Many households will have seen a significant reduction in income, for example through the Government’s furlough scheme, redundancy, salary reductions, or loss of business income. The latest HM Treasury figures show that 8.9 million employees have now been furloughed, representing over a quarter of the workforce, and a further 2.6 million claims have been made under the Self-Employed Income Support Scheme.
The impact on employment will take time to feed through - partly due to reporting lags and partly as we don’t yet know the proportion of furloughed workers who may be made redundant when the scheme ends. However, a sharp rise in unemployment appears inevitable – the latest forecast is for unemployment to reach 7.9% by the end of this year, double the pre-crisis rate.
Independent schools are highly vulnerable to these economic effects, which directly impact the ability of parents to pay fees. In addition, many schools voluntarily reduced fees during the summer term in response to the lockdown, although many have been providing tutoring online. Also, an increasing number of pupils have been returning to schools as Government guidance has changed, particularly in the primary years. There has been considerable variation in the level of discount offered, and in most cases, boarding charges have been refunded. Many schools are also offering to freeze fees for the coming academic year and are offering additional support to parents in financial difficulty.
Given the low margins at which many schools operate, this is having a considerable and immediate impact on school finances, and is clearly not sustainable for any length of time. Much of their cost base is fixed - most teaching staff are still required to deliver online teaching, and many other costs such as property maintenance and pension contributions are ongoing. Many schools will also lose additional summer revenue (such as summer schools and room lettings), and other revenue streams such as social events.
As registrations for September are usually confirmed in the Summer Term, there is uncertainty over pupil numbers for the coming academic year. Lower intake in September will have a longer-term impact as that year’s pupil numbers may not fully recover as it progresses through the school. The current position could cause parents to push back moving to an independent school by one to two years. This has the potential to create a significant shortfall in income in short term.
Social distancing measures will be relaxed from September to allow whole classes or year groups to be educated together in a “bubble” rather than the maximum of 15 permitted during the Summer Term. This will make it significantly easier for schools to function, although some continued disruption to normal school programmes is inevitable. However, there will be an ongoing risk of localised lockdowns and temporary school shutdowns, and long-term planning will remain difficult given the uncertainty over the path of the virus.
Whilst attendance for UK pupils will be compulsory from September, international student numbers will continue to be impacted by flight restrictions, as well as parental attitudes to the risk of travelling abroad.