Tories may let opt-out schools borrow

17th February 1995 at 00:00
The Government is considering allowing grant-maintained schools to borrow money on the open market, the permanent secretary at the Department for Education, Sir Timothy Lankester, told the Public Accounts Committee.

Legislation is unlikely in this Parliamentary session, but officials are looking at the implications of such a move, writes Geraldine Hackett. Schools would be able to borrow against their buildings or against future income.

Labour party committee members accused the Government of double standards over its insistence that local authority schools should pay the teachers' 2. 7 per cent rise out of reserves, while commending GM schools for holding reserves.

Sir Timothy acknowledged that such schools usually have higher reserves than local authority schools. As revealed in The TES two weeks ago, the average GM school in 1993 had balances worth 6.5 per cent of its annual budget, while for local authority secondaries the figure was 4 per cent.

There was probably good reason for higher reserves, however, as GM schools did not have recourse to local authorities if they got into difficulties, he said.

Michael Collier, chief executive of the Funding Agency for Schools, said 13 schools had been given permission to exceed the limits set on the amount schools can hold from money received through Government grant. Dunraven school in Lambeth, which last March had reserves of almost Pounds 900,000, was among the 13. The school accumulated reserves of Pounds 200,000 while part of Lambeth local education authority. The money is being used for a major refurbishment of the premises.

Dunraven is also among those that will continue to be double-funded until 19992000. It will receive an extra Pounds 525,000 over the next four years. According to Sir Timothy, the Government had decided not to comply with the Public Accounts Committee recommendation that double-funding be phased out over two years. The Government had decided to phase out the excess payments over four years.

Sir Timothy said a school such as the Raines Foundation in Tower Hamlets would have lost Pounds 200,000 immediately on a two-year time-scale. Mr Collier promised to provide MPs with details of the cost of double-funding and to give details of individual schools.

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