Govt backs down on school surplus ‘grab’

The government has backed down on plans to demand surplus funds back from schools after it was criticised for “penalising” prudent head teachers.

Schools minister Jim Knight told the Commons today schools that have already built up a surplus would not be required to hand funds back to central government.

However, he warned head teachers the government will monitor unspent funds and promised “further action” if schools are not seen to be reducing surpluses.

The government had proposed a five per cent levy against all cash left unspent by schools at the end of the financial year. It calculated this would release £1.7 billion back into education spending.

After being put out to consultation in March, this was bitterly criticised by opposition politicians and head teachers and school governors.

They argued it would effectively “fine” schools rolling money over to save up for major projects, as well as prudent schools that have relatively small sums of money left over at the end of each year.

In a statement to the Commons, Mr Knight said the government would discuss schools’ “understandable concerns” with head teachers and would not reclaim any cash retrospectively.

But he said his department would continue to monitor surplus balances and take further action if they do not show a “significant reduction”.

Mr Knight said: “My department is absolutely right to take action when the net revenue surplus in school balances has more than doubled since 1999-2000 to £1.7 billion on March 31 2007, with some schools’ surplus balances running into seven figures and still growing.

“This revenue funding should be spent on today’s children. It is intended for teachers’ pay and day-to-day running costs, not capital spending, which is funded separately.”

The Conservatives welcomed today’s announcement but said it only appeared to be a partial climb down for the government.

Shadow schools minister Nick Gibb said the announcement only removed the retrospective element and left open the possibility of “raiding” school budgets in the future.

Mr Gibb said: “By leaving open the possibility of punishing schools that budget carefully it looks like their recipe for hasty end of year spending rather than long-term thinking remains alive.

“The government thinks it knows how to spend this money better than the head teachers.”

The Liberal Democrats echoed this criticism, arguing the proposals were indicative of the government’s approach.

Schools spokesman David Laws said: “Do ministers seriously believe that they know better than 23,000 head teachers and governing bodies how to spend the money given to them?”

Mr Laws said the surplus rebate was a “daft idea” that should “never have seen the light of day.”