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If you've got it, spend it, heads told

The Government plans to seize surplus school money, but there is time to reduce the balances.Headteachers are being urged to go on a spending spree to reduce the size of their school bank accounts before the Government seizes their surpluses.

The Department for Children, Schools and Families has signalled a back-down from plans to retrospectively take five per cent from schools' 2007 balances.

Instead, experts say, it could base the claw-back on a forecast of schools' March 2008 balances - giving headteachers five months to reduce their balances.

George Phipson, the National Association of Head Teachers's school funding consultant, said heads should bring forward next summer's building and maintenance work, or arrange to pay in advance.

"Businessmen on school governing bodies are not going to just say, 'Here, you can have five per cent of my money'," he said. "Obviously, it's not a good idea to just rush out and spend the money on the first thing that comes into your head. But if schools are planning to do work anyway, they should bring it forward or pay deposits now."

With consultation on the 5 per cent claw-back closing today, the department's conciliatory tone has failed to assuage headteachers' anger at the levy.

Local authorities would be required to take five per cent of all surpluses and redistribute them to local schools, including those that have run into deficit. Mr Phipson and Lindsey Wharmby, his counterpart at the Association of School and College Leaders, said it would still penalise those prudent teachers who had carried over funds for planned projects such as repainting classrooms in summer.

But Chris Keates, general secretary of the NASUWT classroom union, urged the Government to stick to its guns. She said Ed Balls, the Secretary of State, should increase the claw-back to more than five per cent, to further penalise schools that were putting money in the bank instead of spending it on the teachers and children it was intended for.

The union's analysis of school balances highlights large uncommitted sums being held by many nursery schools, and by schools in some authorities such as Tower Hamlets.

Three of the schools with the biggest balances in the country last year were in that east London authority, which has now asked its schools to explain how they will spend the surplus money.

Morpeth School had reduced its balance to pound;927,000 this year but Sir John Cass Foundation and Redcoat Church of England Secondary School carried over pound;1.6 million. Mulberry School for Girls, with pound;3.5m, has the biggest balance in England.

Though the schools are all planning new developments none had listed firm spending commitments. "These projects will bring real benefits to the students of these schools and substantially reduce their surplus funds," said a Tower Hamlets council spokesman.

School balances in more than 20,000 schools across England continue to rise: this year's figures, out next month, will show them creeping towards pound;1.7 billion.

The DCSF said it will take into account heads' concerns about penalising schools retrospectively on their March 2007 balances, but remains committed to reducing balances this financial year and in the future.

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