Schools that have made financial provisions for a rainy day to be stripped of funding

Schools face millions of pounds in cuts for being prudent

http://www.timesonline.co.uk/tol/lif…cle6979055.ece

Thousands of schools face having hundreds of millions of pounds cut from their budgets as a punishment for being prudent.

A third of schools, including nurseries and special schools, have amassed almost £500 million in surplus cash in case of future cutbacks, official figures revealed.

The league table was produced by the Government, which wants to name and shame the 7,196 schools with “excessive balances” that it accuses of hoarding money. It is the first time that schools have been ranked according to their account balances.

Ministers warned that head teachers must discuss handing the money back with their local council or face being forced to pay it back under new laws to be introduced next year.

Teachers’ leaders accused the Government of punishing schools for careful financial management and said that there should be no limit on the amount that schools can save. Most of the money was allocated for buildings and other projects, they said.

Christine Blower, general secretary of the National Union of Teachers, said: “There should not be an artificial ceiling on planned expenditure. If a school can demonstrate it has proper plans for the money then they should be able to keep it to spend later. It is only unacceptable if a surplus is being saved for no purpose as the money is lost to the system.”

Thousands of head teachers have saved an average of £70,000 to spend on books, salaries and IT equipment in case of funding shortages while some have run up budget deficits of £75,000.

But as town hall budgets are squeezed this year, council leaders will be tempted to raid school coffers. They have powers, rarely used up to now, to recall money if head teachers at secondary schools have saved more than 5 per cent of their budgets, or more than 8 per cent at primary level.

Vernon Coaker, the Schools Minister, said that the surpluses were too high. “While it is clearly sound financial management for schools to retain a small surplus from year to year, we expect revenue funding to be used to support the education and wellbeing of pupils in school now,” he said. “It is, however, important that schools spend their funds wisely while ensuring best value for money.”

A report by the National Audit Office last June warned that hoarding was not good value for the taxpayer. But this is the first time that the schools doing so have been named.

Ed Balls, the Schools Secretary, said this week that he would increase spending on education. But head teachers fear that spending cuts will come whichever party wins the coming election and have braced themselves by holding money back rather than spending the entire budget.

Mark Wallace, campaign director at the TaxPayers’ Alliance, said that it was wrong to punish schools that had been careful.

“There will be no incentive for schools to do anything that comes in under budget or to set anything aside for a rainy day,” he said. “Schools will simply spend as much as they possibly can and there won’t be a pound left.

“We have got to avoid huge amounts of money festering, but simply allowing it to be scavenged and punishing the organisation that was wise enough to save is quite foolish.”

Town halls can decide case-by-case to recall the money but must spend it on education provision.

A spokeswoman for Tower Hamlets Council in London, which has the most schools in the top 20 surpluses, said: “The local authority takes the issue of surplus school balances extremely seriously and works very closely with schools to ensure these are managed carefully. Schools with surplus balances have approved three-year expenditure plans which are monitored regularly.”

Vanessa Ogden, head of the Mulberry School in Tower Hamlets, which has an uncommitted budget surplus of £3,474,270, refused to comment.

The council said: “Plans are already in place for Mulberry School to use their surplus balance to expand provision for pupils at the school and a local partner primary school, as well as to build new community facilities.”

Mick Brookes, general secretary of the National Association of Head Teachers, said that the figures were grossly misleading. “Politicians and the public will assume that schools are awash with extra funds,” he said. “This is not the case. Most of these funds are identified and allocated and may be for a project for the following year. Schools will have saved money and carried it over.”

He accused the Government of releasing the league table without knowing how much money was earmarked for projects. “It is mischievous . . . and done in order to soften politicians and parents up for cuts to the schools budget,” he said.

The figures also highlighted a rise in the number of schools in debt. More than 1,800 (8.4 per cent of schools) were in debt in 2008-09, up from 1,695 in 2007-08. Primary schools were in the worst position, comprising 1,200 of all schools in deficit.

Schools in wealthier areas were more likely to be sitting on large surpluses. The greatest surpluses were at schools in the South East and London. The Hurlingham and Chelsea Secondary School in London has a surplus of £1,619,121.

The greatest number in debt were in the North West and London, suggesting a huge disparity in budget allocations. Warren Comprehensive School in Barking and Dagenham had the highest deficit, at £1,828,981.

Statisticians said that the definition of “uncommitted” revenue differed between local authorities and comparisons could not easily be drawn.