Making education provider’s cash reserves work harder

The RAAC issue may have intensified the light shone on school funding problems, but Heads, Finance Managers and Bursars at many schools have had to wrestle with tight budgets and funding shortages for years. A survey by the National Association of Headteachers from October 2022, suggested that 90% of schools represented would be in deficit by the start of the next school year as they struggled to manage rising costs including vastly increased energy bills and higher wage bills.

With such intense financial pressure, it has become even more important for schools and colleges to manage their money wisely and make sure they are making the most of any surplus funds.

Make your money work harder
When interest rates were delivering paltry returns on savings and deposits, you could forgive finance managers for paying little attention to making the most of their cash reserves. With many accounts offering interest rates at a fraction of 1 percent, there were bigger fish to fry when it came to balancing the books. However, with multiple increases since December 2021, the Bank of England’s Base Rate currently stands at 5.25%. The extra revenue which can now be made from money already in the coffers has prompted finance managers and bursars to refocus their attention on what could be a simple way of earning extra income whist still keeping suitable reserves available for unexpected costs.

By keeping surplus money in a dedicated account, or several accounts perhaps, schools and colleges can separate their day to day operational funds from other money set aside for emergencies and future plans. This separation is essential for maintaining transparency, accountability, and financial integrity. And of course, money deposited into a suitable savings account will almost certainly earn more interest than if it is held as a surplus balance in a business current account, many of which pay little to no interest on positive balances.

At the time of writing, United Trust Bank’s (UTB) Education 95-Day Notice Account is paying an annual interest rate of 4.25% GROSS AER* and is an excellent way for education providers to increase their returns with very little effort. Prudent finance managers usually keep a reasonable balance on hand for instant access knowing that the rest of their reserves can be generating extra income and still accessible with 95-days’ notice.

With several education savings accounts to choose from, some school and college finance managers may consider using the 95-Day Notice Account alongside other solutions offered. For example, if they are confident that some of their funds can be locked away for 12 months, they could earn an even higher rate of interest in UTB’s 1-year fixed term account, currently paying 4.90% GROSS AER. With interest rates appearing to be stabilising, now may be a good time to lock in these generous savings rates.

If, on the other hand, you feel more increases could be on the cards, UTB also offers a 180-Day Notice Account that tracks the Bank of England Base Rate, currently paying 5.25% a year. If the Base Rate goes up again, the interest payable on this account will increase by the same amount. The same applies in reverse of course but if you think more Base Rate increases are likely, this is a simple way to ensure your interest income will go up too.

UTB Deposit Solutions
Earlier this year, UTB launched its new Deposit Solutions service for customers with over £1m to deposit. The Deposit Solutions team provide a relationship based service delivering tailored solutions that match customers’ liquidity needs and offer a range of competitively priced deposit options.

When choosing the best account for their savings, education providers should consider their cash flow requirements, the availability of surplus funds, and the level of flexibility needed to access the money. By understanding the features and benefits of each type of account, schools and colleges can make informed decisions to maximise the earning potential of their funds while ensuring access to necessary resources when required.

If you have £1m or more to put aside, our Deposit Solutions team can help you structure the right portfolio to suit your requirements.

FSCS protection
UTB customers also benefit from the protection provided by the Financial Services Compensation Scheme (FSCS), which safeguards eligible deposits up to £85,000 per person or, in the case of schools and colleges, per authorised institution.

By choosing the right type of account and partnering with a reputable deposit account provider, schools and colleges can optimise their financial resources and generate extra income, both of which contribute to the long-term sustainability and stability of their institution.

If you would like to know more about UTB’s full range of Education savings accounts or our Deposits Solutions service, please contact our Deposit Solutions team on 020 3862 1041. Alternatively email [email protected]. You can also see a selection of our range at

*AER stands from Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. GROSS is the interest rate without the deduction of income tax. The interest rate is a fixed rate and paid on maturity. The minimum deposit is £5,000.00 per account. The maximum deposit is £1- million per account.