Demand for emergency financial help for academies is decreasing

Deficit funding is a source of emergency funding for academies. In most cases academies do not have to repay this cash. In some cases academies do have to repay the money but this can be done over a longer period than money provided as 'advances of funding' (more detail on this here).


Information about deficit funding is not easy to find, the DfE has confirmed that there is one sentence in one public document called "Academies: apply for advances of funding" which mentions this funding stream. Neither advances of funding nor deficit funding are mentioned in the Academies Financial Handbook.

The document says: 'On rare occasions, academies may experience negative cash flow arising from operating deficits. This can result in an inability to repay any advance within a reasonable period. In this case a request for deficit funding might be more appropriate.'

In response to FOI requests from New School Finance the EFA provided a breakdown of deficit funding over the last three financial years and said:

'Deficit funding can be in the form of:

• Non-recoverable exceptional grant (applied when academies are experiencing exceptional financial issues, usually in-year and supported by robust financial recovery plans)
• Recoverable advance that can be agreed as a recovery from future Grant funding. This is often agreed as a maximum amount and funding is released according to need.
• Requests for any financial support are considered on a case by case basis and are approved by the Director of Academies/EFA Chief Executive and/or the Minister. '

A look at the figures below shows that it has gone to standalone academies as well as multi-academy trusts including Ormiston (which appears to have been the largest recipient - cumulatively its academies appear to have had access to £2.2 million in deficit funding, £1.2 million for Ormiston Victory Academy) AET (Clacton Coastal Academy) Future Academies  and E-Act.

However a look at the totals for each year shows that the over all cost of deficit funding has fallen over three years.

Lower down the table, an 'R' in the third column stands for repayable.

** An additional list of reasons for this deficit funding is provided after the table.

Deficit funding 2011/12 Academy name Sum of deficit funding paid Reason for payment** Manchester Creative and Media Academy (Boys) 104000 Balancing budgets during expansion.   Ormiston Victory Academy 1000000 Falling rolls, IT, premises, complex financial arrangements and more . Open Academy 230000 one-off re-structuring costs and cover for staff absence. The University of Chester Church of England Academy 650000  low student numbers, the high costs of operating across two sites and one-off restructuring costs.  Westminster Academy 292000 To support the academy following a significant reduction in funding. Pimlico Academy 687343 To support the academy following a significant reduction in funding. The Quest Academy 159000 To cover a large inherited deficit from the predecessor school and to meet reductions in funding. Manchester Enterprise Academy 150000 To cover inherited deficit from predecessor school. Trent Valley Academy 200000 To support the academy following a reduction in funding caused by a change in local funding formula for SEN pupils. Westminster Academy 375000 To support the academy following a significant reduction in funding. Clacton Coastal 1300000 To support the academy in meeting split site costs prior to new site being available. Paddington Academy 249000 To support the academy following a significant reduction in funding. Total 5396343 2012/13  Bristol Cathedral Choir School 157000 To support the academy due to diseconomies of scale inherited from the predecessor school.   Clacton Coastal Academy 200000 To meet the cost of Private Finance Initiative affordability gap. E-ACT Leeds East Academy 500385 To support the school during build up, the predecessor school received significant additional local authority support.   Enterprise South Liverpool Academy (Garston Academy) 305000 Funding to support redundancy and operational costs in early years. Hammersmith Academy 324666 Diseconomies funding to reflect low pupil numbers in early years. Kirkby Stephen Grammar School 437000 To cover a large inherited deficit and provide stability.  Lighthouse School 60000  predecessor school received significant additional local authority support that was withdrawn following conversion Manchester Enterprise Academy 143000 To cover an inherited deficit from predecessor school. Ormiston Victory Academy 235000 ditto 2011/12 Pimlico Academy 366000 To provide financial support for inherited position.   St Augustine Academy 325100 To provide financial support for restructuring.  The Quest Academy 300036 To provide stability in early years following the conversion to academy status of a failing school. The University of Chester Church of England Academy 605316 Funding to support a combination of low student numbers, the high costs of operating across two sites and one-off restructuring costs.  Ormiston Ilkeston Enterprise Academy 600000 To support the merger of two academies. Total 4558503 2013/14  Eden Primary 34000 Funding adjustment at the point of a change to the funding methodology Enterprise South Liverpool Academy (Garston Academy) 784000 To support operational cost and non-statutory restructuring costs enabling financial stability. Enterprise South Liverpool Academy (Garston Academy) 131000 R To support operational cost and non-statutory restructuring costs enabling financial stability. Hammersmith Academy 162334 Low pupil numbers Kirkby Stephen Grammar 181000 R Low pupil numbers Manchester Enterprise Academy 50000 Low pupil numbers Ormiston Enterprise Academy 600000 Merger costs St Aldhelm's Academy 360000 Management and governance Visions Learning Trust 160000 R Low pupil numbers Total 2462334

**Additional detail about reasons for deficit funding

• Leeds East Academy, Eden Primary, Kirkby Stephen Grammar, Lighthouse School, and Visions Learning Trust received funding to support the school towards financial stability;
• Clacton Coastal Academy received funding to support the academy in meeting split site costs prior to new site being available which will support the school to improve both the financial and educational performance;
• Hammersmith Academy the funding was to meet transition costs of the new school during build up enabling financial stability;
• Manchester Creative & Media Academy (Boys) received funding to support cashflow difficulties enabling financial stability;
• Manchester Enterprise Academy received funding to provide financial stability after steeply falling pupil rolls;
• Ormiston Ilkeston Enterprise Academy received funding to support the merger of two academies which created a single financially viable school at a lower cost to the taxpayer than the two predecessor schools;
• Ormiston Victory Academy received funding to cover a range of infrastructure issues inherited from the predecessor school and support the academy back to financial stability;
• Paddington Academy, Pimlico Academy and Westminster Academy received funding to enable financial stability during the transition to a reduced level of funding following historic errors;
• St Aldhelm’s Academy received funding to contribute to the short term running costs for the academy whilst a new sponsor was found to improve both the financial and educational performance of the academy;
• St Augustine Academy received funding to support restructuring to improve both the financial and educational performance of the academy;
• The Quest Academy received funding to cover a deficit from the predecessor school and enable financial stability and;
• The University Of Chester C Of E Academy received funding to cover a range of infrastructure issues to improve both the financial and educational performance of the academy.