One of England鈥檚 biggest academy trusts has walked away from a long-planned merger with a struggling chain, sparking concerns that the worsening funding landscape is going to scupper more schools getting support. Bath and Wells Diocesan Multi Academy Trust bosses revealed this week it does not have enough funding to absorb Beacon Education鈥檚 six schools without impacting its current primaries. It comes after Beacon was handed almost 拢500,000 to prop it up and surveys uncovered 鈥渃apital needs鈥 across the chain. Lucia Glynn, an academy consultant, said the case highlighted how funding pressures deterred some trusts from stepping in to improve underperforming schools. Trusts 鈥榯ightening the belt鈥 鈥淭rusts are having to tighten the belt more and more and can鈥檛 take risks any more, they can鈥檛 even say 鈥榝or a couple of years, we will subsidise this trust鈥. They don鈥檛 have the flexibility within their budgets.鈥 Lucia Glynn The Department for Education approved the proposed merger following an advisory board meeting . Minutes show Bath and Wells鈥檚 due diligence 鈥渋dentified capital needs at Beacon schools鈥. To 鈥渟upport these needs an application will be made to the strategic school improvement capital budget鈥. The fund is used to secure sponsors for underperforming schools in cases where the condition or suitability of premises are a 鈥渟ignificant barrier鈥 to agreement. At the time, Beacon鈥檚 Ofsted outcomes were 鈥榩oor’, according to the minutes, with one academy in special measures and two deemed to be 鈥榗oasting鈥. One of the 鈥榗oasting鈥 schools has since been rated 鈥榞ood鈥. Beacon鈥檚 latest accounts state 鈥渋t is reliant on additional ESFA funding to be able to continue to operate鈥. So far, it has been given 拢495,000 鈥渢o support short-term cashflow requirements鈥. The trust has also introduced strategies 鈥 such as staff redeployments and mixed-year classes 鈥 to 鈥渞educe in-year deficits鈥. Pamela Cosh, Bath and Wells鈥檚 chair, said it had become clear that the 鈥渓evel of funding for us to achieve this [the merger] was not available鈥, with it 鈥渕indful鈥 of its 鈥渞esponsibility to our existing schools鈥. More merger caution? 鈥淲hile we appreciate the steps the DfE has taken to try to address this shortfall, unfortunately the trustees have had to make the very difficult decision to step away from continuing to work with Beacon.鈥 Bath and Wells runs 45 schools. A primary-only MAT, it had just under 9,000 pupils on roll as of last August. Stephen Morales, the chief executive of the Institute of School Business Leadership, believes the trust merger landscape is complicated by the funding available. Stephen Morales This could lead to MATs 鈥渂ecoming more risk averse鈥 especially where that merger involves larger-scale deficit recovery or capital and condition issues鈥. This could be 鈥渃ompounded鈥 by the government scrapping trust capacity funding (TCaF) last year. It is understood, however, that Bath and Wells鈥檚 decision was not affected by the removal of TCaF. Beacon is not large enough to qualify for annual allocations of capital funding. Instead it applies for building cash through the condition improvement fund (CIF). Of the 4,363 schools eligible for CIF, just under half applied for cash last year. Only 866 projects were approved, with 拢450 million awarded. This is a near 60 per cent fall since 2020-21 when ministers gave 2,104 schemes more than 拢563 million. 拢14bn maintenance backlog Dr Jonathan Dewsbury, the Department for Education鈥檚 director of education estates, revealed in October that Labour had ordered a review of the system for issuing capital funding. He noted that for 鈥渢hose small trusts that access CIF, it鈥檚 perhaps too complicated and not in some places as accessible as it needs to be鈥. A National Audit Office report earlier this year revealed a 拢13.8 billion backlog in maintenance. It cited several reasons, including historic under-investment, cost increases and inflation. Many buildings have also reached the end of their operational life. A Beacon spokesperson noted that while the pulling of the merger 鈥渞epresents a shift in our immediate plans, it is important to highlight the significant progress made across our schools鈥. A recent monitoring visit to Danesfield, a Beacon school in Somerset rated 鈥榬equires improvement鈥 three times in a row, praised 鈥渟trengthened leadership, curriculum enrichment, and the level of support from the trust鈥. It was 鈥渨orking constructively with colleagues from the Diocese of Bath and Wells and DfE to consider options for long-term and sustainable future partnerships鈥.