The government wants reassurance that hundreds of academy trusts with reserves worth a fifth or more of their annual income have plans to spend the cash. But trusts say the crackdown disincentivises long-term school rebuilding planning. Schools Week investigates The government is investigating whether academy trusts with reserves worth a fifth or more of their annual income have 鈥渞obust鈥 plans to use the cash. Placing a cap on reserves isn’t sound policy Schools Week analysis suggests hundreds of trusts鈥 budgets could be under scrutiny, despite many saying the reserves are for Covid-delayed building projects or are helping them stay afloat as costs soar. But ministers ratcheted up scrutiny after the (NAO) called for 鈥渁ction鈥 over those building up 鈥渟ubstantial reserves鈥. NAO analysis found 22 per cent of trusts had reserves amounting to one-fifth of annual incomes in 2019-20. However, one senior trust leader said any potential 鈥渃ap鈥 would disincentive long-term school rebuilding plans. Guidance to ensure academy trusts aren鈥檛 鈥榟olding back too much鈥 In March, MPs on the Public Accounts Committee (PAC) made similar pleas, and in June Labour鈥檚 Baroness Wilcox warned that 鈥渢hese institutions cannot be cash cows鈥. The DfE said earlier this year it was 鈥渟trengthening鈥 trust data requirements to help 鈥渃hallenge the robustness of their financial reserves鈥 plans鈥. It was also 鈥渆xploring鈥 new guidance to help trusts hold cash for contingencies and big investments 鈥渨ithout holding back too much that could otherwise be used to benefit current pupils鈥. Questions were added to this July鈥檚 budget forecast return about how trusts would use reserves exceeding 20 per cent of income, and about planned project costs and timings. A DfE spokesperson confirmed officials were 鈥渨orking through the data鈥 to ensure it was being 鈥渋nvested back into schools and pupils鈥. The latest data has not been published, but last year鈥檚 accounts suggest at least 699 trusts would face scrutiny if they have broken even since. Single-academy trusts were more likely to meet the threshold. Forty-two trusts鈥 reserves were more than half their annual income, and three had savings exceeding income. Ashton West End Primary Academy, a 459-pupil standalone trust in Greater Manchester, received about 拢2.5 million last year with 拢671,000 not spent, pushing reserves to 拢3.7 million or about one-and-half times income 鈥 the highest of any trust. Accounts said some of the excess would be used on staffing and infrastructure, but some was held because of the risks of 鈥渄iminishing funding鈥. It did not respond to a request for comment. Reserves now a lifeline for rising costs Many trusts would bridle at suggestions they are 鈥渃ash cows鈥. Reserves rose in both 2019-20 and 2020-21, partly because of Covid lockdowns limiting everyday and capital spending. But many trusts are now forecasting deficits. Some 350 leaders warned the government this month that rising inflation and unfunded pay hikes put trust viability at risk. Several chief executives recently told Schools Week reserves were a lifeline amid soaring energy bills. Stuart Gardner, the chief executive of The Thinking Schools Academy Trust, even warned of a culture of stockpiling if trusts 鈥渒now government won鈥檛 step in鈥. Officials are also scrutinising out-of-date budgets. Ministers鈥 and councils鈥 unexpectedly high pay decisions came after many trusts had already submitted their budget figures. Trusts鈥 circumstances vary too. Thirteen of the 20 trusts with the highest-ratio reserves in 2021 run special schools or alternative provision. Four are multi-academy trusts with one school, suggesting growth ambitions requiring investment. Reserves rise due to Covid staff shortage An Apollo Schools Trust spokesperson said its reserves had risen because of Covid-linked staffing shortages in its new alternative provision, and cancelled refurbishment and IT projects. A National Autistic Society Academies Trust spokesperson said reserves were for planned investments in therapists and IT training. Delta Academies Trust, the Bishop Hogarth and Bishop Bewick Catholic trusts, Star Academies and the Diocese of Chelmsford Vine Schools Trust were the only five trusts with 20 or more schools to meet the 20 per cent threshold. The chief executive of Bishop Hogarth, Mike Shorten, said the data was 鈥渕isleading鈥 as it included 18 schools鈥 income but 29 schools鈥 reserves. Some 拢8.9 million of 鈥渆ssential鈥 maintenance and construction would cut reserves to 8.7 per cent, he said. A Delta spokesperson said it was set to spend nearly 拢15 million this year on capital investment across its schools. Projects were delayed during Covid, which led to a 鈥渂uild-up鈥 in reserves. The spend included the Dallowgill outdoor education centre in the Yorkshire Dales, which would give every pupil across the trust a two-night residential experience. Suthan Santhaguru, the finance director at the Vine Schools Trust, said reserves were paying for material cost increases and urgent capital projects not funded by the government. 鈥楥apping reserves isn鈥檛 sound policy鈥 Sir Martyn Oliver, the chief executive of Outwood Grange Academies Trust, said placing a cap on reserves 鈥渋sn’t sound policy鈥. 鈥淲e should be asking all those responsible for public buildings to have a long-term plan in place to maintain them. Reserves should be judged against this.” The trust, which has 40 schools, boosted its overall reserves from 拢22.8 million in 2020 to 拢31.9 million last year. Oliver “We have a long-term estate plan,鈥 Oliver said. “We take on many schools that are broken educationally and which are often in poor buildings with urgent estate needs. “So we save hard and build up enough money to be ready to undertake capital expenditure projects – without needing to go to the Government to ask for additional funding.鈥 No large trusts had reserves ratios above a quarter, while some had ratios as low as 5 per cent. A spokesperson for the David Ross Education Trust, with a ratio of 3 per cent, said it had been 鈥済radually strengthening鈥 reserves after rapid expansion. A Department for Education spokesperson said schools nationally had 鈥渉igh standards of financial management鈥. The government would take current financial challenges 鈥渋nto consideration鈥, but would take 鈥渁ppropriate action where necessary鈥.