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Head damns 'act of piracy'

Government plans raid on school surpluses.Schools could lose more than pound;200 million from their budgets because of new regulations that mean unspent cash can be seized and redistributed.

Heads say the money has been set aside for new classrooms, maintenance or back pay. A number also saved cash at the direction of their local authority. Now the Government is set to claw back 5 per cent of the pound;1.6 billion schools carried over in their balances in March.

Jim Knight, the schools minister, previously said he planned to levy only excessive balances, but now the department is consulting on plans to levy all positive school balances.

Staffordshire council told schools to save pound;1 in every pound;100 in their budgets each year, to cover an anticipated pay rise and back pay for support staff. Those that followed these instructions will now be penalised by having 5 per cent of their end-of-year balances clawed back.

Peter Traves, the council's corporate director for children, wrote to the Department for Children, Schools and Families this week, warning that the clawback would create antagonism between schools.

"We will have a situation where those schools that have managed to make provision will now be penalised," he wrote. "To add insult to injury, their hard-earned resources will be given to those schools who many will perceive to have taken a risk on this particular issue."

Surrey council has also written, saying schools that saved up for capital schemes, such as buildings, would be worst hit.

The new School Finance Regulations enable the 5 per cent levy to be clawed back from this and the next two years' balances. The money, which local authorities will claim back from about 20,000 schools, will be redistributed between all schools in the area.

At Oxted School, which with 2,100 pupils is the largest in Surrey, the diggers have just moved in to start work on a new pound;2 million classroom and special-needs block. The new block will replace 17 prefabs. The school has been budgeting and setting aside cash for six years, as well as receiving a pound;200,000 grant from Surrey council.

Margaret Hawley, the head, now expects to have to extend the overdraft in order to cover nearly pound;50,000 that will be clawed back from her school's savings. She said schools that had not managed their money would now be getting hand-outs from more prudent ones.

"It is just iniquitous," she said. "I'm aware of schools that are hiding money in federation bank accounts. I feel so angry about this."

She has written to Mr Knight expressing her "utter contempt at this latest act of piracy".

"My sense of outrage is heightened by the moral message we are receiving from our political leaders who appear to have no business acumen themselves or are conveniently setting it aside," she wrote.

Opposition to the clawback has united the Association of School and College Leaders, the National Association of Head Teachers and the Liberal Democrats. David Laws, the Lib Dem schools spokesman, demanded the Government scrap its "outrageous" plans to raid pound;225m over three years. "This is the economics of the madhouse," he said.

Consultation on the new regulations closes next week.

The ASCL, in its submission, will describe the retrospective levy as "completely inappropriate".

"The idea of a crude 5 per cent levy is ill-judged, and has angered many school leaders who run effective and efficient school budgets with sensible and reasonable cash reserves," the submission will say.

A DCSF spokesman acknowledged headteachers' concerns. He said it was "good financial sense" for schools to accrue surpluses for long-term projects. But when those savings became excessive, today's pupils were denied education opportunities.

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