Over the past three months the Department for Education has issued a series of updates that continue to reshape the financial and governance landscape for academy trusts. While many of these changes are incremental in isolation, taken together they reflect a clear direction of travel: greater consolidation of funding streams, increased reliance on data accuracy, and a tightening of expectations around financial governance and internal control.
For academy financial controllers and finance leaders – including those working across the North West’s growing number of multi-academy trusts – the implications are both operational and strategic, affecting not only how funding is recorded and reconciled, but also how trusts demonstrate accountability to boards, auditors, and regulators.
Key takeaways
- Local Government Pension Scheme (‘LGPS’) employer contribution rates are expected to fall significantly from 1 April 2026, following a record-high funding position at the 2025 valuation – a rare piece of budget-easing news for 2026/27 forecasting.
- Both the National Insurance grant and the Teachers’ Pension employer contribution grant for mainstream schools have been absorbed into core DSG funding, requiring careful restatement in management accounts.
- The Academy Trust Handbook 2025 (effective 1 September 2025) tightens internal scrutiny requirements and introduces new rules on novel, contentious or repercussive (NCR) transactions and cyber ransomware payments.
- DfE’s Financial Benchmarking and Insights Tool (FBIT) and the new Manage Your Education Estate service give trusts named, practical tools for the data accuracy and capital monitoring expectations now being emphasised.
- Financial oversight for North West trusts sits with DfE’s Regions Group North West team, based in Manchester, which is currently navigating a change in regional director leadership.
Funding allocations and the evolving DSG framework
The DfE has begun issuing 2026/27 funding allocations through the Manage Your Education and Skills Funding service, with General Annual Grant statements being released in phases. These allocations continue to cover pre-16 and post-16 funding, alongside high needs provision routed through local authorities, with trusts required to ensure timely access to DfE systems in order to reconcile income accurately.
Alongside this annual cycle, a more structural shift is underway within the Dedicated Schools Grant framework. Certain funding streams, including those previously provided through separate National Insurance-related grants, are being consolidated into core funding lines. While this simplifies the funding landscape at a national level, it creates a new challenge for trusts in maintaining year-on-year comparability, particularly where Minimum Funding Guarantee baselines are concerned. Financial controllers will need to take a considered approach to forecasting in order to avoid distortion in multi-year financial planning.
Transition of National Insurance and Teachers’ Pension funding into core budgets
A notable change from 2026/27 is the removal of separate National Insurance and Schools Budget Support Grant payments. These will no longer exist as standalone funding streams and will instead be absorbed into core DSG allocations.
This isn’t an isolated change. The teachers’ pension employer contribution grant for mainstream schools has followed the same path: this grant has been rolled into core funding rather than continuing as a separate line, mirroring the treatment of the NI grant. Taken together, these two changes confirm a clear pattern — DfE is steadily folding standalone support grants into core funding lines rather than maintaining them as separate, trackable income streams.
This transition has practical implications for financial modelling, particularly where historic income lines have been used to support internal benchmarking. The re-basing of these grants means that trusts will need to adjust their internal reporting structures and ensure that comparisons across financial years remain meaningful. In many cases, this will require careful restatement within management accounts and budget monitoring reports in order to avoid misinterpretation of underlying financial performance.
A rare piece of good news: LGPS contribution rates set to fall from April 2026
Amid a quarter of updates that mostly add to the compliance and forecasting workload, one development works in trusts’ favour. LGPS funds carry out a formal valuation every three years, and the updated employer contribution rate then takes effect 12 months after the valuation date — meaning rates set at the 31 March 2025 valuation come into payment from 1 April 2026.
The reason this matters is the scale of the change. The aggregate funding level across LGPS funds reached a record high of 126% at the March 2025 valuation, a striking improvement from 67% at the 2022 valuation. As a direct result, employer contribution rates are expected to fall substantially in many funds — one published example shows the employer future service cost dropping from 22.5% to 15.6%* of pensionable pay under the new rates.
For trusts with significant support staff costs, this represents a genuine, budgeted reduction in one of the larger lines in the staffing budget, landing in the same financial year as the funding consolidation changes described above. Financial controllers should contact their specific LGPS fund directly, since rates vary by fund and by individual academy within a trust, and should factor the expected reduction into 2026/27 budget setting rather than carrying forward the previous year’s rate by default.
(*Contribution rates are set per LGPS fund, so the actual reduction your trust sees will depend on which fund(s) your academies sit in — it won’t be a uniform 22.5% to 15.6% everywhere. If you want this nailed down precisely for a specific trust, the right move is contacting your Trust’s LGPS administering authority directly rather than relying on a sector-wide figure)
Inclusive Mainstream Fund and SEND investment
The introduction of the Inclusive Mainstream Fund marks a continued policy emphasis on supporting SEND provision within mainstream education settings. Significant funding has been allocated across schools, 16–19 providers, and early years settings, with the intention of strengthening inclusion capacity and improving outcomes for learners with additional needs.
For academy trusts, this funding is expected to be clearly identifiable within allocation statements and will likely require more detailed tracking of expenditure linked to inclusion activity. Financial controllers should anticipate increased scrutiny of how SEND-related funding is deployed, particularly where trusts are expected to demonstrate a clear connection between funding received and outcomes achieved.
16–19 funding, data accuracy, and correction timelines
Further updates to 16–19 funding arrangements for 2026/27 continue to place strong emphasis on the accuracy of underlying learner data. Allocation statements are now issued via Document Exchange, and providers are required to submit any correction requests within a 20-working-day window.
This tighter timeframe reflects a broader shift towards more responsive funding adjustments, where inaccuracies in ILR data can have a more immediate impact on allocations. For trusts with sixth form provision, this increases the importance of robust internal data validation processes and close alignment between curriculum, MIS, and finance teams. Even small discrepancies in learner data now have the potential to translate into meaningful financial adjustments within the same funding cycle.
Using FBIT to stay ahead of the data accuracy curve
Given how central data accuracy has become across funding streams, it’s worth naming the tool DfE itself provides for this purpose. The Financial Benchmarking and Insights Tool (FBIT) replaced the previous View my financial insights and Schools financial benchmarking services, and lets any school, academy or trust compare its financial data against similar settings across England. Academy accounts return data is refreshed annually on the platform, alongside summary reports that have replaced the older benchmarking report cards.
For finance teams already under pressure to validate learner and funding data, FBIT offers a practical way to sense-check spending patterns against comparable trusts before issues are picked up externally – by auditors, governors, or DfE itself.
Capital funding and estates investment
The DfE has continued to confirm significant investment in capital programmes, including school condition allocations and targeted estate improvement schemes. This includes ongoing funding for condition improvement projects and continued support for rebuilding and remediation work where required.
Alongside the financial allocations themselves, there is also a clear shift towards digitalisation in estates management. DfE has launched Manage Your Education Estate, a new digital service bringing estates guidance, condition data and funding tools together in one place for responsible bodies, schools and colleges. For academy trusts, this reinforces the importance of maintaining clear separation between capital and revenue funding, as well as ensuring that spend is appropriately aligned to funding conditions. Strong audit trails and consistent monitoring of capital programmes remain essential in this area, and the new service is a useful starting point for trusts that haven’t yet centralised their estates reporting.
Apprenticeships and funding reform direction
DfE consultation activity continues around apprenticeship funding reform, with a gradual move towards more granular, unit-based funding structures. Updated funding rules and changes to learning support and reservation systems indicate a period of transition that is likely to increase the complexity of tracking apprenticeship-related income and expenditure.
For finance teams, this will require closer integration between operational training data and financial reporting systems, as well as a greater emphasis on forward forecasting to account for changes in funding methodology as reforms progress.
Strengthening financial governance: what the Academy Trust Handbook actually requires
Alongside funding and technical changes, there is a noticeable and increasingly explicit focus on financial governance within academy trusts. Recent assurance activity has highlighted a number of cases where trusts have been subject to Notices to Improve, often linked to weaknesses in financial oversight, unrealistic budgeting assumptions, and insufficient in-year monitoring.
These expectations are set out specifically in the Academy Trust Handbook 2025, effective from 1 September 2025. The Handbook requires all academy trusts to have a programme of internal scrutiny that provides independent assurance to the board on financial and non-financial controls and risk management, and trusts must submit their internal scrutiny summary report to DfE by 31 December each year alongside their audited annual accounts.
Two further points from the same Handbook update are worth flagging specifically. First, trusts must not pay any cyber ransomware demands – a clear, non-negotiable position trusts should ensure is reflected in their incident response planning. Second, the Handbook clarifies the treatment of novel, contentious or repercussive (NCR) transactions, with a direct link to the relevant Managing Public Money guidance; NCR transactions – broadly, spending decisions likely to set a precedent or create pressure on other parts of the public sector – are a common trigger for DfE scrutiny, and trusts should be confident their finance committee understands when a transaction needs prior approval.
A recurring theme across recent cases is the expectation that management accounts must provide a reliable and timely reflection of financial performance, supported by robust internal scrutiny arrangements. It is not sufficient for internal scrutiny to rely on external audit activity alone, and governing bodies are expected to be able to evidence effective oversight throughout the year, not solely at year end.
What this means for North West academy trusts specifically
Financial oversight of academy trusts isn’t delivered centrally – it sits with DfE’s nine regional directors, each covering a different part of England, including a dedicated North West region led from DfE’s Manchester office. This regional structure is the route through which Notices to Improve and broader financial scrutiny are issued, so it’s worth North West finance leads understanding who they’re ultimately accountable to.
It’s also a relevant moment for the region specifically: the DfE’s longest-serving regional director, who held the North West role for 11 years, has recently retired, with recruitment for a successor ongoing. Leadership transitions in regional oversight roles can bring shifts in emphasis or priority, so North West trusts should keep an eye on how the new appointment approaches financial governance expectations once confirmed.
Academy Accounts Direction 2025/26 and reporting changes
The latest Academy Accounts Direction introduces a number of technical updates that will directly affect the preparation of year-end accounts for 31 August 2026. These include enhanced disclosure requirements around key management personnel, updated treatment of restructuring costs including termination payments, and strengthened requirements in relation to related party transactions.
There are also changes to non-financial reporting, including updates to energy and carbon disclosure expectations, alongside removal of certain reporting lines such as trade union facility time. In addition, trusts will need to begin preparing for future accounting changes linked to FRS102 and updates to the Charities SORP framework.
Collectively, these changes will require careful planning within finance teams well ahead of the year-end audit cycle to ensure compliance and avoid last-minute adjustments.
Pupil premium and in-year funding adjustments
Pupil premium funding continues to be issued on a quarterly basis, with ongoing adjustments based on census data and eligibility updates. In parallel, in-year growth funding for post-16 provision is expected to continue, with payments phased through the funding year.
The key challenge for financial controllers lies in ensuring that funding received is accurately reconciled against underlying pupil data and eligibility criteria. Given the frequency of adjustments, there is an increasing need for continuous monitoring rather than periodic reconciliation, particularly where funding corrections may impact in-year financial positions.
Key themes for academy financial controllers
Taken together, these updates point to four overarching themes that are increasingly relevant for academy finance professionals. Funding structures are becoming more consolidated, but also more sensitive to underlying assumptions and data inputs. At the same time, expectations around financial governance are tightening, with greater emphasis placed on the quality of in-year oversight and the effectiveness of internal scrutiny arrangements. The role of data accuracy has become central to financial performance, with errors in underlying systems now translating more quickly into funding adjustments. And, for the first time in some years, trusts also have a genuine cost-reduction opportunity to plan for, in the form of falling LGPS contribution rates.
Frequently asked questions
Will our LGPS contributions actually fall, and from when? For most funds, yes — rates set at the 31 March 2025 valuation take effect from 1 April 2026, reflecting the scheme’s improved funding position. The exact reduction varies by fund and by individual academy, so check directly with your specific LGPS administering authority.
What’s replaced the separate National Insurance and Teachers’ Pension grants? Both have been absorbed into core DSG funding rather than continuing as standalone, separately trackable grants, which means historic income lines used for internal benchmarking will need restating.
How Williamson Croft supports academy trusts
Williamson Croft works with academy trusts to strengthen financial control, improve forecasting accuracy, and support compliance with evolving DfE requirements. Our work includes budget setting and financial modelling, funding reconciliation and assurance support, academy accounts preparation and audit readiness, and reviews of internal control and governance frameworks. We also support trusts in improving the integration between financial systems and operational data to strengthen reporting quality and reduce risk.