May 2020. You can see the picture they are portraying here.
But what the Budget seems to have forgotten is that whilst education is a vital part of the national recovery, there was little detail on its plans for the future. It only confirmed what we already knew, that a further £705 million would be spent on catch-up, including a £302 million recovery premium, £200 million for secondary schools to run summer schools and £203 million to extend tutoring and early years support. So as usual, school business managers will be struggling to accurately budget for what’s coming.
Whilst, as proven in the 2021 Kreston Academies Benchmark Report, schools tended to benefit financially from the closures, any surpluses in 2019-20 appear to have already been utilised by schools thanks to extensive cleaning and PPE for staff – all items schools would not budget for ordinarily. It remains to be seen whether any additional windows for claims to cover these costs will be opened in the future and this was perhaps an opportunity to confirm that. But the silence suggests there will not.
In terms of other potential areas of impact, the national minimum wage will increase to £8.91 per hour for those aged 23 and over – so something to consider when looking at budgets. There might also be some Academy Trusts which have established trading subsidiaries to help generate additional income – their ears will have pricked at the increase to Corporation Tax rates from 2023 – although it is unlikely many won’t see the 25% tax rate impact them unless they are generating sizeable funds. In addition, those schools looking to remove cash from their systems following the pandemic will also welcome the increase of the contactless limit to £100 (previously £45).
It was probably expected as it is fast becoming the norm now, but there was minimal news for those in education. As usual any additional funding has been lacking in detail and therefore schools will have to continue to adapt their budgets as and when new information is released – hardly the best way to budget and forecast. Schools will just have to ‘keep calm and carry on’ for now.
We will be regularly updating the Budget pages of our website. If you would like to discuss the implications, please don’t hesitate to get in touch. Alternatively, book your place on our Budget question time webinar on Friday 5 March 2021 to find out more.
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