Bursar’s Review Spring 2020.

Feature 8 Spring 2020 www.theisba.org.uk Guy Biggin, partner at Crowe UK LLP, suggests that against the backdrop of political and economic uncertainty, now is the perfect time to agree a new strategy with governors to maximise return on your school’s existing assets and to update your programme of income generation. On 13th December 2019 the country woke up to a Conservative majority government and the imminent risk of Labour dismantling independent schools was deferred to the medium term, unless another political twist is on the agenda. Most independent school governors, heads, teachers and parents, however, will have felt little lasting relief. Despite losing the election, Labour’s election pledge to either slowly suffocate the sector with taxation or to more swiftly asset strip the charities gained substantial momentum with the Labour backed twitter campaign #abolisheton in particular having wide-reaching impact. The argument that independent schools create a two tier elitism in the UK, embedding irreversible societal unfairness, resonated with many during the campaign and the result of the recent election does not change the underlying issue – that the independent sector is a political target. In fact the Labour Party manifesto, in reality, only highlighted the risk that the sector was already facing from threats of stripped charitable status, VAT on schools fees and removal of the business rates relief. Sometimes though, a real and imminent risk that doesn’t come to fruition can be exceedingly informative and can provide an opportunity to bring minds together to brainstorm solutions to robustly guard against negative risk and to make preparations to seize upside risk. If independent schools are going to continue to fulfil their charitable objectives by providing world class education for the foreseeable future then political risk cannot be ignored. Neither indeed can the risk presented by the economic uncertainty that is facing the UK, including, naturally, the unpredictability as a result of the vote to leave the European Union. Managing risks For individual schools their ability to manage the risks arising from political and economic uncertainty may feel somewhat limited. But, it seems now more than ever, every independent school has a responsibility to amplify the positive messages about their educational achievements and the wide- reaching public benefit. This is along with aiming to manage the barriers to entry that are appropriately designed to ensure all children, irrespective of their background, have the opportunity to gain access to the best possible education, be it in the state or independent sector. Affordability, a topic long discussed in the sector, is clearly one of the most substantial barriers to entry for families to obtain an independent education for their children, not to mention a substantial ongoing challenge for some existing parents. Costs increase year on year, driven both by elements over which the school can exert at least some control (i.e. salary rises and capital projects) and those which are externally forced increases, such as the TPS uplift from September 2019. As a result, independent schools are required to manage the fine balance between increasing fees against ensuring the cost to parents remains achievable. And all against the backdrop of political and economic uncertainty. So how and where can schools find the flexibility to navigate the turbulent future? Expenditure control There is a natural tendency when seeking to improve financial health to focus on how costs can be reduced. Many schools, correctly, are already reviewing their expenditure to seek out cost savings. The ability to adapt: Navigating turbulent times