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Millionaire schools hoard piles of cash

Primary heads have been accused of holding on to 'obscene' levels of reserves. In this time of budget crisis, should they give the money back? William Stewart reports

SCHOOLS are sitting on reserves of more than pound;1 billion with primaries stashing away more than ever as headteachers elsewhere complain about funding shortages.

Early indications from a survey of 5,000 schools reveal that the amount held by primary schools in bank balances has increased from pound;722 million to pound;756m during the last year. Total reserves across all schools have decreased slightly in 12 months from pound;1.12bn to pound;1.11bn. In secondaries they fell from pound;314m to pound;250m.

The annual survey by the National Association of Schoolmasters Union of Women Teachers shows some schools have accumulated bank balances of more than pound;1m.

The union claims that, in some respects, funding problems cited by schools are exaggerated, as the cash could be distributed more effectively. It wants the Government to help councils force schools to return "unreasonable" surpluses so those short of money can benefit. Brian Clegg, NASUWT assistant secretary for salaries and pensions, said: "I'm not trying to argue there isn't a problem. Secondaries are beginning to suffer noticeably but primary schools have still got balances that are frequently obscene."

The Audit Commission says that on average reserves should be no more than 5 per cent of annual budget, although there might be exceptions for small schools.

The National Association of Head Teachers said much of the rise in reserves was justified, because schools were now responsible for maintaining buildings. David Hart, NAHT general secretary, said: "The NASUWT should not keep pumping out this propaganda on school balances without a much more specific analysis of what the money has been used for."

He pointed to the Audit Commission's March report on improving school buildings which found that a significant proportion of the doubling in school reserves to around pound;1bn between 1997 and 2001 had been caused by the delegation of property responsibilities.

"Every school has to have a contingency of some sort," he said. "If schools do have any significant balances they will be gone by the end of the year because they will be spending them to deal with the dreadful budget situation."

He said he had been bombarded by emails in the past week from heads across the country who were having to make staff redundant The NASUWT data is the latest available and represents school balances at the end of 20012.

Mr Clegg said councils should be forcing schools with "unreasonable" reserves to hand money back. But he accepted this could be politically difficult because schools could respond by going for foundation status, which would mean councils could not take the money. He called on ministers to help local education authorities retrieve the unspent money. The Department for Education and Skills said any clawback of school reserves had to be approved by the Secretary of State but were a matter for councils to discuss with schools.

Meanwhile the Local Government Association Conservative group has publicised an LEA survey which it says reveals the extent of the schools'

funding crisis.

It said findings included 27 education staff redundancies in Essex and schools in education secretary Charles Clarke's home LEA of Norfolk facing a pound;3.5m shortfall despite the authority finding pound;1.5m from its own reserves.

The survey also found that schools in Wandsworth, London, were setting deficit budgets for the first time, that Cambridgeshire heads had said a pound;4m shortfall would lead to "significant numbers of redundancies" and that redundancies were expected in Surrey.

Budget worries, 29 amp; 31

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