23 July 2004
Councils were this week urged to intervene in the financial management of poorly run schools to prevent a repeat of last year's funding fiasco.
Francis Done, managing director of local government at the Audit Commission, said authorities should develop a better understanding of school finances and act to ensure struggling institutions avoid a 'cycle of poor management'.
She told Public Finance that authorities already have at their disposal powers to advise schools struggling with their finances, under the code of practice that emerged from the Schools Standards and Framework Act 1998.
The code has previously been interpreted as relating to schools' academic performance rather than resource issues, but the commission believes it allows scope to address the latter.
'We feel that the code could be tightened to provide more flexibility, allowing local authorities to stand back from the majority of well-managed schools, but facilitating swift action to help schools that are struggling with their financial management,' Done explained.
Meanwhile, government moves to bypass councils over education cash came under renewed fire following the commission's much-anticipated report on funding.
Education funding, published on July 21, found that too little is known about how schools in England spend £24bn annually of taxpayers' cash.
It recommends that they should be subject to greater financial scrutiny, and that councils are best placed to assess problems. That contrasts with plans to give schools financial independence, announced last week by Education Secretary Charles Clarke.
Commission chair James Strachan said: 'It is startling that education, one of the biggest areas of public spending, attracts the least amount of scrutiny. There needs to be much clearer accountability for this expenditure.'
Neither schools, local councils nor the government have 'reliable, consistent and up-to-date information', the report states.
However, the commission concludes that there was no 'widespread' funding crisis during 2003, claiming schools are sitting on surpluses totalling £1bn.
Last year, the Local Government Association accused ministers of responsibility for a £500m cash shortfall following allocations from Whitehall. In response, Clarke accused some local education authorities of failing to 'passport' full allocations to schools.
PFjul2004
