No chronic school funding crisis, says Audit Commission
A new report by the Audit Commission has concluded that the perceived school funding crisis of 2003 was not as chronic and widespread as councils and schools believed at the time.
In spring 2003 schools and councils complained that there was a major funding crisis in education and there were numerous media reports claiming that schools would have to lay off teachers.
Ministers at the time accused local councils of failing to pass on funding, which they claimed was at record levels.
Today’s report does not pin the blame on any organisation, arguing that there was no widespread evidence that councils did not pass on increases in education funding to schools and that inadequate information about school finances led to a perception of a crisis rather than an actual crisis.
School bank balances increased on average during the past year despite predictions that they would fall.
It is, however, critical of some of the Government’s measures to tackle the perceived crisis, notably the introduction of a minimum funding guarantee per pupil.
Education Secretary Charles Clarke subsequently introduced measures to stabilise school funding in 2004/05 and 2005/06 and to provide schools with earlier notification of their budgets. These included a guaranteed increase of funding of four per cent per pupil (the minimum funding guarantee) and providing £120 million to one-third of councils that would otherwise receive the smallest increase in their education funding over the two years 2003/04 and 2004/05.
Audit Commission chairman James Strachan told a press conference in London that Government responses were “blunt instruments” and “didn’t target need very effectively”.
Mr Strachan said it was “quite definite” that there was no widespread funding crisis in spring 2003. He blamed deficiencies in the information about school finances for the perceived funding crisis.
“Nowhere in the system, neither at Government nor council level, is there reliable, consistent and up-to-date information about schools’ budgets and financial positions,” the commission’s report reads.
It found that uncertainty over future funding created a climate whereby schools maintained surplus balances. Total balances exceeded £1 billion and the surplus balance in over half of primary schools and over one-quarter of secondary schools exceeded DfES guidelines.
The lesson of the crisis for the Government was that it could not run 24,000 schools directly from the centre, said Mr Strachan. Local government on the other hand needed to improve its ability to monitor and challenge schools in terms of financial managements.
Councils need to improve their information about the state of school budgets and could do this by adopting a formal budget reporting structure and they should become more involved supporting schools’ financial management.
The Commission welcomed Charles Clarke’s recent announcement of three-year budgets for every schools from 2006/07. This could end the “profound uncertainty” that has characterised the schools’ funding system to date, it said.
The chairman of the Local Government Association (LGA), Sir Sandy Bruce-Lockhart, said: “This is a complete vindication of our position. There is already an accountable structure in place to support, monitor and plan school funding – 150 democratically accountable local education authorities.
” If the Government continues down the road of weakening the role of councils, it would need to create a new centralised bureaucracy at a huge new cost. The report shows that far from local education authorities holding back Government funding for schools, councils have not only passed it all on but have added to it.
“The report is strong evidence that centralising school funding to Whitehall is neither going to give local support to schools, nor make good use of the public’s £24bn. The Government has to think again on this.”
