Shepway Schools Will Suffer under Government Cash Clawback Plan

The Liberal Democrats have called for new Government plans to take £225 million out of the cash reserves of up to 20,000 English schools to be scrapped. Figures suggest that 90% of Secondary and Primary schools across Shepway will have money 'clawed back' under the rule.

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

Outraged headteachers have contacted the Liberal Democrats complaining about the plan, which would take away 5% of all schools' balances and redistribute them. In the first year this will be based on cash surpluses in schools as at 31st March 2006, irrespective of whether the schools have since spent the money.

The Liberal Democrats have called for the plan to be scrapped, arguing it:

• Penalises prudent schools
• Penalises schools which are saving up to fund a major capital project, such as new buildings (there is no protection for committed funds)
• Penalises schools even if since 31st March 2006 they have spent their surplus
• Creates an incentive for schools to spend money quickly, even when this means spending wastefully, undermining long term planning

Commenting, Liberal Democrat Shadow Children, Schools and Families Secretary, David Laws MP said:

"The Government's plan to raid £225m from over 20,000 schools is outrageous and must be scrapped.

"This dotty idea will hit the most prudent schools, including those who have 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 that 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 scheme 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 penalising schools who manage their budgets prudently.

"The Liberal Democrats will oppose these regulations when they are brought before Parliament. The Government already has powers in relation to uncommitted balances - there is no need for any further draconian steps."

The Liberal Democrats have tabled questions on this issue this week in Parliament. The plan 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.

David Laws MP is tabling an Early Day Motion in Parliament this week to urge the Government to scrap these proposals. The Liberal Democrats have called for the plan, due to hit schools' 2008/9 budgets, to be scrapped, arguing it unfairly penalises schools.

The Government intends to claw back 5% of school balances of £1.6bn (approx) for the three years 2008-2011.

Government plans appear to include taking back School Standard Fund monies which are specifically allowed to be spent over a longer time period than the end of the financial year.

According to the Government, 20,500 schools (90% of Secondary and Primary schools) will have money 'clawed back' under the rule.