Over half MATs forecasting deficits for 2025/26

A growing number of multi-academy trusts (MATs) are facing serious financial difficulties, with more than half forecasting in-year deficits for 2025/26, according to a new report.

The MAT Finance Sector Insight Report 2025, published by IMP Software in partnership with the Confederation of School Trusts (CST), provides an analysis of MAT finances, drawing on data from 274 MATs covering over 3,300 schools.

The report reveals a sharp decline in financial health across the sector, highlighting systemic challenges that could threaten the sustainability of many trusts.

According to the report, 55% of MATs are predicting a deficit for the current academic year, up significantly from 34% the previous year. A third of trusts are expected to hold reserves of less than 5% of their income by the end of 2025/26, this is a level the Department for Education (DfE) considers financially vulnerable. That figure is projected to rise to 50% by 2028, while only 2% of trusts report reserves exceeding 20%, suggesting that few have meaningful financial buffers left.

The analysis suggests a troubling convergence in financial vulnerability, as more trusts cluster around the 5% reserves threshold. This leaves many organisations with little room to respond to unexpected costs or to invest strategically. The report also finds that financial resilience does not appear to be strongly linked to levels of pupil deprivation or trust size, challenging assumptions that additional funding for disadvantaged pupils necessarily offsets the costs associated with supporting them.

The report points to significant workforce challenges as well. In primary trusts, teaching assistant numbers are expected to fall at nearly three times the rate of declining pupil numbers, potentially reducing the level of in-class support available to students. While secondary trusts are forecasting relatively stable pupil numbers, they show little change in staffing levels, despite rising costs.

General Annual Grant (GAG) income per pupil continues to vary widely across the sector. Lower-funded primary trusts, in particular, are being squeezed between high pupil-to-teacher ratios and the growing share of revenue consumed by teaching costs. Meanwhile, teaching costs themselves are rising faster than headline pay awards, due to incremental increases and other pressures. This is contributing to further strain on already stretched budgets, with no corresponding increase in income to compensate.

Special schools are also facing serious funding challenges. Despite serving students with similar levels of need, the report finds wide disparities in funding, driven more by local authority allocation methods than pupil characteristics. This raises concerns about equity and consistency in provision for some of the most vulnerable pupils in the system.

Operationally, the report highlights the financial benefits of centralisation, though adoption remains uneven. Around 22% of trusts have fully centralised back-office functions including IT, HR, payroll, finance, procurement and facilities. IT is the most frequently centralised function, while facilities management is the least. Smaller trusts that have not centralised services face higher per-pupil finance costs, while larger and medium-sized trusts are able to leverage economies of scale more effectively.

Pooling strategies are becoming more common, with 55% of MATs now pooling reserves, compared to just 21% pooling their GAG funding. The report suggests that pooling reserves is often a response to financial stress, rather than a proactive strategy, but nonetheless is associated with improved short-term financial positions.

Will Jordan, Co-founder of IMP Software, said: “The financial health of multi-academy trusts is under growing strain. A convergence of cost pressures – from pay increases, to falling pupil numbers and unfunded increases in demand for provision for children with special educational needs – is squeezing budgets more than ever."