Over half of Multi-Academy Trusts (MATs) are forecasting an in-year deficit for 2025/26 – and a third are expecting to hold reserves below 5% of income by the end of the year, a level considered potentially ‘financially vulnerable’ by the Department for Education (DfE) – according to a new report published by MAT finance specialists IMP Software in association with the Confederation of School Trusts (CST) today.
The MAT Finance Sector Insight Report 2025, which compiles budget forecasts from 274 multi-academy trusts for the 2025/26-2027/28 financial years, explores key issues such as surplus and deficit forecasts, pupil number predictions, SEN challenges, GAG and reserves pooling, MAT finance team structures, and funding and resource deployment in special schools.
Drawing on the only forward-looking dataset in the MAT sector – and covering over 3,300 schools – this report highlights the financial trajectory of the MAT sector and concludes that “Trusts’ ability to allocate resources efficiently, manage SEN demands, and adopt appropriate centralisation and pooling strategies will be critical to maintaining operational stability in the coming years”. The report’s main findings are:
- 55% of trusts are forecasting an in-year deficit for 2025/26. This marks a sharp deterioration from the MAT Finance Sector Insight Report 2024, where only 34% of trusts were expected to be in deficit for 2024/25, underlining the growing financial pressures facing MATs.
- A third of trusts expect to hold reserves below 5% of income at the end of 2025/26, a level considered potentially ‘financially vulnerable’ by the DfE. 50% of trusts predict they will fall beneath this level by 2028, and only 2% have reserves exceeding 20% of income, a worrying emerging picture for the sector.
- Trusts are now consolidating around the 5% of income reserves mark. This indicates increasing uniformity in financial vulnerability across the sector and suggests that a greater proportion of trusts will be operating with more limited capacity to absorb unexpected costs or invest strategically.
- Projected resilience does not appear to be strongly influenced by pupil deprivation (or trust size). Although additional funding is provided to support higher-deprivation cohorts, the associated costs limit trusts’ ability to use this income to offset broader financial challenges, constraining their capacity to generate a surplus.
- In primary trusts, teaching assistant FTEs are projected to fall at nearly three times the rate of pupil numbers. However, secondary trusts are projecting stable or slightly increasing pupil numbers, with little change to budgeted teaching assistant and teacher FTEs.
- GAG income per pupil varies considerably across the sector, highlighting the financial pressures faced by primary trusts. Lower-funded trusts are facing the dual challenge of higher pupil-to-teacher ratios, whilst also spending a large percentage of their revenue income on teaching costs.
- Teaching costs are rising faster than the headline pay award, reflecting the impact of increments and other factors. Trusts across primary and secondary settings appear to be absorbing the additional expenditure without corresponding financial recovery, highlighting another potential pressure point in budgetary planning.
- Variation in funding across special schools raises questions about equity of provision. Despite serving pupils with comparable levels of need, special schools receive markedly different income levels, suggesting that local funding approaches, rather than pupil characteristics, define what resource allocation is achievable.
- 22% of trusts now centralise all of IT, Payroll, Finance, HR, Procurement and Facilities, with IT most frequently centralised and Facilities the least. Smaller trusts face higher per-pupil finance costs, particularly when functions are not fully centralised, whereas medium/larger trusts benefit from greater economies of scale.
- Pooling of reserves is more prevalent than GAG, with 55% of trusts pooling reserves compared to 21% pooling GAG. While pooling is associated with an improved surplus/deficit position for 2025/26, this likely reflects its adoption by trusts starting from lower reserve levels and under greater pressure to balance their budgets.
Will Jordan, Co-founder of IMP Software, said:
“The financial health of multi-academy trusts is under growing strain. A convergence of cost pressures – from pay increases, to falling pupil numbers and unfunded increases in demand for provision for children with special educational needs – is squeezing budgets more than ever.
“A high proportion of trusts have already moved into in-year deficits, are drawing on reserves at unsustainable rates, and face growing concern that these pressures will worsen in 2025- 26 and beyond without adjustments in funding, policy or operational models. The analysis presented in the MAT Finance Sector Insight Report 2025 highlights rising financial pressures across the MAT sector, with the short-term trajectory underscoring both the tight budgets that trusts face and the value of benchmarking data in informing robust financial planning.
“The financial outlook MATs have forecast for the next three years is another wake-up call for an overhaul of funding to better reflect the reality they face.”
Writing in the report Foreword, CST Chief Executive Leora Cruddas CBE, commented:
“The primary concern for school trust leaders will always be education – but providing an effective education depends on having the right resources to do so. That is why the intelligence provided by this report is so valuable for trust leaders, government, and policy makers. It sets out, quite starkly in places, the situation on the ground for our schools and trusts. More than half of school trusts are expecting an in-year deficit for this academic year, calling on reserves to plug the gap between costs and funding. We have seen exceptional events in recent years – a pandemic; high rates of general inflation; unparalleled jumps in energy costs – and reserves can be a crutch on which to get through them. But this is not sustainable year after year, and falling reserves eventually hit the bottom.”
The MAT Finance Sector Insight Report 2025 was officially launched at the CST Annual Conference today, where Will Jordan explored the varied approaches trusts are taking to navigate budget challenges over the medium and long term.
Download your copy of the MAT Finance Sector Insight Report 2025 here.
