Listen to this story Members can listen to an AI-generated audio version of this article. 1.0x Audio narration uses an AI-generated voice. 0:00 0:00 Become a member to listen to this article Subscribe Almost half of ailing academy trusts censured by ministers after registering losses of up to several million pounds have continued their financial slide, a Schools Week investigation has found. Reserves have dwindled and balances have slipped further into the red, with three now saddled with deficits of more than £1 million since they were issued with government . And school bosses have warned more NTIs could be in the offing as funding continues to be squeezed. Julia Harnden, of the leaders’ union ASCL, said trusts would be in different positions, depending on factors such as the historic level of reserves, the composition of schools and falling rolls. “But many are struggling financially.” Julia Harnden The Department for Education issues NTIs to trusts when it has concerns about financial management or governance. The documents state what the chain must do to address these issues. Failure to do so “will be deemed a funding agreement breach” and could lead to the trust shutting. Twenty that have been issued to 19 trusts running 129 academies are listed on the Department for Education’s website. On average, the chains each have six schools. Only five have 10 or more. Council-maintained schools A similar system exists for council-maintained schools, with local authorities issuing their own notices when funding rules are breached. DfE figures obtained through freedom of information show 159 local authority-run schools across 26 councils were subject to a notice of financial concern in 2023-24, up from 94 the year before. Samira Sadeghi, of the Confederation of School Trusts, stressed NTIs were issued when “the most complex changes are needed”. These were “likely to need both time and additional professional and financial support to implement”. Our analysis of the published notices shows all but two cite the trust’s reserves or “weak” finances as a reason for the NTI. Among them was the Beckmead Trust, which runs 12 special schools. It was given a notice in September after appealing to ministers for an emergency bailout. Samira Sadeghi A spokesperson insisted Beckmead was “a well-run trust” and that it would return to a surplus this year. “A historical deficit built up because central funding due to us for capital work to build new free schools was delayed, as was funding from local authorities for the education and care of our students.” The SAND Academies Trust in Gloucester was sanctioned two months ago after its newly installed chief financial officer discovered “historic financial failings”. However, a National Governance Association (NGA) report from 2024 found there had “been a steady decline in the number of notices issued” over the previous 10 years, with MATs becoming “less likely to fail”. Joining forces Of the 19 trusts with open notices against their names, seven – running two schools on average – were told to weigh up joining another MAT. Stephen Morales, the chief executive of the Centre for Education Operational Excellence, thinks trusts in these situations would need to “pull a rabbit out of the hat” to provide the “financial confidence” to convince the DfE they did not need to merge. “I think the NTIs are basically saying, ‘Explore that because your survival depends on it.’” Pointing to the number of single-academy trusts in deficit, ministers posed a “challenge to our best standalone schools” earlier this year to partner with others and make the system less fragmented. Last June, the South Cumbria Multi-Academy Trust was told to “strongly consider merging with a high-quality” chain. Plans to join one of England’s biggest MATs, the Co-op Academies Trust, have since been given the go-ahead. The move is expected to be completed next year. Steve Jefferson, the chief executive of South Cumbria, said his six schools would form Co-op’s first hub in the area. This would bring increased capacity, investment and “significant benefits” that included “educational opportunities, enhanced support and shared expertise”. But the National Foundation for Education Research has said that claims large trusts could manage their finances more effectively were “difficult to evidence”. Larger trusts could pool cash, making it “difficult to observe the real circumstances of an individual MAT school and compare that with single trusts or maintained schools”. Staff cuts Meanwhile, three of the NTI trusts were ordered to cut staff. St Ralph Sherwin Catholic MAT was told in February to “ensure all financial recovery proceeds at pace”. It must “provide evidence it is expediting efficiencies to bring in-year savings, including staff restructuring”. Kevin Gritton, its chief executive, previously said he has worked with officials on a financial recovery plan, with changes planned to “staffing structures at some schools and our central team”. Stephen Morales The SAND Academies Trust was ordered “to undertake a comprehensive review of its structure and staffing models as a means of reducing costs” ahead of the next academic year. It confirmed an independent forensic investigation had also been commissioned to establish “how the financial position arose and to ensure full accountability”. A spokesperson said staff pay was secure, with financial support in place, as the trust focused on “putting things right”. Many NTIs also order trusts to look for savings or efficiencies. One was also told to “demonstrate that every possible economy is being made to achieve a balanced budget”. As part of this, it had to consider its senior leadership structure and staffing costs. ‘We’ll see more notices’ Harnden said ASCL was concerned by the highly pressurised financial climate that schools operate in, which is driven by a lack of government funding. “There is a very real risk that, if funding rates do not increase, we’ll see more notices to improve, bailouts, and cost-cutting programmes.” A report from the Kreston group, a network of accountancy firms, found only 37 per cent of trusts returned in-year losses in 2024-25, down from 60 per cent 12 months earlier. The largest MATs recorded gains of £1.1 million on average. Despite this, “a great deal of uncertainty” remained. All trusts, except medium-sized MATs, were forecasting reserves to fall by up to 43 per cent over the next two years. Our analysis suggests eight of the 11 trusts issued with an NTI before the start of this academic year have been handed a government bailout. Despite this, finances deteriorated in five of the 11, with three recording seven-figure deficits. The most high-profile examples are at St Ralph and the Arthur Terry Learning Partnership. The former, a 25-school chain based in Derby, was given a second notice four months ago after slipping £9.2 million into the red. And Arthur Terry’s deficit has almost doubled to £8.4 million since it received its NTI two years ago. Lee Miller, its interim boss, confirmed education secretary Bridget Phillipson had decided its 24 academies should “transition to a small number of strong, regionally based” chains. This would “support long-term stability and ongoing school improvement”. ‘Blunt instrument’ Morales called the notices a “blunt instrument” that failed to address structural problems that caused trusts to be in “such a bad place”. “They conflate different levels of risk, they’re retrospective and there’s limited nuance. It limits their efficacy because if a really good school goes to the wall for reasons beyond its control, then that’s terrible. “But if a poorly run school isn’t serving its children particularly well, then we need to think about how those learners are better served by someone else.” One of the country’s first free schools, Langley Hall Primary Academy Trust in Slough, was censured last year after handing the government “inaccurate” budget forecasts while racking up deficits of almost £380,000. Its deficit has since grown to £406,000. But its notice said officials were “most concerned” by the trust’s “failure in successive financial statements to disclose all related-party transactions”. Emma Balchin Langley Hall’s latest accounts, published this year, noted there were “limitations in the evidence available to confirm that all related party relationships, transactions and balances have been fully identified, appropriately approved and correctly disclosed”. Accounts also detailed an “instance of borrowing from a related party, the proceeds of which were used to settle an amount owed to another related party, without obtaining the required prior approval from DfE”. Emma Balchin, the chief executive of the National Governance Association, said NTIs were an important accountability mechanism that often identified fundamental issues that needed to be addressed. “Equally, it is important to recognise the context in which trusts are operating. “Poor financial management should be challenged, but financial difficulties do not arise in isolation.”