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Budget surpluses reach pound;2bn

Heads continue to squirrel away cash in fear of funding cuts and deepening recession

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Schools' budget surpluses are set to reach a pound;2 billion milestone, The TES has learnt. The vast pile of cash being "squirrelled away" is growing as heads are concerned about falling budgets and the deepening recession.

The Government defines as excessive a surplus of more than 5 per cent of a secondary's budget or more than 8 per cent for a primary or special school. Two years ago, it was thought 38 per cent of schools had excessive balances.

Schools' savings have long been a matter of contention between schools, unions and government. In 2007, when ministers proposed a 5 per cent levy on excess cash, the total was pound;1.7bn. It is now pound;1.83bn. About 90 per cent of schools - 20,000 - have a surplus in the bank.

The move to introduce statutory rules to claw back the cash angered heads and governors, but was supported by teachers' unions. The NASUWT has fought a long-running campaign for a clampdown on what is sees as excessive surpluses.

Ministers dropped the plans, but warned they would act in future if surpluses were not reduced.

Some local authorities have introduced their own schemes to retrieve excess balances, including Gloucestershire, Peterborough, Middlesbrough and Staffordshire.

Mike Heiser, senior policy consultant for the Local Government Association, said: "There is an issue about why schools are holding balances. The LGA believes the money should be used for children's services as a whole, but sometimes it can be difficult to redistribute the money because so much of school funding is ringfenced.

"Times are going to be hard in the next few years, and we expect head to use their balances. Instead of 5 per cent funding increases, it's likely to be 2.1 per cent, which is the minimum funding guarantee."

In Peterborough, pound;9.4m was kept aside by heads in 2007; in Hampshire excess balances amounted to pound;47.1m in March 2008; and in Middlesbrough pound;90,000 was taken back from schools.

In Gloucestershire, the hefty surpluses kept by some heads have angered their less well-off colleagues. The excess in the county has risen from pound;15m in 2001 to pound;26m in 2008, despite it being one of the worst-funded in the country.

The county council decided not to claw back funds last year after being advised that it had not followed a consultation process properly. But money will be taken from schools this year and redistributed.

Steve Savory, chairman of the Gloucestershire Association of Secondary Headteachers, said substantial savings undermined arguments for more government money.

"The authority is struggling to finance schools fairly, and we have significant inequalities for no real reason," he said.

Total expenditure by the DCSF is pound;55bn a year.

Chris Keates, general secretary of the NASUWT, said the union's research showed many schools were stockpiling more than pound;100,000, and some had pound;250,000 or more.

"This money was given to schools for pupils," she said. "Headteachers often say they are saving for building projects, but there are capital funds for that.

"We must remember this is public money - it's taxpayers' money rather than the schools'.

Financial leftovers

The average surplus per school is up by pound;6,322, or 7.6 per cent.

According to figures compiled by local authorities last April, 38.4 per cent of schools had excessive surpluses totalling pound; 0.531 billion, and 23.2 per cent of schools have held an excessive surplus for at least the past three years.

About 9.1 per cent of schools have budget deficits, totalling pound; 0.157bn - up pound;17m on 2005-06. This is 0.5 per cent of the total income. The average deficit per school has risen by pound;8,877 - 13 per cent - to pound;76,947. Most deficits are small but in about 400 - 1.8 per cent - it is more than pound;100,000. Where a school is in deficit, it must agree a recovery plan with the local authority to eliminate the deficit, normally over three years.

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