Credit crunch lies behind school closures

Few sectors of the economy are immune to the impact of the credit crunch and the market for independent education in the UK is no exception. This week six school closures have been announced and the reality is many of the smaller private schools are under intense financial pressures as a new academic year looms.

Rising costs, the risks of banks foreclosing on loans designed to improve facilities and the decline in effective demand caused by above-inflation increases in fees over many years have combined to create the dangers for a number of independent schools. Most of the costs of running a school are fixed - especially the salary costs of staff - and any decline in pupil numbers can have a hufe effect on the viability of the business. The credit crunch and a rise in the real cost of sending a child to an independent school have combined to hit demand.

Westbrook House Preparatory School in Kent, La Sagesse school in Jesmond Newcastle (pictured at the top of this blog entry), Green Hill School in Evesham, Worcestershire, St Peter’s school in Burgess Hill, West Sussex,Wispers School in Haslemere, Surrey and Wentworth College, a private secondary school in Bournemouth, have all fallen by the wayside.

As this article in the Telegraph makes clear

“Small independent schools that don’t have the capacity to make economies of scale are vulnerable.”

There is naturally a huge amount of angst when a school closes unexpectedly - for parents, teachers left looking for fresh employment and also students for the disruption that it can cause to their education. But school closures are little different to manufacturing businesses having to scrap to survive in an intensely competitive environment and a financial crisis. And of course there is never any chance of government or local authority intervention to protect them.