Financial Pressures May Put Schools In Red, Says Spending Watchdog

Money Squeeze Could Put Schools In The Red And Hit Academic Performance

Financial pressures may put more schools in the red, which could lead to a drop in achievement, the spending watchdog has found.

If schools struggle to contain their costs, they could end up making "inappropriate" cuts that damage the quality of education on offer, a National Audit Office report warns.

The total budget for schools was planned to increase by 0.1% in real terms each year between 2011/12 and 2014/15, the report says. But schools are expected to save around £1 billion in "back office and procurement costs" over the same period.

In 2009/10, more than a quarter (28.5%) of the total schools budget was spent on these costs. This needs to be reduced by 3% - an average of £12,400 per school per year - to 27.8% of total spending to reach the £1 billion saving, the report found.

"Schools will probably need to make further savings, as a subsequent increase in forecast inflation means the schools budget will decrease slightly in real terms in 2011/12," it adds.

The report adds: "As funding for many schools becomes tighter, more schools may incur a deficit, and numbers of schools that individual local authorities need to support may move beyond their capacity to do so.

"Financial difficulties could affect academic performance as schools struggle to contain costs, and then make inappropriate cost reductions that adversely impact on the quality of provision."

Figures show that at the end of 2009/10, 7% of primaries and 18% of secondary schools were in deficit. The Department for Education (DfE) expects schools to clear their deficits within three years, the report says.

A DfE spokesman said: "Local authorities have a clear responsibility for overseeing the financial management of maintained schools. They should put in sufficient resources to ensure they can carry out this responsibility properly. With the right support, schools should be able to manage their finances.

"The Government is increasing frontline investment in schools by £3.6 billion over the next four years - protecting cash levels; putting money directly in heads' hands through the pupil premium; and cutting central bureaucracy which diverts funding from the front line."

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