02 November 2007
School leaders have welcomed ministers' climbdown over proposals to recoup and redistribute 5% of school cash reserves.
Following the closure of the consultation on school finance regulations on October 26, schools minister Jim Knight this week announced that he had deferred the decision on whether to claw back some of the £1.7bn sitting in school accounts.
In a statement released on October 30, he said: 'I have listened carefully… and rather than proceed now we will continue to discuss these detailed concerns with schools and work with local authorities to lower excessive surplus revenue balances.'
But he added that the Department for Children, Schools and Families would continue to monitor the level of surplus balances.
A negligible reduction in surpluses would prompt the government to take action over the next spending review period, Knight warned.
The Association of School and College Leaders welcomed the news but said there was a problem to be addressed. ASCL's funding consultant Lindsey Wharmby told Public Finance that the proposed 5% levy was a clumsy attempt to deal with a serious problem that involved only a small minority of schools.
She said: 'The 5% levy was stupid because it was attacking all members of the class for the misbehaviour of a few – never a good policy.
'We have to talk about how we tackle the issue of some schools holding on to large amounts of revenue which should be used on children's education. We've got to work out why they do it.'
The ASCL maintains that, as schools move to three-year budgets from 2008, the financial uncertainty that encourages some to hold on to excessive surpluses will diminish.
Local authorities last year gained new powers to reclaim and redistribute a proportion of school surpluses, which have been little tested.
But the general secretary of the National Union of Schoolmasters/Union of Women Teachers, Chris Keates, said it was 'extremely disappointing' that the government was putting off tackling the issue of surpluses.
PFnov2007
