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School Revenue Balances (2008-09)

Volume 503: debated on Thursday 7 January 2010

The Department for Children, Schools and Families has today published information on the end of financial year revenue balances of all local authority maintained nursery, primary, secondary and special schools for the year 2008-09.

This information is presented alongside information on schools’ revenue balances for the financial years 1999-2000 to 2007-08 published on 24 February 2009. The information is taken from local authorities’ published section 52 outturn statements for the years in question but presents this in summary form. Copies of the information have been placed in the Libraries of both Houses and will be accessible from the Department for Children, Schools and Families website, at:

Surplus balances totalled £1.92 billion and deficits £139 million at the end of 2008-09, giving net total revenue balances of £1.78 billion. This represents a decrease of £137 million or 7 per cent. compared to the position at the end of 2007-08. At school level, 91 per cent. of schools held a surplus balance, with 33 per cent. holding an excessive balance, defined in guidance from my Department as over 8 per cent. of budget for primary and special schools and over 5 per cent. of budget for secondary schools. Excessive surpluses totalled £495 million.

The Government welcome the fact that balances are coming down, and in particular that excessive balances are reducing, but the level of surplus held by some individual schools is too high. While it is clearly sound financial management for schools to retain a small surplus from year-to-year, we expect revenue funding to be used to support the education and well-being of pupils in school now. It is however important that schools spend their funds wisely while ensuring best value for money. Local authorities have the power to claw back excess, uncommitted surpluses and redistribute the proceeds back to local schools in consultation with schools forums.

Where a school is in deficit, it must agree a recovery plan with the local authority to eliminate the deficit, normally over three years.

As former Schools Minister, my right hon. Friend the Member for South Dorset (Jim Knight) made clear in his statement to the House on 24 February 2009, Official Report, column 15WS about school revenue balances for 2007-08, we expect schools and local authorities to work to reduce the level of balances by the end of 2010-11. If we do not see a substantial reduction of total revenue balances and in particular the excessive balances held by individual schools, the Government will consider further action from 2011-12 to bring the total down to ensure the funding is being spent on improving outcomes for children and young people.

In the meantime my Department continues to work with its partners to prepare further guidance for local authorities on the control of surplus balances.