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Pounds 808m reserved for a rainy day

Schools in England and Wales are squirrelling away more than Pounds 808 million in their bank accounts, an average underspend of more than Pounds 100 per primary pupil and Pounds 74 per secondary child, according to figures collected by the National Association of Schoolmasters Union of Women Teachers.

The union has analysed the balances of 17,868 schools in 199495 and discovered that unspent balances have risen by 6.45 per cent from Pounds 27,459 to Pounds 29,230 per school. While unspent secondary balances have fallen in the past year, those in primary schools have risen by 12.3 per cent to more than 7 per cent of the overall budget.

In the 940 special schools surveyed, unspent balances had risen by 19. 8 per in a year, with an average balance of Pounds 35,980 per school, more than 5 per cent of the budget. Over half of primary schools and almost a third of secondary schools have kept more than 5 per cent of their budget back. Primary school balances aggregate to Pounds 490.3 million.

These savings have been made despite the Government's refusal to fully fund this year's teachers' pay rise. With local authorities and unions warning that the Budget settlement this week will put a further squeeze on education spending, many schools may have to use reserves to avoid job cuts.

One in 10 primary schools has balances of more than Pounds 50,000 and one in four secondaries has underspent by more than Pounds 100,000.

The report calls the situation "counter to the interests of an adequately funded education service". The NASUWT said it supports the Audit Commission when it says that schools' cash budgets should be kept to a prudent minimum.

Brian Clegg, author of the report, said: "There is growing evidence that some schools have issued teachers with redundancy notices in order to preserve high balances." He called for governors to be legally obliged to publish their section 42 budget statements, showing balances and reasons for retaining money and said a limit of 1 per cent should be carried forward, unless the money is earmarked.

Gillian Shephard, the Education and Employment Secretary, in previous years has asked the School Teachers' Review Body to take into account the level of unspent school balances when assessing the teachers' pay settlement. From the 199495 figures the NASUWT estimates that the money held in school acounts is the equivalent of every teacher gaining a full increment.

One infant school has a balance of Pounds 26,639 - a third of its total budget - a junior school has Pounds 25,255 unspent, 37 per cent of its budget and one London secondary school has a balance of Pounds 96,2673, 23 per cent of its budget.

Nigel de Gruchy, NASUWT general secretary, said: "An underfunded education service with some schools keeping large unspent balances is unforgivable. "

Council officers said the LMS formula created winners and losers, and although the unspent sum may seem high it is unevenly distributed. David Whitbread, education secretary of the Association of County Councils, said: "Schools have to save for contingencies and one-off payments. They also need to safeguard against annual fluctuations."

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