Schools are sitting on £4.3 billion of financial surpluses and local authorities should take this into account when allocating budgets, according to the Department of Education's permanent secretary.
Speaking during an evidence session before the Public Accounts Committee this morning, Jonathan Slater said: "The net surpluses across local authority-maintained and academy schools is £4.3 billion for 2015-16...That represents a number of things.
"It represents some schools being more efficient than others, it represents some schools historically having been rewarded financially more than others because of the inequities of the previous regime. So the flexibility, the headroom that a local authority would have would be to take account of the fact that there’s about £4 billion worth of cash.”
Meg Hillier, committee chair, said his comments amounted to "a raiding of the surpluses". Mr Slater responded: "That’s a choice for local authorities to make.”
'Robbing Peter to pay Paul'
He added: “We are funding in each local area the equivalent of real-terms per-pupil protection and we’ve recommended a national funding formula. The local authority, we will be delighted if it simply applies it, but we are saying to them, 'If there are particular local circumstances which mean that it should be varied in your local circumstances, please do so.'”
Ms Hillier said: "So you’re robbing Peter to pay Paul?”
Mr Slater replied: "Well, what is a funding formula within a fixed envelope? It’s about reallocating money across an envelope, isn’t it? And if I were still director of education at Islington Council I would indeed be looking at the level of surpluses in my schools.
"I would sort of expect London schools to have more such availability because historically they’ve been funded at a higher level and so, by definition, as you say, when you introduce the national funding formula they are going to be losing out.”
Drawing the questions on school funding to a close, Ms Hiller commented: "The danger is now you’re sending the message out to headteachers, ‘Spend your surplus now because then you’re more likely to benefit.'”
The DfE permanent secretary replied: "What would you like me to do?"
More to follow.