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Squirrels help poorer neighbours to buy classrooms

Rich schools are helping bail out their poorer relations through loans to pay for new classrooms and equipment.

The Robin Hood-style schemes are operated by local authorities who are keen to share out the multi-million-pound savings squirrelled away by schools from their delegated budgets.

Now the schemes are coming under close scrutiny as local government leaders urge ministers to overcome the funding crisis by using reserves already held in many schools.

Nationally an estimated Pounds 600 million is held in reserves by schools - although the amounts vary widely. Some may be in debt while others have saved thousands.

Councillors in Solihull and the London borough of Newham introduced loan schemes two years ago and between them the two authorities have distributed more than Pounds 500,000. Loans have been used to improve changing rooms, extend classrooms, improve science facilities, and buy computers and a minibus.

And for Steve Taylor, head of Dorridge Junior in Solihull, a Pounds 25, 000 loan proved to be a life saver.

Proposals to extend his 425-pupil school for seven to 11-year-olds were turned down by ministers on the grounds that temporary classrooms were actually a permanent feature as they had been there more than four years.

The trouble was the three classrooms were not only dilapidated but were on the main vehicle entrance with pupils making around 3,000 journeys each week between the huts and the school.

"It was a miracle that nothing happened to the children - that there were no accidents," he said.

Solihull Council came up with Pounds 20,000 from its minor works programme towards the refurbishment and relocation of the temporary classrooms. The loan added to it and helped build a new car park.

Dorridge junior has no reserves and a budget this year of Pounds 560,877. Mr Taylor said: "We had no choice but to take out the loan. Our hand was forced. It was safety as much as the quality of education. I love my job but it is really annoying not to have the resources to do what we need."

Solihull, where no political party has overall control, charges 7 per cent interest on its loans. It gives its schools 6 per cent on their savings - a half per cent less than the Bank of England was giving this week.

Loans in Newham are interest free. But then the Labour-controlled council gives its schools no interest on their savings.

Max Krafchik, assistant education director strategic planning, said the incentive for schools to keep their cash with the local authority was the fact they paid no bank charges - that duty lay with the LEA.

"If they took their money elsewhere they would have to pay charges on every transaction."

Schools in Newham can borrow a maximum 10 per cent of a school's annual budget - between Pounds 10,000 and Pounds 100,000 - and have to agree a timetable to return to a balanced budget over a period of up to five years.

In Solihull, council officials are more cautious. Heads and governors are able to borrow, at the most, 1 per cent of their budget for between two and five years. The scheme is linked to the rate of interest paid on reserves plus 1 per cent to cover administration - the extra 1 per cent is also designed to ensure there is no incentive to borrow in order to increase balances.

Both authorities believe that the scheme is ideally suited to help schools boost their computer networks and Newham is hoping to convince its schools to use it for substantial investment in information technology.

The take-up of the scheme in both education authorities has however been relatively slow - just six schools in Solihull and six in Newham.

But as Ian Harrison, education director in Newham, said: "Why save for three to four years to build up balances to invest in equipment or redecorate your school when you can have the money now and pay it back later?"


SOLIHULL: Lode Heath: Pounds 48,600 loan for computers. Dorridge junior: Pounds 25,000 for temporary classrooms and car park. Fordbridge infants - Pounds 15,000 for extension. Group of seven primaries: Pounds 54,000 for computers. Lanchester school: Pounds 10,000 for a minibus. Langley secondary: Pounds 40,000 for computers.

NEWHAM: Woodside community school: Pounds 73,900 for changing rooms. Storey primary: Pounds 10,000 for computers. Sarah Bonnell secondary: Pounds 50, 000 for computers. St Bonaventure's secondary: Pounds 50,000 for computers. Lister secondary: Pounds 160,000 towards building a new block and disabled access. Cumberland secondary: Pounds 50,000 to rebuild entrance and improve security.

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