The Recession: Viewpoints

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Attain asked the Bursars of two senior (Winchester & Roedean) and two prep schools (Cothill & Cumnor House), plus Shane Rutter-Jerome of AGBIS, to share their views on how the recession is affecting schools.

Jeff Hynam
For the last few months there has been much press comment on the effect of the credit crunch on independent schools.  On one hand we are told that despite tough economic times, interest in independent schools shows no signs of abating.  For many schools pupil numbers for September 2009 are at capacity and admissions for 2010 and even 2011 look buoyant.

On the other hand if property prices continue to fall or even stagnate, if the banking system continues to self implode and the economy fails to recover sufficiently to re-engender confidence, it could be argued that it is only a matter of time before independent schools feel a real squeeze on finances.

Schools are generally ‘last in’ and ‘last out’ of a recession.  That was certainly true in the early 1990s and this recession has every feel of repeating that experience.  Why?  For many parents the decision to send their children to independent school is a major financial undertaking, and not one to be taken lightly.  Having made that decision, however, and particularly if they see their offspring flourishing, most parents will be determined to see their investment through even if it means sacrifices in other areas.

Many schools saw an upsurge in interest in fees-in-advance schemes at the beginning of the current academic year.  The opportunity to invest in their children’s education at a time when the banking sector was entering a major crisis and interest rates on savings were tumbling is perhaps no coincidence.

The worrying part is that the real effect of the current economic downturn is yet to be felt.  A continuing increase in unemployment, the threat of inflation and an uncertain economic recovery will lead to some parents in the future questioning their ability to sustain fees over a period of years and opting either for a cheaper alternative or the maintained sector.

Jeff Hynam is the Bursar of Winchester College, a boarding and day school for boys aged 13 to 18 years.


Stephen Launchbury
Even in the good old pre-recession days, controlling expenditure and ensuring that independent schools remain affordable was one of the key challenges facing the sector.  Fees over the last decade have increased significantly above salaries, and the recession will, if nothing else, redouble the desire of schools to contain fee increases to something more in line with inflation.   Paying appropriately to recruit and retain good staff, improving facilities and managing the demands of increasing regulation whilst, simultaneously, containing increases to the fees is the dynamic which schools have to master with even greater skill than normal during a recession. 

Roedean has had an atypical year.  In April we took over St Mary’s Hall, another girls’ school in Brighton, and have acquired an excellent junior school as well as the old SMH senior school site which will be leased to commercial tenants.  In the short term this has added pressure to our finances, but in the longer term it will provide for greater financial stability. 

Notwithstanding such extraordinary events, it is a confident, and somewhat blasé, school that does not respect the recession and work to counter its effects. Regrettably, the recession was the final straw for St Mary’s Hall so it is clearly the case that parents in some schools should be concerned about the impact of the recession but such closures/mergers will be few indeed.  Parents recognise the value of good independent education and will be determined in their support when making choices about family expenditure but equally they will expect schools to play their part in containing the increases to fees.

Perhaps the biggest response that Roedean has made to the effects of the recession has been the strengthening of its marketing and admissions department.  Always an important function, in a recession its efficient operation becomes paramount and it has been heartening to watch, as this department changes gear, the uplift in results.  The recession is unwelcome but most schools will not be cowed and will rise to the challenge.

Stephen Launchbury is the Bursar of Roedean School, a day and boarding school for girls aged 11 to 18 years and, in Roedean Junior School, a day school for girls and boys aged 3 to 11 years.


Simon Blackmore
On 12th May, ‘The Times’ was announcing that ‘Private schools are closing or merging at a rate of one a week as increasing numbers of parents take their children out of fee-paying education because of the recession.’
Have we really witnessed such a dramatic change this year over and above the ebb and flow of schools’ fortunes and popularity?

The article was extraordinarily alarmist with phrases such as ‘brought to the brink’ and ‘parents who have so far clung on’, concluding with: ‘...are expected to pull their children out, causing a rush for places in state schools and a crisis in the independent sector’.  Crisis?  What crisis?

Albeit slowly, independent schools have in the past always adapted and changed, responding to the needs and aspirations of parents for the education of their children.  In ‘The Times’ article, mergers are referred to in the same breath as closures as if both are last minute solutions to the dreaded recession.  However in recent years there has been a natural and gradual progression in schools, both in those that are privately owned and in charitable trusts,
towards the grouping and sharing of facilities and administration in order to streamline costs and increase efficiency.  Gone or going are the days of small traditional independent schools each with its own costly administration and infrastructure.

The Trust of which I am Bursar oversees the running of seven schools, all for preparatory age children.  We believe in strength through partnership and the development of individuality, which extends parental options and enables the right choice to be made for each child.  Each of our schools retains its own name and preserves its own identity, while our Trust provides support and expertise in the encouragement of all that is special and particular to each.  Far from being a reaction to the recession, mergers and groupings of schools represent good sense regardless of the state of the economy.

The recession may now be hurrying this process on, weeding out the inefficient schools and encouraging others to overcome any reluctance to modernise.
The security and solidarity of shared assets have suddenly become more attractive to governing bodies and in Darwinian terms a natural evolution is taking place, thanks perhaps to the pressures and demands of the recession.

Simon Blackmore is Bursar to the Cothill Educational Trust, which runs seven schools for preparatory age pupils: Cothill House, Chandlings, Château de Sauveterre, Kitebrook House, Mowden Hall, The Old Malthouse, and Ashdown House.


Mark Dickens
All companies need to ensure they are lean and mean to weather a recession and preparatory schools, as charities, are no exception.  As private education is such an expensive long term undertaking, parents need confidence in a school before they will make such a significant investment.  This will be even more carefully scrutinised at the moment.  How well prepared is your school?

Moving with the times:  A school that is outward looking can recognise opportunities that the recession brings.  Is it providing the all round education that both current and prospective parents want for their children?  This may seem obvious but it is easy to lose sight of it when times are very tough.  No school can afford to sit on their laurels and wait for the good times to return.  Times are changing fast and schools must keep up with parental expectations.  Beware the ‘it has always been done that way’ mentality.  Does your school ask its parents what they want?

Keeping fee increases low:  This is of course stating the obvious and is something for which all schools strive.  It is also essential to recognise parental economic pain at the moment.  Extra savings can be found during a recession (with low inflation and interest rates and the re-tendering of contracts), however a school that slashes its budget too far will be reducing quality which will usually be counter-productive.  Teaching salaries are easily the largest proportion of all expenditure and may need to be pruned.  However good schools need to attract and retain the best teachers and this cannot be achieved if staff are overworked and poorly paid.  Savings can also be made by delaying large maintenance items but this should not be for long or the fabric of the school will suffer and it will show.  Most importantly, such savings should not be temporary as a zero increase one year followed by a higher than average catch up the next will make more enemies than friends.

Involving everyone:  Is the whole school community involved with fighting the recession?  Keeping parents informed keeps them onside and avoids nervousness in the car park which can quickly flourish in a vaccuum.  Are the staff and pupils spearheading initiatives such as minimising waste and other green issues?  This can be fun, educational and beneficial and although going green may not be cost effective in the short term, it should bring great dividends in future years.

Planning for a downturn:  How prepared is the school?  Are the pupil numbers stable?  How will the school manage if there is a reduction and do they have a staged plan to cope with it?  Do they support other schools and look to them for ways to share costs?  Are staff aware of the situation as it may involve redundancies?  Paradoxically this may improve their performance and hence ease the situation!  In recessionary times it is vital for the school to hold a significant financial contingency in reserve.  In non-financial terms this contingency is the strength of relationships between the parents, teachers and children as well as the loyalty that the school invokes.

Working together with your school is always the best policy.

Mark Dickens is the Bursar of Cumnor House School, a day and boarding school for boys and girls aged 7 to 13 years, with a pre-preparatory department for children of 4 upwards.


Shane Rutter-Jerome
The make up of the independent sector has always been subject to change, even in good economic times as economic and social conditions change.  The current financial crisis has brought into ever sharper focus the need for schools to be run as efficient businesses, with all the discipline that brings.  Whilst a school’s strategy might be well thought-out and far-reaching, a significant downturn in the economy or a major local change might easily disrupt these careful plans.  In looking ahead, governors and head continually question their assumptions and prepare plans for the worst case.  This is particularly so for smaller schools whose modest surplus is quickly dissipated by a fall in pupil numbers.

In September 2009, we will all know how well our parents – and thus our schools – are riding out the current storm, how many parents have not been so fortunate, and how successful our marketing efforts have been.  That is the point at which we have to identify the key factors, decisions and assumptions for the September 2010 school year:  What will the pupil numbers be?  How does that affect our planned surplus?  How much can we improve this by additional marketing efforts?  What would be the effect on staffing levels?  How can we cut costs and increase other income?  How will this all affect the development plan?  What do the long-term prospects look like?  Are there any local issues which affect us more than other schools?  How are our neighbouring schools faring? Are we still financially viable?  Should we be looking towards some sort of strategic alliance or merger with another school or a larger body?

If all is not looking rosy, leaving this process until half way through the school year is too late.  It takes time to negotiate some sort of alliance, if that becomes necessary, or to renegotiate bank arrangements and it is better to make any preparations before coming under pressure.  Schools’ governing bodies will have spent time considering contingency plans to make savings if all does not go according to plan.  They will be relying on the Head’s marketing efforts and the reputation of the school to keep the finances in good shape but taking sensible precautions, too. 

In the relatively small number of cases when schools are forced to close or merge, governors are sometimes criticised for taking decisions late and thus adversely affecting staff.  Whilst they try to avoid this, not least so that they are not found to have operated whilst insolvent, the converse: announcing a decision too early, can lead to a more precipitous collapse as parents rush to secure places at another school.  Regardless of size, well run schools with good forward planning, good leadership and excellent staff and facilities have every reason to look forward to a long and successful future; on the way, there may be some difficult decisions to be taken, even for the best schools.  These decisions are best taken early.

Shane Rutter-Jerome is the outgoing General Secretary of AGBIS (the Association of Governing Bodies of Independent Schools).  He retired in August 2009 and is succeeded by Stuart Westley.

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