After the slump

Mark Cummins looks at the challenges facing independent schools post-recession

Posted by Stephanie Broad | January 25, 2016 | Law, finance, HR

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• #recession
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There is little doubt that the schools which found themselves in strong positions in recent years strengthened even further during the recession. Many families across the UK aspire to put their children through private education but are often unable to due to financial constraints. However, with the Independent School Council (ISC) reporting that the number of pupils at its schools is now at the highest level it has been since records began in 1974, it seems times are changing.

With that said, independent schools must continue to demonstrate innovation to become more nimble and efficient businesses. Parents need the reassurance of excellence while being certain that the money they spend is being directed appropriately. Reassuringly expensive is a forceful offering, but to gain parents’ trust schools need to offer a bespoke service.

There are six key priorities for independent schools: value for money; affordability; reassurance; distinctive quality; exceptional professionalism and outstanding customer service. High fees improve the quality of a school but they come at a cost; it can significantly impact on the number of applicants. School fees have risen faster than inflation and salaries; many middle-income parents who would like to send their children to independent schools, and did so in the past, can no longer afford the fees.

Mark Cummins: “There is a critical need to ensure the people running the school are accountable for expenditure and capable of controlling it.”

Research from the ISC also suggests that over the past five years the number of pupils at ISC schools whose parents have a joint household income of £50,000-100,000 has declined by 60,000 and that these pupils have been replaced by those with wealthier parents, particularly those in the £200,000+ segment. If independent schools want to maintain or even grow the market, then they must be particularly focused on the fees they charge.

The independent sector still faces a multitude of challenges, such as maintaining educational standards whilst simultaneously ensuring that student numbers are kept at acceptable levels and the operational and capital budgets of the school are under control. Governors, heads and bursars increasingly have to consider an evolving list of objectives and targets. The economic downturn hit general affordability levels in the independent sector; governors have been faced with difficulties in making surpluses from activities and being able to reinvest in school development.  Independent schools also face growing competition from government-sponsored academy projects.

As each new school year begins there are a number of critical areas that governors should be keeping an eye on. First among these is pupil numbers. With budgets calculated according to how many students attend the school, it is essential that the predicted enrolment and the actual enrolment figures are aligned.

As I’ve mentioned, the ISC has boasted that the number of pupils at its schools is now at the highest level it has been since 1974 – up from 511,928 last year to 517,113. The rise is partly due to an increase in the number of international students from wealthy families – from 4.4 per cent of pupils to 5.3 per cent (27,211) over the last 30 years. But as the ISC also suggested, more parents can now afford the fees to educate their children privately.

Governors at independent schools, however, need a plan B for situations when there is a shortfall in enrolments so that any committed programmes and schemes, infrastructure investments and operational elements of the school remain unaffected. Shortfalls do happen and it would be naïve for an independent school to think “it will never happen to us”. Contingency plans are needed which allow for the school to continue operating effectively on a reduced budget if the worst happens.

The issue of enrolment numbers and understanding the predicted income is not something that governors can do on their own. It requires a close working relationship between school management and the governors. Having a balanced team of governors is vital as they can bring skills to the table that management may lack. There is a critical need to ensure the people running the school are accountable for expenditure and capable of controlling it.

Mark Cummins is charities and education partner at Russell New

www.russellnew.com