SCHOOLS WITH big bank balances are preparing to oppose local authorities that seek to claw the money back.

Sandwell council in the West Midlands has said it intends to redistribute schools’ savings. Its plan has been welcomed by the Department for Education and Skills. Leicestershire will soon follow suit and the department is encouraging other local authorities to take action to stop schools squirrelling away money intended to benefit today’s children.

Sandwell officials have scheduled talks next week to persuade schools to pool their excess balances. That would have the effect of requiring schools with more savings to subsidise those with less. If the pooling negotiations were unsuccessful, the council would consider directly clawing back big surpluses.

One of the Sandwell schools with such a surplus, relative to its size and revenue, is St John’s CofE primary school in Wednesbury.

Yvonne Hughes, the new headteacher, said she had been working voluntarily with the council to reduce the school’s pound;121,000 surplus, but would oppose any attempt to seize it.

The school’s last Ofsted report, in 2004, congratulated the head for reducing the surplus to pound;109,000, saying she had “wisely used” the school’s extensive savings to develop its work.

By last year, the uncommitted surplus had grown again to pound;121,000, although Mrs Hughes said it was sitting below pound;100,000 today. She said she was saving it for costs that were anticipated to hit the school two years from now.

It is the only voluntarily aided Church of England school in the area and more children were enrolling at reception. The 120-pupil school would be opening a new class in September.

It is building wheelchair ramps for a disabled pupil, rebuilding the toilets in a 50-year-old classroom block, and repairing the roof.

“We’ve held the money so it will prevent us going into deficit in the next couple of years,” Mrs Hughes said.

But government auditors have declared that schools carrying more than 8 per cent of their budget (for primaries), and 5 per cent (for secondaries) are stockpiling excessive amounts. St John’s carried more than 22 per cent.

Melanie Dudley, director of strategy and resources for Sandwell, said that if an infant school built up balances for three years, then by the time it was spent, the child that the money had been intended to educate had left.

“They’ve got no benefit whatsoever from that money,” she said. “And that’s wrong.”

The DfES announced proposals this month for local authorities to claw back 5 per cent of schools’ excess balances and redistribute the money among poorer schools.

While teachers’ and heads’ unions generally agree that schools should not squirrel away funding, they were surprised at the extent of the department’s plans.

One union official suggested that Whitehall was bluffing just to scare schools into spending their money on school books rather than saving for a rainy day.

But the department insisted that the proposal in the School Funding Implementation Group consultation report was serious.