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School Funds

Volume 489: debated on Monday 9 March 2009

I reported to the House last month that net surplus balances across schools totalled £1.9 million in the past financial year. My officials have held a number of discussions recently with local authority representatives, head teacher and teacher associations and other interested parties. Local authorities have powers to claw back excessive surpluses, and I expect them to use those powers.

Thank you.

Does the Minister share my view that with some 8,500 schools—nearly 40 per cent. of the total—holding excessive surplus funds, it is no wonder, considering the present allocation of school funding, particularly to rural areas, which are significantly underfunded compared with the average, that school governors and heads are more or less obliged to hold back surplus funds to ensure that they have money to fund their schools for the full school year?

I have had discussions with the hon. Gentleman about this matter. There is a debate to be had, but the case about the underfunding of rural areas is not helped when in an area such as Shropshire, 44.6 per cent. of schools have excessive surpluses totalling £2.2 million.

It is difficult to understand why the Government should choose to criticise school governors for being prudent with school money at a time when we all wish the Government had been a bit more prudent with our money. If the Minister still believes in autonomy for schools, will he assure the House that there are no hidden plans for him to come in and plunder school reserves?

We have always been perfectly clear that a small level of surplus is prudent for schools to carry over, but excessive surpluses of the sort that the hon. Member for Ludlow (Mr. Dunne) mentioned comprise £1.9 billion that was given to schools to spend on this generation of children, not to save for some fictitious moment in the future. That is not acceptable. We have said that local authorities need to manage that, and if they do not, we will look at it again in 2011-12.