Clare Dean and Frances Rafferty on how Government may, after all, fund the winding up of the Grant-Maintained Schools Foundation
The Government is considering bailing out the Grant-Maintained Schools Foundation six weeks after ministers told Parliament that the future of the private company, set up to promote opting-out, was a matter for its directors.
The Department for Education and Employment made an 11th-hour intervention just days before a meeting of creditors to discuss the publicly funded company going into voluntary liquidation.
Staff at the foundation, set up under the Conservatives, claim they are owed a total of Pounds 66,000. Other creditors are understood to be the Inland Revenue and telephone companies.
Just last month Stephen Byers, the school standards minister, told Parliament there was no further need to allocate public funds to the foundation, adding that it was for the foundation in the first instance to consider the consequences for its employees.
Two weeks earlier he had told Parliament that the foundation was a private company whose future was a matter for its directors.
However, late last Friday afternoon Begbie Norton, insolvency practitioners, said directors of the foundation were told by the DFEE that, subject to further negotiations, winding-up costs could be met. The creditors' meeting, scheduled for Tuesday, has now been postponed until later this month.
Labour moved swiftly to wind up the foundation on taking office. Government funding ceased on June 30 and staff were told by a personnel consultant hired by the foundation to clear their desks five days earlier.
For the past three years the foundation has received an annual grant from the DFEE of around Pounds 800,000 most of which went on the salaries of its 22 staff based in London and regional offices.
As a private company limited by guarantee it is not required to submit detailed accounts to Companies House. The directors are not liable for any debt.
Its staff estimate they are owed on average Pounds 3,000 each - one month's gross salary in lieu of notice, holiday and redundancy pay.
The previous Government had set aside Pounds 840,000 for the foundation's grant this year - in the end though only Pounds 213,000 was paid as grant up until the end of June. In the meantime the Government announced that Pounds 330,000 from the foundation's grant was being spent on summer literacy schemes.
Staff claim they were given verbal promises of counselling and 90 days' pay in compensation.
One said: "We have been told that whatever money is available will not materialise yet. It is not very good: that money should have been in our bank accounts at the end of June. We are not happy. Some sort of political game is being played out and we are the pawns in the middle. Redundancy is bad enough without being used like this."
Another added: "We have been shabbily treated throughout the redundancy process since the new Labour Government decided our jobs weren't needed any more."
Sir Robert Balchin, chairman of the Foundation, said: "I have every confidence our negotiations with the DFEE will lead to a satisfactory wind-up of the company at the least possible cost to public funds."
Andrew Turner, the foundation's chief executive and a Conservative candidate in the last election, was not available for comment.
Clare Dean and Frances Rafferty