Across the sector, MAT finances are tightening faster than many expected.
IMP’s latest Benchmarking Report shows that more than 55 percent of Trusts now forecast an in-year deficit for 2025/26. At the same time, 50 percent are projected to hold reserves below 5 percent of annual income by 2028. That 5 percent threshold is widely viewed as the point where financial vulnerability begins.
These figures are not isolated warnings. Together, they describe a system operating with shrinking resilience and limited margin for shock.
Deficits Are Becoming the Norm, Not the Exception
Benchmarking data across over 270 Trusts shows that the number operating at a deficit is rising sharply year on year. Just twelve months ago, roughly a third were forecasting in-year overspends. That figure has now climbed to more than half.
Several pressures sit behind this shift.
Staffing costs continue to rise faster than funding settlements. Energy and operational inflation remain elevated. SEN demand is increasing without equivalent funding growth. Across every phase and region, Trusts are seeing costs accelerate ahead of income.
The immediate effect is that budgets which appear balanced on paper are becoming exposed within months, forcing many Trusts to rely on reserves to sustain staffing levels, support provision, and delivery standards.
The 5% Reality: Reserves Are Being Eroded
As deficits rise, the impact flows directly into reserve balances.
Benchmarking reveals that only around 2 percent of Trusts now hold reserves exceeding 20 percent of income. Meanwhile, the middle 50 percent of the sector is tightly clustered between 3 and 8 percent reserves, leaving many Trusts close to the Department for Education’s 5 percent “vulnerable reserves” marker set out in its Managing academy trust reserves guidance, and with very little distance between stability and financial distress.
This compression matters. Reserves are not a luxury. They provide capacity to:
- Absorb funding delays or pupil number volatility
- Manage pay awards and other cost shocks
- Invest in school improvement and educational outcomes
- Support estates condition, maintenance planning, and longer-term capital pressures
- Enable Trust restructuring, growth, or planned reorganisation
When reserves fall toward the 5 percent line, that flexibility rapidly disappears. What remains is a narrow operating corridor where even minor pressures can trigger emergency interventions.
Pooling for Stability and the Role of Shared Resource Models
Benchmarking data also highlights how Trusts are responding.
Around 55 percent of MATs pool their reserves, with approximately 21 percent also pooling GAG. These shared resource models can play a significant role in smoothing volatility, supporting weaker schools, and protecting front-line delivery.
However, the data makes an important distinction.
Pooling works best where redistribution decisions are driven by transparent, Trust-wide financial intelligence. Without that clarity, shared models risk creating tension or misallocation rather than stability.
Benchmarking gives leadership teams comparative evidence on:
- Which schools consistently generate surplus or deficit
- Where structural cost pressures sit
- How centrally managed services perform against peers
- Whether redistribution aligns with need and impact
This turns pooling from a reactive safety net into a strategically governed mechanism.
Visibility as the Foundation of Resilience
One of the strongest signals from the Benchmarking Report is that the Trusts best positioned for recovery are those with early visibility.
Benchmarking highlights emerging risks before they reach the point of crisis. Scenario modelling through IMP Planner allows Trusts to test how changes to staffing structures, pay settlements, pupil numbers, or funding profiles affect their three-year outlook. Combined with ICFP analysis, leaders gain a forward-facing understanding of financial trajectory rather than historical reassurance.
This layered approach replaces reactive management with proactive planning.
Instead of asking how to plug next year’s gap, teams can evaluate which structural changes strengthen long term sustainability.
Turning Sector Data into Strategic Advantage
The 5% reality is not a verdict on the sector’s future.
It is a warning that resilience margins are shrinking and that leadership decisions must now be underpinned by stronger data than ever before.
IMP’s Benchmarking Report transforms system-wide data into actionable insight, giving Trust leaders a clear understanding of where they stand, where pressure is rising, and which strategic choices are most likely to strengthen financial stability.
With live benchmarking comparisons, scenario modelling, and ICFP tools working together, Trusts are no longer left to navigate uncertainty in isolation.
They can lead with clarity.
Find out how Trusts like yours are using benchmarking to plan with confidence.
