According to the April 2022 DfE report, Academy reserves have increased over the last full year.
The data submitted by Trusts as part of the academy accounts return in early 2022 shows that 97.4% of Trusts have either a cumulative surplus or a zero surplus with average revenue reserves increasing to £1.48m
The cumulative surplus across all Trusts has increased from £3.17bn to £3.96bn.
Taking into account the 2.6% of Trusts with a deficit, the total NET financial position of all academy trusts was a cumulative surplus of £3.94bn
With reserves of this level, there is a moral obligation to achieve 'best value' on the returns they generate (subject to the Academy Trust Handbook guidelines). Unfortunately, most of these reserves sit with a very small number of banks that are paying minimal returns on deposits.
As an example, a spread of reserves totalling £4m across various deposit accounts from 32-days notice to 12-months fixed lead to very different returns depending on the bank(s) deposited with. The 'Example 1' below is based on a Trust depositing £4m with one of the banks that currently hold a significant proportion of Academy reserves:
In contrast, if the same Trust were to utilise a cash management platform to spread the same funds over similar products with UK FCA regulated banks, the potential returns increase by over £45,000 per year (net of the platform fee) as shown in 'Example 2'
Putting that in perspective, if just 75% of the sector's surpluses were moved from a deposit profile such as 'Example 1' to 'Example 2', that would give a potential uplift of interest across the sector of over £33m per year.
If you would like any further information or free support to review your deposit strategy or cash deposit policy, do let me know.
Data and graph is Crown copyright 2022 and are reused under the terms of the Open Government Licence v3.0
Interest rate examples are correct as at 14th April 2022.