Schools `hoarding' pound;2.4bn amid budget uncertainty

1st February 2013 at 00:00
Surpluses of pound;1m prompt questions over use of pupil premium

Schools are "hoarding" a record pound;2.4 billion of unspent funds, an amount that has soared by more than pound;600 million since the coalition government came to power.

Figures released by the Department for Education last week show a 33 per cent rise in money being kept in school bank accounts since 2009-10, despite budgets coming under increasing pressure.

The data also reveal that a handful of schools are sitting on unspent balances of more than pound;1 million. This is despite local authorities' power to claw back "excessive" uncommitted balances of more than 5 per cent of annual budgets in secondaries and 8 per cent in primaries.

In Tower Hamlets, East London, several schools have seven-figure surpluses. These include the school with the biggest surplus in the country, Sir John Cass's Foundation and Red Coat School, which has more than pound;2 million in the bank. The Church of England secondary received about pound;700,000 in pupil premium funding last year, which is supposed to be spent on improving education for children from deprived backgrounds.

Professor John Howson, a research fellow at the University of Oxford and chief executive of Data for Education, who analysed the numbers, said the increase in surpluses among schools in poor areas suggested additional funding from the pupil premium was not being spent.

"In Tower Hamlets, some seven secondary schools have uncommitted balances in excess of pound;1 million and six schools increased these balances over the past year," Professor Howson said. "As all of these schools have in excess of 50 per cent (of pupils) on free school meals, it suggests the pupil premium isn't being used at all, let alone effectively."

Mary Bousted, general secretary of teaching union the ATL, said schools should be held to account if they built up substantial surpluses. "It is a massive amount of money to be sitting on and this money should be spent on pupils' education," she said. "While it's perfectly legitimate to build up reserves, this level of hoarding should mean schools are held accountable. If they don't show how the money is being spent then they should be forced to give it back."

Per-pupil funding was frozen in 2010 when the coalition came to power, creating a real-terms funding cut for most schools. The DfE has said that it intends to introduce a "fairer" national funding formula, which ministers hope will eliminate historic imbalances in funding between schools with similar characteristics, although its introduction has been delayed.

Shadow education secretary Stephen Twigg said it was "imperative" that the government ensured money was going to pupils. "While every school needs to manage its finances sensibly, it must ensure it is meeting the needs of children," he said.

But the surpluses were defended by the Association of School and College Leaders (ASCL), which said the uncertainty around future funding was forcing schools to hold money back.

"I'm not the slightest bit surprised by the figures," ASCL general secretary Brian Lightman said. "People are being very cautious about future funding for schools. There has been so much turbulence around school funding, heads have not been able to plan properly when it comes to their budgets.

"We always advise against excessive surpluses, but there is enormous concern around the new funding formula at the moment."

Sir John Cass's school was not available for comment, but a spokesman for Tower Hamlets Council said it was up to individual governing bodies to determine how they spent their money.

"The local authority recommends 5 per cent balances for secondary schools and 8 per cent balances for other schools to allow for unplanned events," the spokesman said. "The Schools Forum locally scrutinises individual schools' plans annually for spending beyond those levels. Schools have been cautious recently about the potential impact of school funding reform."

One school with more than pound;1 million sitting in its account is George Green's School in the Isle of Dogs, East London. Its headteacher, Kenny Frederick, said the money was to be used to keep her school building running.

"There is no doubt the money should be spent on the kids, but it is no good if the kids can't come to school because it has been closed due to the heating going down or a cracked drain," Ms Frederick said. "It's not about keeping it away from the pupils; it is about spending it on the school so they can keep coming to school."

Ms Frederick added, however, that some schools around the country could be holding on to money without a clear plan for how they intended to spend it.

The DfE said schools were "best placed" to manage their money, adding that it was why they had autonomy over their budgets. A spokesperson said: "While it makes sense for schools to retain a small surplus from year to year, we expect them to have a clear plan for using the money they plan to hold at the end of each year."


Surpluses over the past five years:

pound;2bn - 2007-08

pound;1.9bn - 2008-09

pound;1.8bn - 2009-10

pound;2bn - 2010-11

pound;2.4bn - 2011-12.

Photo credit: Alamy

Original headline: Schools are `hoarding' record pound;2.4bn amid budget uncertainty

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