Schools look to leasing in austere times

Educators are investigating ways to spread investments
costs on back of cuts to capital expenditure, writes Grant
Collinson.

As austerity measures place strain on UK schools’ IT budgets,
the leasing industry could step in to provide an alternative source
of finance for learning technology.

An industry survey by asset finance
provider Syscap found more than half of schools would look for ways
to spread the cost of investment on the back of cuts to their
capital expenditure.

Schools in England have seen their
budgets cut by £155m (€176m) this year.

ICT procurement was hit especially
hard. Becta, the government agency for promoting technology in
education, was closed in May last year; the Harnessing Technology
Grant was reduced; and the Building Schools for the Future
programme scaled back.

School budgets for ICT equipment
grew steadily to 2008, but the British Educational Suppliers
Association says that IT budgets have fallen 14% from 2008 to
£502.4m this year.

Syscap CEO Philip White said state
schools need funding alternatives if their local authorities are
unable to provide the required capex.

“The leasing industry provides the
schools sector with cost efficient and sustainable environment to
invest in technology,” White said.

His argument is that technology is
constantly changing and faces increasing wear and tear in the
schools environment. White adds that schools also need a degree of
autonomy in order to make investments in ICT projects. Some schools
use podcasts and virtual learning environments to enable them to
remain competitive.

“It is not just state-funded
schools that are in this dilemma,” added White.

“Some parents of children at
privately funded schools have had to stump up extra cash in order
to make the technology investment.”

The Syscap survey found 55% of
schools, out of a total 35 surveyed, say they would look for ways
to spread the cost of investment.

Some 58% of schools say they are
likely to use collective buying and 64% said they will seek to form
shared service partnerships with other schools and were likely to
make greater use of school managers to manage their budget.

The leasing option has the support
of the e-Learning Foundation, which aims to increase access to ICT
for education in the UK.

The charity encourages leasing as a
finance option for schools and works with partners in the industry
such as Bluestone Leasing and Novatech to meet schools’ technology
needs.

Currently, however, leasing is not
widely used by schools to fund new ICT.

Research by the e-Learning
Foundation found only 20% of schools used leasing to fund the
acquisition of equipment with the remainder citing reasons from
both in-house and local authority regulation to fears over the cost
as reasons for not looking into leasing.

But, as spending cuts bite, leasing
may become more attractive to schools.

Valerie Thompson, the charity’s
chief executive, said she expects an increase in the number schools
turning to leasing to fund their ICT investment.

“School budgets are being hit
particularly hard in the capital area which means particularly
ICT,” Thompson added.

“We have always said leasing is a
very sensible way of spreading the cost of an asset of over the
years the programmes run.”

Schools free to
lease

Thompson said growth in the number
of academies, schools directly funded by central government and
independent of local government control, and greater use of
business mangers in running schools would also contribute to more
schools using leasing.

She said: “Because of the
establishment of many more independent academies, the previous
barriers many local authorities put up to schools signing leases
have been removed.

“Schools are freer now to make use
of operating leases which are fully compliant.”

Her thoughts are echoed by
Education Minister Michael Gove who said the reduction in
bureaucracy allowed academies to improve standards.

In that vein, the Department of
Education issued a guide, in conjunction with the Finance &
Leasing Association (FLA) and the National Association of School
Business Management (NASBM), entitled Tips for Successful
Leasing in Schools.

FLA head of asset finance Julian
Rose said: “Many schools have had their capital budgets cut by 75%
or more so it is no surprise they are taking a fresh look at
leasing for their office equipment, ICT, minibuses and other
equipment needs.

“School business managers,
headteachers and governing bodies often have limited experience of
leasing so we wanted to provide some very practical guidance on how
to get the best deal.”

A Department of Education
spokesperson said: “A key message from the government is to make
sure there is always enough money and efficiency alongside high
quality teaching.

“Schools are keen to make
efficiency savings where they can and this kind of information will
be useful to help them do so.”

Thompson said the outlook is positive for leasing companies who
she expects will see an increase in school contracts and added:
“If, as a result of that, we are able to give children the
resources they need then it has got to good for education too.”