Laws slams government plans for £225m raid on cash reserves of over 20,000 schools

David Laws, MP for Yeovil Constituency, has today condemned new Government plans to take some £225 million out of the cash reserves of up to 20,000 English schools. The plan is due to hit schools in their 2008/09 budgets.

The Liberal Democrats are tabling a House of Commons Motion calling on Ed Balls, Secretary of State for Children, Schools and Families, to scrap the plan.

The plan, uncovered by the Liberal Democrats, is contained in new guidance given to schools over the last few weeks, while Parliament was in recess. Final decisions on the plan will be taken later this month.

The plan is designed to redistribute money and discourage schools from running large cash balances. It comes as the Government plans to slash by half the growth of education funding from next year.

Outraged Head Teachers have been contacting the Liberal Democrats to complain that they will lose tens of thousands of pounds. The Government has said that in the future it will take away 5% of all schools balances, to redistribute, and in the first year this will be based on cash surpluses in schools as at 31st March 2006. This is even for schools which have since then spent the balance!

The plan is unfair because:
*It penalizes prudent schools.
*It penalizes schools which are saving up to fund a major capital project, such as new buildings (there is no protection for committed funds).
*It penalizes schools even if since 31st March 2006 they have spent their surplus.
*It creates an incentive for schools to spend money quickly, even when this means spending wastefully. This undermines long term planning.

David Laws said:

“This Government plan to raid £225m from the cash balances of over 20,000 schools is outrageous and must be scrapped.

“This dotty idea will hit the most prudent schools, including those who have specifically saved up money for a special project, such as a new school building.

“Most bizarrely of all, Ministers say that they will take money from schools based on their balances almost 18 months ago, even if they have since spent the money!

“This is the economics of the madhouse, and takes us back 10 or 20 years to the ridiculous rules that used to force Government departments into blowing their money on almost any old schemes at the end of the financial year.

“At a time when the growth of the schools budget is set to be cut in half, it is absurd to be penalizing schools who manage their budgets prudently.

“I am tabling a Motion in the House of Commons urging the Government to consign these damaging proposals to the waste paper basket. We will oppose these regulations when they are brought before the House. The Government already has powers in relation to uncommitted balances – and there is no need for any further draconian steps.”

Notes:
1. The Lib Dems have tabled questions on this issue this week in Parliament.
2. David Laws MP is tabling an Early Day Motion in Parliament this week to urge the Government to scrap this plan.
3. The Government plans to claw back 5% of school balances of £1.6bn (approx) for the three years 2008-2011.
4. Government plans appear to include clawing back School Standard Fund monies which are specifically allowed to be spent over a longer time period than the end of the financial year.
5. According to the Govt, 20,500 schools (90%) will have money clawed back under the rule.
ENDS

Category: Constituency News