Did you know that 80% of schools in the UK report financial pressures impacting their ability to deliver quality education? Flexible finance solutions could be the answer.
Schools, academies and educational institutions across the UK are currently facing unprecedented challenges, from rising operational costs to increasing student numbers and aging infrastructure.
At the same time, public budgets often fall short, leaving schools scrambling to bridge the gap without compromising the quality of education.
This is where flexible finance solutions come in. By offering tailored financial options, schools can fund critical projects, such as classroom expansions, infrastructure upgrades, and technology investments – all whilst staying within their budgets.
In this blog, we explore how flexible finance can help education establishments tackle funding challenges and grow sustainably:
- The challenges of school funding
- IFRS 16 leasing changes for academies/schools
- What are the implications for academies/schools?
- Could modular school buildings help expansion?
- How flexible finance supports school funding
- Benefits of flexible finance for schools
- Choosing the right finance partner
The challenges of school funding
The issue of school funding has been a significant concern in the UK for many years now. Schools are continuing to face mounting demands with limited budgets, making it increasingly difficult to sustain high standards while meeting evolving needs.
Here are some of the key challenges schools currently face:
- Classroom overcrowding: Growing student numbers are placing pressure on already stretched facilities, leading to overcrowded classrooms and reduced learning space.
- Aging infrastructure: Many schools operate in outdated buildings that require urgent repairs or upgrades to ensure safety, functionality, and compliance with modern standards.
- Digital transformation: Adopting new technologies is critical for providing students with a modern education, but the associated costs for devices, software, and training can be prohibitive.
- Rising operational costs: Increasing expenses, such as energy bills, staff salaries, and general maintenance continue to strain already limited budgets, leaving schools with tough financial decisions.
Many schools are striving to address these challenges to create safe, modern, and effective learning environments for both students and teachers. However, securing the necessary funding to implement these vital improvements remains an ongoing struggle.
IFRS 16 leasing changes for academies/schools
Despite these challenges, the UK government has taken steps to address some of the issues. In March 2024, the Department for Education announced changes to leasing agreements for academy trusts, which took effect from on 1st September 2024. These changes streamline the process for academy trusts to acquire assets through finance leases by granting prior consent from the Secretary of State for specific asset categories. This removes the need for individual approval, making asset procurement quicker and more efficient.
The approved asset categories include:
- Information technology equipment: Laptops, tablets, servers, security systems, and whiteboards.
- Phone equipment: Mobile and landline phones, and systems.
- Catering and cleaning equipment: Dishwashers, fridges, ovens, vending machines, and small appliances.
- Furniture: Desks, tables, and chairs.
- Bathroom and sanitary items: Hand dryers and sanitary bins.
- Gym equipment: Treadmills, weights, and exercise machines etc.
- Grounds keeping equipment: Lawn mowers, trimmers, and blowers.
- LED lighting and renewable support: Lightbulbs and control systems via DFE-supported programs.
- Vehicles: Minibuses and similar school-use vehicles.
- Temporary classrooms: With possible separate consent needed for land leases.
These changes aim to simplify asset procurement for academy trusts, making the process more efficient and reducing administrative hurdles. While this is a positive step forward, it does not address all the costs schools need to manage.
What are the implications for academies/schools?
The IFRS 16 legislative change streamlines the process for schools to acquire essential assets through finance leases, allowing them to respond more quickly to operational needs without excessive administrative hurdles. However, for high-cost assets like buildings or land, which is critical for infrastructure and learning space expansions, schools must still seek specific approval from the Secretary of State for Education.
One of the most pressing issues for schools is outdated infrastructure and overcrowded learning spaces. Investment in new buildings and land is crucial to address these challenges. Unfortunately, the exclusion of these categories from the new legislation means schools will face longer delays and significant administrative obstacles to initiate such projects. On top of this, securing funding for large scale infrastructure improvements remains a substantial challenge, further delaying much-needed upgrades and expansion.
Could modular school buildings help expansion?
Modular buildings provide a practical and cost-effective solution for schools needing to expand quickly while minimising disruption to learning. Built offsite and assembled on location, they drastically reduce construction time and ensure minimal interference with school operations.
These structures are highly versatile, making them ideal for creating tailored spaces such as classrooms, libraries, or offices to meet specific needs. Additionally, modular buildings are scalable, allowing schools to adapt as student numbers grow. They are not only more affordable than traditional construction but also a more environmentally friendly option.
At SAF, we have supported numerous modular projects across various sectors, enabling businesses to expand faster, cost effectively, and sustainably. Our financial solutions allow projects to progress without the burden of significant upfront capital investment.
How flexible finance in education supports school funding
Flexible finance for education provides schools with a sustainable way to overcome funding challenges while delivering the highest quality. By exploring these solutions, schools can address pressing needs before they have the upfront capital to make these changes.
Flexible finance solutions, such as leasing, hire purchase, and tailored repayment plans, allow schools to spread costs over manageable periods. This approach enables investment in crucial areas, such as:
- Infrastructure upgrades: From constructing new classrooms to renovating outdated facilities, flexible finance helps schools make much-needed improvements. This could include installing modern heating systems, improving accessibility, or investing in renewable energy solutions to reduce long-term costs.
- Capacity expansion: With student populations growing, schools must expand their physical capacity. Flexible finance can fund temporary classrooms, modular buildings, or permanent expansions, ensuring schools can accommodate demand while maintaining high standards.
- Equipment/technology outside of the IFRS 16 leasing categories: Flexible finance will enable educational establishments to invest in new equipment and technology that falls out of the IFRS 16 categories, allowing schools to acquire these resources immediately and ensuring students and teachers have access to the tools they need
Benefits of flexible finance for schools
Flexible finance can help spread the costs and enabling quicker access to essential resources as well as helping empower schools to manage budgets more effectively, implement solutions faster, and plan strategically for the future without the need for upfront capital investment.
Here are some key benefits of adopting flexible finance for education:
- Improved budget management: By spreading costs over time, schools can avoid large upfront expenses and balance their budgets more effectively.
- Faster implementation: Schools can address pressing needs quickly, without waiting for additional funding or grant approvals.
- Customised repayment plans: Finance providers, like SAF Solutions, can tailor solutions to match a school’s financial circumstances, ensuring affordability.
- Long-term planning: Investing now in infrastructure and technology helps schools prepare for future needs while reducing long-term costs.
Choosing the right finance partner
By partnering with the right financial provider, schools, academies, and educational institutions can overcome financial barriers, enabling them to enhance their facilities, improve learning environments, and positively impact the lives of both students and teachers, quickly and without unnecessary financial strain.
At SAF, we bring over 18 years of experience working across both the public and private sectors. We specialise in creating tailored financial solutions that empower schools and businesses to invest in new facilities, modular buildings, equipment, and research to help them grow, improve, and deliver greater value to their communities.
By collaborating closely with both businesses and suppliers, we have developed a deep understanding of the needs of each stakeholder. This allows us to create flexible financial agreements that deliver mutual benefits for all parties involved.
Get in touch with our team today to find out how we can help you invest in new infrastructure and equipment for education through flexible finance without the need for upfront capital investment.