Use it or lose it, says schools minister

Schools that run up surplus cash reserves could find some of their money taken away, the government has warned.

Announcing the end of year revenue balances for primary and secondary schools, the minister for schools and learners, Vernon Coaker, encouraged local authorities to claw back excessive balances held by schools for redistribution to other schools and threatened direct action if they failed to do so.

The minister said: “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 well-being of pupils in school now. It is however important that schools spend their funds wisely while ensuring best value for money. Local authorities have the power to claw back excess, uncommitted surpluses and redistribute the proceeds back to local schools in consultation with schools forums.

“If we do not see a substantial reduction of total revenue balances and in particular the excessive balances held by individual schools, the government will consider further action to bring the total down.”

The Department for Children, Schools and Families (DCSF) calculates the excessive surplus held by schools to be £495m. According to the figures for 2008-09, more than nine-in-10 (91%) schools held a positive balance, with 33% holding an “excessive” balance, defined by DCSF guidance as more than 8% of budget for primary and special schools and 5% of budget for secondary schools.

The total balance amongst schools in surplus was £1.92 billion, while the 9% of schools in deficit owed £139 million between them at the end of 2008–09, giving a net balances of £1.78 billion. This figure is £137 million lower than the position at the end of 2007–08, a fall of 7%.