26 October 2007
Education leaders were this week united in pressing ministers to drop their plans to claw back 5% of school cash reserves.
Under the measure, included among proposed changes to school finance regulations for the next three years, 5% of the balances of any school recording a surplus will be removed and redistributed by the local authority's schools forum.
Prime Minister Gordon Brown told MPs on October 24 that the government would report back on the issue next week after the closure of the consultation period on October 26.
Head teachers have criticised the plan as crude and likely to punish schools that have budgeted prudently.
Martin Ward, deputy general secretary of the Association of School and College Leaders, agreed that schools should be discouraged from holding on to excessive balances with no fixed purpose. But, he said, the government's remedy was heavy-handed and wrong-headed.
'It's a blunderbuss approach, and will certainly penalise some schools that are behaving perfectly sensibly, those [that] have made provision against expenses which they know are coming in the following year,' he told Public Finance.
'One of the objectives of recent changes to a three-year budgeting process is to allow schools to do precisely that, so the notion that you then penalise them for doing so doesn't make sense.'
The National Association of Head Teachers has also lodged complaints against the change, saying it is indiscriminate and disadvantages schools that are planning for large-scale building or infrastructure projects.
In 2005/06, positive balances in schools totalled just over £1.7bn. The government estimates that a 5% levy could redistribute £85m of this in the next financial year to 'support locally agreed priorities'.
Schools minister Jim Knight has said it was unacceptable for school surpluses to be allowed to grow unchecked.
'This is taxpayers' money voted by Parliament for the education of the pupils in schools… and it should not be steadily accumulating in schools' bank accounts.'
The Local Government Association said it did not support the introduction of a universal 5% levy. 'But we do think this is an issue which authorities, in consultation with heads and governors through schools forums, ought to be able to sort out for themselves,' a spokesman told PF.
He added that it was unclear why ministers were proposing a universal levy when only last year local authorities gained new powers to claw back a proportion of surplus school balances.
But he suggested: 'The idea that there's £1.7bn worth of money lying idle in schools balances is one that is fairly tempting for ministers and civil servants to get hold of.'
PFoct2007
