| |
| |
| |
RAAC and academy schools – urgent answers needed to three funding questions | |
The extent of Reinforced Aerated Autoclave Concrete, or RAAC, in schools has sent shockwaves through the education sector and with parents as children returned to school after the long summer break. It has left many schools facing the impossible decision of having to vacate areas that are known to contain RAAC with little or no notice and desperately searching for portable classrooms or alternative classroom spaces. Even where RAAC is not evident, its spectre hangs over future capital investment programmes.
| |
It has long been known that RAAC was used in school construction between the 1950s and 1990s and that its safe life use extends to just 30 years. If further warning was needed, the collapse of a primary school roof in 2018 should have been sufficient. To date, 174 schools are known to have RAAC. | | | |
| |
| |
Local Government Pension Scheme assets – to recognise or not to recognise | |
| |
Academy schools and their auditors are well-used to recognising liabilities on the school’s balance sheet in respect of defined benefit (“DB”) pension schemes, typically Local Government Pension Scheme (“LGPS”) obligations relating to the non-teaching staff. Since the academy sector in its current form was created these schemes have been in deficit, with the discounted value of estimated future liabilities being significantly higher than the value of the corresponding plan assets. But what happens when that position is reversed?
Corporate bond yields have increased dramatically over the past 18 months, meaning that the discount factor applied to estimated future liabilities has increased at the same pace. One leading pension consultancy has estimated that increased bond yields have caused DB pension liabilities to fall by between 25-50% in a year, more than offsetting the fall in equity and other asset markets over the same period. At the same time the rate of growth in life expectancy slowed slightly, further restricting the rate of growth of future liabilities. This means that many LGPS employers will potentially be in a net asset position at 31 August 2023, leading to the question: to what extent these net assets positions can/should be recognised as assets on the balance sheet? | |
| |
| |
Commitment to remove the VAT exemption from independent school fees | |
The Labour Party has reaffirmed its commitment to remove the VAT exemption from independent school fees if elected at the next general election. The UK’s VAT treatment of different education providers is complex. Independent schools which are charities or not-for-profit bodies, unable to distribute profit, are currently classified as an ‘eligible body’ so that school fees and other closely related supplies are VAT exempt. | | | |
| |
| |
Webinar recording: Academy Trust Handbook & Academies Accounts Direction 2023 | |
| |
| |
During our recent webinar, our education specialists Darren O'Connor and Rebecca Foy provided insights into the trends in the sector and issues faced by Academies and Multi-Academy Trusts, following the release of the Academy Trust Handbook and the Academies Accounts Direction 2022 to 2023. | |
| |
| |
| |
| |
If you would like to arrange a virtual meeting to discuss your specific circumstances in relation to any of the above, please get in touch with your usual contact within James Cowper Kreston or contact me using the details below.
Mike Bath Partner T: +44 (0) 7557 340691 | E: MBath@jamescowper.co.uk | |
| |
The information in this newsletter must not be relied on as giving sufficient advice in any specific case. | | | |
| |
| |
| |
| |
| |
| |
.png)
