iplicit: Why preparing a MAT’s budget forecast will be harder than ever - and what to do about it.

But this year, the process has been further complicated by a looming general election – and by the requirement to submit some new key data.

With no change to the 29 August deadline for providing the forecast, MAT finance teams may find themselves under even more pressure than usual this summer.

What’s required in the academies budget forecast return (BFR)?

The Department for Education (DfE) requires all academies to provide financial information for past, current and future financial years in the annual BFR. The data must be in a format that allows the department, and the ESFA, to analyse the figures by academic and financial years.

For this year – in BFR 2024 – that means covering:

• September 2022 to March 2023 and April 2023 to August 2023 – this will have been covered in part by the BFR 2023 submission.

• September 2023 to March 2024 and April 2024 to August 2024.

• Summary forecasts for September 2025 to August 2026.

• Summary forecasts for September 2026 to August 2027.

The BFR has to be prepared in the form specified and must be approved by trustees before it is submitted. Trusts must notify ESFA within 14 days of that meeting if they are proposing to set a deficit revenue budget which they cannot address after taking into account unspent funds from previous years. Such a deficit budget would not be compliant with a trust’s funding agreement and the Academy Trust Handbook, which sets out academies’ obligations.

All this data must be prepared and returned by 29 August.

The uncertainty around BFR 2024

The DfE started accepting academies’ BFR data as planned at the end of May. But an event a few days earlier made forecasting considerably harder.

On 22 May, Rishi Sunak announced that Parliament would be dissolved and a general election held on July 4. We all knew that an election would happen some time before January 2025, but the timing of this announcement caused some additional uncertainties.

Whitehall is now in “purdah” – the period of “heightened sensitivity” when the Civil Service must take care not to influence the outcome of an election.

David Withey, Chief Executive of ESFA, wrote to MATs on 29 May that the agency would “continue to deliver the majority of our operational activity as normal”. But he added: “However, we must pause on communicating anything new or novel, and on most of our external engagement activities.”

Among the key areas of uncertainty are:

No new handbook. There will be no changes to the Academy Trust Handbook until after the election. ESFA says any such revisions will require ministerial approval and there will be an update “at the earliest opportunity”.

No news on funding. Because of the election purdah, there will be no announcements about school funding before July 4.

No updates on teachers’ pay. The government has delayed the publication of its response to the recommendation of the School Teachers’ Review Body on teachers’ pay. The body’s recommendations are thought to be with ministers, but we don’t know what they are or whether any rise will be fully funded.

Pepe Di’Iasio, General Secretary of the Association of School and College Leaders, has said: “The implications of this delay are serious as it means that teachers and leaders have no clarity about what they will be paid when they come back after the summer break, and schools are unable to plan their budgets for next year with any confidence.”

Who’ll be in charge? We don’t, of course, know who will be in government come 5 July. However, unless the opinion polls are massively wrong, or there’s a huge last-minute shift in opinion, the next Education Secretary will be Labour’s Bridget Phillipson. That will mean new policies that could affect budgets – including a pledge to introduce 6,500 new “expert” subject teachers and an entitlement to more professional development training. 

New BFR requirements on ICT 

On top of all the complexity outlined above, trusts face extra work this year when it comes to forecasting their spending on information and communications technology.

The government has introduced seven new lines to the revenue section of BFR the form and five new lines in the capital section.

The categories for capital are: connectivity; onsite servers; administration software and systems; laptops, desktops and tablets; and other hardware. The revenue section adds lines for IT support and IT learning resources. 

No data will be required for the 2022-23 year, so these fields are greyed out on the form.

“This new section will help your school or trust to monitor spend in key areas of ICT that can lead to cost and time savings longer term,” the DfE says.
“We want all schools to reap the benefits of ICT, but we know that it can be expensive. It is important that schools invest in technology that meets their educational objectives.”

However, there’s another complication for trusts using the DfE’s chart of accounts (CoA). Some of the CoA codes don’t correspond with the new fields in the BFR for ICT spending. The government says the CoA for 2024/25 will be updated to accommodate the new reporting categories. But in the meantime, trusts need to follow the instructions in a DfE table that explains what should go where.

What can MATs do? 

The Submitting a BFR might seem like assembling a puzzle with a lot of pieces missing.
ESFA has said it will continue with “business as usual” tasks such as processing business cases and collecting data – and it will respond to concerns and urgent queries.
As it stands, the advice seems to be:

• Hop on a call. The DfE is running regular sector calls on Microsoft Teams, with half-hour sessions every few days until 29 August, plus a “power hour” on 11 July.

• Take an educated guess. When it comes to the teachers’ pay award in particular, it seems wise to look at the past few pay settlements and make the best possible estimate of what might happen in the coming years.

• Wait for signals. After election day, there will still be nearly two months left until BFRs have to be submitted. It might be worth reviewing forecasts following the signals that come from the Education Secretary – whoever that is. 

This might be your most complicated BFR yet – but at least matters may be clearer the next time you go through the process.