There has been a lively debate about the costs of academy trusts’ central services ("Academy trust central teams gobble up £200m," Schools Week, 7 February 2025). But does centralisation cost more, or does it save money?
Our Director, Chris Kirk, sheds light on the true costs of centralisation using the latest data from Aurora, CJK's benchmarking service.
Back in 2018, when working with a large school trust to help the evolution of its services, we faced a key challenge: while we knew what was funded from the ‘top slice,’ the cost of locally delivered operations was far less clear. Were we only seeing the tip of the iceberg?
Applying an end-to-end ‘Activity-Based Costing’ (ABC) approach helped us uncover the full financial picture. Since then, CJK has collected ABC data across hundreds of academies over seven years. This data not only supports trusts in operational improvements but also provides key insights into the centralisation debate. Converting costs to a ‘per pupil’ basis allows meaningful comparisons across trusts of varying sizes. Additionally, identifying line management structures enables analysis of the impact of centralisation versus delegation in each operational service.
Surprising findings on trust central services
1. Larger trusts aren’t necessarily more efficient
Academies group together into trusts to enhance student outcomes and to achieve economies of scale. Logically therefore, larger trusts should have lower per-pupil finance costs. However, Figure 1 - using a sample of our data from 270,000 pupils, 475 schools, and 30 trusts which have similar SEN but are otherwise different in size and structure - shows the opposite: larger trusts tend to incur slightly higher per-pupil costs.
2. Higher centralisation tends to reduce costs
When examining trusts by the percentage of finance staff reporting centrally, those with higher centralisation typically had lower finance costs per pupil. So there we have it: while centralisation shifts budget control from schools to central teams, it often releases funds for other uses, such as teaching.
That said, centralisation is not an automatic, universal cost-saver - some highly centralised trusts remain expensive, and some decentralised ones operate efficiently. The trend is clear, but not absolute.
3. Trusts with large schools can be decentralised and cost-effective
Decentralised trusts with low per-pupil costs turn out to be those with larger schools. These trusts maintain resources at the school level and operate with small central teams, avoiding duplication of overheads. However, they may struggle with financial oversight and strategic alignment. Headteachers in these trusts may feel the operational burden remains primarily on their shoulders as individual schools.
It ain’t what you do, it’s the way that you do it
A well-executed, central shared service delivers more than just financial savings:
Strategic: enables focus on high-value operational improvements
Effectiveness: frees educators to teach, ensures consistency, and reduces errors
Efficiency: leverages economies of scale and matches skills to tasks
However, central services can also be ineffective - unresponsive, detached from school priorities, lacking accountability, or failing to demonstrate value for money.
Ultimately, centralisation tends to reduce per-pupil costs, despite increasing the top slice. Instead of fixating on which budget holds the costs, we should focus on efficiency and service quality, whether delivered locally or centrally.
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