Key considerations and top tips for managing the challenges ahead for the Independent Sector

Market conditions are getting tougher for independent schools. Governors and leadership teams are having to consider Brexit and other political factors alongside the usual risk considerations.

In the last couple of years, in addition to the economic uncertainty arising out of Brexit, the following challenges have become more prevalent:

  1. Increased competition from the state sector. With the recent investment in the state sector and the extension of grammar schools combined with parents increasingly struggling to meet increasing private sector fees, in some areas academies and grammar schools are beginning to attract families away from the independent sector.
  2. Increased competition in attracting talent. Not only is competition for pupils increasing between independent schools and top performing state schools, but securing the best talent (both teaching and non-teaching) is becoming a greater challenge for some schools in certain areas.
  3. Teacher’s Pension Scheme (TPS) changes. The majority of independent schools are part of the Teacher’s Pension Scheme (TPS) and the Treasury has indicated recently that pension contributions will rise from 16.4% to 23.6% from September 2019. The Independent Schools Council has issued a stark warning that an increase in employer contributions to the TPS will simply be unaffordable for a significant number of schools.
  4. Political uncertainty. It is difficult to predict what the political landscape may look like in the near future. Should we have a Labour government under Corbyn, it is inevitable that independent schools will face greater challenges, perhaps in relation to independent schools’ charitable status and the possible imposition of VAT on school fees.

Given some of the challenges outlined above, governors and senior management will have to rely more heavily on the skills of those managing the finances and administration at a school, in particular the bursar. As part of the strategic planning governors and schools should consider:

  • Opportunities which there may be in merging or forming collaborations with other schools. This can assist not only in terms of cost sharing, but also from a strategic planning perspective. This aspect requires very careful consideration and due diligence. Advice should be sought at an early stage.
  • Putting in place a project team, with the right mixture of skills, knowledge and experience to manage the school’s finances and successfully implement an effective financial strategy which plans and models for these issues.
  • As part of HR resourcing, consider whether savings can be made through effective resourcing, for instance sharing back-office services.
  • Alternative revenue streams such development and selling the school's IP; as venue hire for events; possibility of parking facilities for nearby events on non-school days or outsourcing staff with specialist skills to other schools that need such specialist input but cannot afford to take on the additional staff.
  • Alternative ways of raising finance such as crowdfunding and bonds.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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