Small Independent Schools - How to escape from being between a rock and a hard place?

Parents love small schools. Parents sending their child to an independent school for the first time want their child’s school to be a “home-from-home”. They want the school to be local so they are not spending hours each day on the school run, and where the school provides a focus for wider community activities and life. They don’t want their son or daughter to be lost in a large school, instead they often choose a school where they know that their child is valued and known to all the staff. These are some of the reasons why small schools continue to compete successfully against larger ones, which perhaps have superior facilities.


However, times are tough for the small free-standing school. The challenges are well known:

1. Compliance and Regulation. The regulatory burden on the Independent Sector means that it is increasingly difficult for the senior management team of a small school to ensure that their school is fully compliant. ISI require ever more policies, procedures and checks to be in place; and the nature of compliance and health and safety matters means that schools increasingly need specialists in this area. Changes in employment, disability and equality legislation have placed additional burdens on senior managers to keep up to date.
2. The Micawber Principle. It is often the case with small schools that the surplus is represented by a relatively small number of pupils. A small swing of as few as five to ten pupils could wipe out the whole surplus and put a school into a deficit situation.
3. Lack of Economies of Scale. Small schools do not have the purchasing power to enjoy the benefits of economies of scale.
4. “Poverty Trap”. It is unlikely that a small school that is generating a surplus of, say, £100k-£150k p.a. is ever going to manage to complete a significant capital project. Banks are reticent to lend significant sums of money to small schools because the gearing required would be too great. Small schools are therefore caught in a “poverty trap” from which they cannot escape. They cannot invest in the significant capital spend that will enable them to increase the numbers to move to the next level and to service the loans. Inevitably, therefore, they fall further and further behind their rivals, until they eventually become uncompetitive and fail.

It is very important that small schools survive as they give parents choice. Parental choice is one of the key drivers for ever higher standards in our sector. One of the reasons that Independent Schools are amongst the best in the world because they operate in a competitive environment – there are no Government bail outs or subsidies for us – we either provide what parents want, or we go to the wall.

Small schools need to find strength in numbers, either by working together to share costs and to achieve economies of scale; or by merging or by becoming part of a wider group of schools. At present most of the groups of schools are in the "For-Profit" sector, but I am sure that we are going to see a rise in the number of Charity/ "Not-for-Profit" groups.