Use it or lose it – the £1.6bn question
Many schools hold back some of their budget to cover emergencies. These cash surpluses can be sizeable but the government isn’t too happy that any of its offshoots should have financial surpluses.
So the DfES’s latest wheeze to try and discourage schools with surpluses is to demand that 5% of these funds will have to be given to other local schools.
This isn’t just money left over from normal running expenses, it also includes money allocated for capital projects. ‘Clawback’ is the term being bandied around DfES head office in Westminster and while their attitude to LEAs has varied over the last few years, the DfES now wants them to get tough about financial surpluses, which it believes could save in excess of £300m p.a. and reduce what it estimates is up to £1.6bn of unspent funds.
Keeping to its usual tactic of barking loudly in the media, but without much solid evidence, DfES officials have admitted they don’t really know how much of their estimate of £1.6bn are funds committed for specific projects. Never one to let facts get in the way of a story, all the DfES and Schools Minister Jim Knight have actually done is launch a consultation on schools, early years and 14-16 funding for 2008-2011.
The idea for forcing clawbacks of surpluses is just one of eleven proposals, many of which relate to the funding for the delivery of specialised diplomas, something Knight’s boss, Alan Johnson has recently been equivocal about, but which will still happen nevertheless. What probably matters far more to schools and the businesses who supply them will be the impact of three-year budgets.
According to Knight, ‘The predictability and stability of the new three-year budgets for all schools means schools can plan ahead with confidence’. Really, so what the DfES are saying is that schools who plan prudently and have budget surpluses as part of the new system will actually be penalized and have money taken off them to top up schools who can’t manage their own budgets – a very mixed message.
If there really is £1.6bn sitting around unspent, business will be very pleased to have schools spend some or all of it, but we suspect the situation is a bit more complex and while we wait for the outcome of the consultation, few companies we spoke to see a windfall on the horizon.