23 May 2003
Education Secretary Charles Clarke's decision to allow schools to use money earmarked for building improvements to ease budget shortages violates good accounting practice, CIPFA has warned.
The institute said the relaxation of the split between capital and revenue funding, announced by Clarke last week, set an 'awkward accounting precedent' that should not be repeated elsewhere.
CIPFA's intervention came after Clarke told head teachers that for this year only they could use more than £500m set aside for capital projects to pay staff salaries. Schools have also been given permission to dip into their reserve funds if necessary.
Vernon Soare, CIPFA's policy and technical director, said the move did nothing to identify the underlying reasons for the apparent funding shortfall.
'CIPFA is concerned that permitting the use of capital resources to fund schools' revenue spending could be replicated across other parts of the public sector or at other times as a means of addressing immediate revenue funding difficulties,' he added.
'This flexibility cuts right across both good accounting practice and the whole direction in which government policies on capital accounting have been leading.'
Teaching unions reacted angrily to Clarke's announcement, which was intended to resolve the bitter row over education funding that has been rumbling on for several weeks.
Doug McAvoy, general secretary of the National Union of Teachers, said it merely served to demonstrate that additional money was needed for schools.
'This year's quick fix is next year's major problem,' he said. 'The government has got its sums wrong and schools are suffering as a result. The choice of allowing schools to crumble or sacking staff is no choice at all.'
PFmay2003
