Monday, October 22, 2007

Successful Schools Penalised by Labour

A few years ago I calculated that fewer than ten Labour MPs, out of a (then) total of 416 had ever run a business. THIS story in today's Telegraph exemplifies the effects of what happens when politicians have no idea how businesses work. Ok, a school is not a business, but in this case acts like one. It builds up a capital sum over a number of years to spend on an expensive project - maybe a refurbishment, or a new classroom. Now the government comes along and says that it must hand over 5% of any end of year surplus to the local authority in some sort of new tithe system. All this does is penalise good schools who manage their assets properly, and encourage all schools to spend every single penny of their budget for fear of being penalised for not doing so. Typical socialist economics of the mad house.


Anonymous said...

Have a look at the career backgrounds of all the cabinet. None of them have run a business, and pretty much the only person to have had a "real job" - as in a working class job - is Alan Johnson.

Bit funny isnt it for the so called LABOUR party?

Wiki page listing all the members of the Cabinet with links to bio pages for each of them.

Anonymous said...

The lunacy starts with the Civil Service .There is an entry in the Alan Clark Diaries where his Department was in danger of not spending all of its appropriation.Clark thought it good news but his Civil servants were horrified as it would be used to decrease their budget the following year.

Old BE said...

Someone I know was involved in a school where they were told to spend their whole budget or have it reduced next year so they "invested" in lots and lots of 17" flatscreen computer monitors. Completely pointless as the computers were perfectly adequate already.

My University had a similar issue so the Library had an escalator installed to take customers from the ground floor entrance to the first floor. The budget didn't allow for a return escalator, unfortunately.

Mulligan said...

The so called LABOUR party has spent the past 10 years rewarding people not to work, whilst penalising even the lowest paid (removal of 10% rate plus tax credit fiasco).

British jobs for British people my arse.

Nich Starling said...

Iain, this is the same system that Conservative Run Norfolk County Council ahve tried to introduce for the last few years. It has been defeated in Norfolk due to public pressure, but not because the Tories oppose it.

Nich Starling said...

Iain, would it be like this tory scheme

Anonymous said...

Have you been a school governor, Iain?

The key problem with your analysis there is that if schools are actually doing this to pay for capital projects then the total amount in balances should be roughly constant (or increasing at the rate of inflation) since each year some will 'cash in' their savings to pay for that project.

In my experience what schools are mostly doing is saving up the bonanza of today to cushion against the risk of a Tory government tomorrow.

Iain Dale said...

Norfolk, If a Tory Council ran such a scheme I would also condemn it. It's crackers. I'm not sure from the link you provided whether the Norfolk scheme was exactly the same, but if so, it was flawed.

John, Yes I have been a school governor. What you say is of course rubbish, but even if it weren;t I am glad that many school governors now view the prospects of a Tory government as imminent. Your gross misrepresnetation of their views is of course very revealing. Many are Tories, as you well know.

Anonymous said...

ah John, you are obviously an 'appointed' governor, from your local authority perhaps? as ward councillor???

Anonymous said...

Given the make-up of the Home Information Pack, one must assume the same culprits haven't bought or sold property recently!

Anonymous said...

The fact remains that a council HAS to do it

Anonymous said...

The Norfolk Scheme and the government's current proposals are two completely different things.
All local authorities have to have a scheme in place from last year to deal with surplus 'uncommitted' balances held by schools.
This new proposal removes 5% of a schools end of year balance, even though that balance may have been reserved for a special project and was committed expenditure. Some schools have already agreed a scheme with the full backing of the local authority and now face having 5% of their funding confiscated.

Anonymous said...

I do wish you wouldn't tar socialism with this sort of behaviour. The sort of set up where schools are run as profit centres and then someone tries to siphon off some of that money is pure, unbridled capitalism, pure and simple.

I think you are somehow forgetting that if it wasn't for socialists you wouldn't have the National Health Service and education for all, which you Tories profess to now love so much..

So stop putting forward your vapid and asinine arguments to make out that socialism, which values education for all, is somehow responsible for this. However I would not expect a non-intellectual such as yourself to grasp reasoned argument and logical thought - you are a Conservative after all...

JohnofScribbleSheet said...

The background of people in the cabinet is very limited. Even if, someone had come from a business background there is no guarantee that this case would not have happened anyway.

Even if we had a conservative government I am sure departments and schools would race to spend their entire budget.

This same thing happens in business as well! Departments fear loosing money so spend it all.

What we need is a cultural shift. Policy and Politics alone wont do much.

Anonymous said...

At least the Labour party actually gives schools and hospitals adequate funding.

Anonymous said...

Labour politicians haven't run businesses, schools have a budget, businesses have a budget, therefore schools should be run like a business? I'm not following this chain of "logic".

Anonymous said...

Also Iain, you Tories can't on the one hand say that schools and hospitals should be run by teachers and doctors but that they should be run like businesses.

Windsor Tripehound said...

I think you are somehow forgetting that if it wasn't for socialists you wouldn't have the National Health Service and education for all


If it wasn't for the Christian Church in 19th Century Britain there wouldn't be any education. And I believe the great education act of 1944 is referred to as the "Butler" act. What kind of socialist was RA Butler?

As for the NHS, wasn't Beveridge a Liberal?

pxcentric said...

As a head teacher responding to the Telegraph article says, "schools should spend their revenue budgets in the year they are given it on the children who are there at the time."

Perhaps schools who save for a new music suite whilst the original buildings are "falling to pieces" need to be reminded of their priorities.

Whilst the proposed "tax" might achieve this, confiscating unspent money so that it could be given to schools that needed it certainly would.

That is what would happen in business. Budgets not consumed by the end of the financial year are not just taxed, they are simply lost.

So although this proposal treats schools in a kinder fashion than a business would its own departments, it does not solve the real problem, which our head teacher identifies as "inequality of funding across the country."

In other words, this is not a question of good and bad schools, it is a question of inefficient allocation of budgets in the first place.

Anonymous said...

Re: business experience.

I agree its important but weren't you (or someone here was) moaning the other month that the problem with Tory MPs was that they spent so much time with their business directorships rather than being an effective bunch of politicians?

That aside, Archie Norman was a businessman he seems to have made such a great politician, he decided to go back to business!

Of course, it's important that every political party has different interests within it.

The over-dominance of the so-called 'business interest' in the Tory Party ensures that it remains out of touch with key issues for people, like working tax and child benefits, skills, family-friendly policies and basic employment rights.

In all of these areas you struggle.

Johnny Norfolk said...


Most businesses do not allow you to carry over any underspend. It is all down to the planning process. Capital expenditure sould not be part of day to day running expenses and any surplus should reduce the amount you need next year. This will not be a labour idea but an accountant. By the way I am not saying I sgree with it but it is the way it is.

Anonymous said...

it is not just Norfolk, ALL local authorities run the same system. If you don't spend your budget in that financial year, you cannot move it forward to the next. That has happened in local Government for generations.

When I worked in local government, if our council was short of money, they would knock 5% off all budgets, irrespective of the budget.

It is a crazy system where you are forced to spend money, because if you do not, you can expect to be easy prey for budget cuts of the future.

Anonymous said...

Windsor Tripehound ...

"If it wasn't for the Christian Church in 19th Century Britain there wouldn't be any education."

There were plenty of schools before then.

"And I believe the great education act of 1944 is referred to as the "Butler" act. What kind of socialist was RA Butler?"

Butler introduced the three-tier secondary school system (grammar, technical, secondary modern) which consolidated the grammar schools which are now hated by Tories.

"As for the NHS, wasn't Beveridge a Liberal?"

It needed a Labour government to implement the Beveridge proposals. The Tories certainly wouldn't have wholeheartedly done so.

Wrinkled Weasel said...

First of all this story has been rumbling around since March, when the Guardian reported it, so the Daily Telegaff is "revealing" nothing new.

Secondly, Schools are funded in three ways:

delegated budgets
devolved budgets
central budgets

The Devolved Formula Capital Grant allocates capital funding to schools.

"From 2006-07, where a school wishes to accumulate DFCG for more than three years to finance a specific large project it may do so. This applies to cumulative funds unspent on 1 April 2006 as well as to future allocations. If schools have unspent DFCG left at the end of the three year period and do not have a specific project on which to spend the grant in the immediate future, the amount will be reclaimed from the school by the local authority and spent on other capital projects. The school retains the right to reclaim the amount surrendered at a later date when it needs the money for a capital project. "

There is more but by now you have nodded off.

The main issue is that schools and LEA's should either be run centrally or given greater autonomy.

The idea that any public body can accumulate slush funds on a whim is absurd, particularly when adequate measures are in place to fund capital spending.

A good story, but not quite what it seems. Sorry Torygaff.

Vienna Woods said...

These budget claw-backs have been in existence, not only with Education, but with Town and District Councils for as long as I can remember. It didn’t make sense 25 years ago and it certainly doesn’t make sense today. If my first hatred is government economists, my second must be the devious accountants employed by the same body.

A good example of idiocy was Wiltshire County Council, who in the 70’s had a Central Workshop for Police vehicles located in Devizes employing 10 mechanics. They also had Regional Workshops at the divisional HQs located in Swindon, Salisbury and Chippenham, each employing 2 mechanics for routine servicing and a guy to clean the vehicles. The “clever” accountants decided to close the Regional Workshops to economize on (a) employment costs; (b) gain 3 indoor parking bays for Superintendents’ private vehicles, and (c) depreciation of tools.

What did they do instead? Well, the Central Workshop in Devizes took over routine servicing of the whole fleet as well as major repairs. How is that possible? Well, the “clever“ accountants worked out that the fuel costs of ferrying cars to and from Devizes would not be shown on the books, but would be put down to duty trips. (e.g. Swindon to Devizes = 45Miles round-trip). Each weekday night a minimum of 3 police cars had to be ferried to, and from, each division by night duty officers. Their times ‘off the patch’ didn’t show in the books either.

It is no wonder to me that the public services are in such a mess when economy management doesn’t take account of efficiency, thriftiness and common sense. I can well remember, as a Councilor, trying to make sure our departments spent up to budget as if we didn’t then our budget would be reduced the following year.

Anonymous said...

Your business arguement makes no sense. If it was run like a business Iain, the schools should pay back anything they don't spend to the Government as schools are a subsidiary. Why should schools, that have been given more money than they need to educate the children they have, get to keep it?

Why do tax payers fund school surpluses? if they dont need it they should pay it all back surely, they get referbs by asking for the cash they need (i dont agree with that - i'm following your logic of business)

Also you missed some points. You are allowed to keep 5% above your budget (8% for primary i think) and there is an allowance for capital projects that you can ring fence for a few year.

I cant believe you are actually complaining that schools have too much money! teachers in the 80s dreamt of this situation.

(Also how many of the tory front bench have even had a proper job?)

Anonymous said...

I'm a Labour chair of a school finance committee (I run a successful business as well, by the way) and we aim to balance our budget over the year, not to accumulate "surpluses". This strategy is agreed with the headteacher and the governing body as a whole, including the Conservative LA governors.

I suggest that you research your stories better in future.

Anonymous said...

Called agian, no reply.

There was a global problem with the CWT system at the time this log was raised, this has since been resolved. I am therefore closing this log

Anonymous said...

Schools being given cash to spend on what they like. Sound good to me.

The head and staff can decide what they would like or need, then spend accordingly. Apparently according to Iain and the other increasingly right wing nutters, this is economics of the mad house.

Where I live, there are 3 main secondary schools, All three have been fully refurbished and fitted in the past 10 years, all have new sports and IT faculties, all have seen results get better, and all were crumbling dumps 10 years ago

Anonymous said...

Dale's slapstick approach to logic and research never fails to entertain.

He is to analysis what Tom and Jerry are to Health and Safety.

Anonymous said...

Windsor tripehound:

you're forgetting - schoolboy error - that everything good is socialist and everything bad is Tory. When Labour adopt Tory ideas they were always going to do it anyway, but if the Tories ever admit that with the benefit of hindsight Labour did something good (eg Welfare state) then they are turncoats and this goes to prove that they are always wrong. Thatcher was evil and the fact that the country went to the dogs in the 70s was somehow the Tories' fault and as soon as they've worked out how they'll let you know.

Anonymous said...

It is quite possible to run a school as a business - many private schools manage to do so extremely well.

Anonymous said...

Iain, I think you're trying to conflate too many prejudices into one posting. 7% of the school population is in the private sector yet nearly 60% of Tory MPs were educated privately. Would you therefore say that the Conservatives are not qualified to make education policies?
When you do raise a Labour frontbencher's work experience you usually do it with a snigger as with John Prescott working as a Cunard steward.

Anonymous said...

If Coco the Clown had a blog, it would probably be something like this.

Anonymous said...

Are you a Socialist,Iain?

All businesses that hit a profit are kindly relieved of any excesses by HMG and so makes sense to spend before the end of year.

To do this in a schooldoes seem to be a step too far but the Tory party has been a mad dog when it comes to running schools along business lines over the last part of the last Century.


Anonymous said...

Just to humour the "running a school like a business" line, presumably the taxpayer is "the shareholder". and should require a return - not necessarily a cash return, a well-educated graduate of the school would represent a good enough "return". So, Invest , manage the investment, and profit from the improved unit of value (the child). Is that a Tory idea, a Labour one or a LibDem one? Does it matter?

It's the mddle bit that counts, and there's nothing more likely to succeed in the "management of the investment" than a well-paid, well-qualified, motivated staff who aren't distracted by pointless arguments over end-of-year surpluses. Common sense should rule, not the meddlesome manipulators of statistics.

Anonymous said...

The scheme is not as tight as you suggest. It is possible to carry over more than 5% if you can justify it, say for ongoing capital projects. I know this is true, because as a governor of a secondary school I spent much of March doing this.

The clawback also has some logic anyway. School budgets are driven by student numbers. The money ion schools is aimed at a particular student and it should be spent on them - they only have once chance at each school year and they money should be spent on them and not saved for future students, who in effect get a double helping. Some heads build up reserves so they can avoid sacking surplus staff in lean years - this is silly, if you have too many French teachers get rid of one.

Anonymous said...

"It is quite possible to run a school as a business - many private schools manage to do so extremely well."

Yes with massive tax breaks and the ability to vary their fees. Sadly, my school faces a reduction in "fees" as the LEA has cut the APWU by £23, or a total reduction of £23,000 before inflation, pay rises etc.

Equally, if a customer in a business, or a private school, becomes a burden a company would refuse to deal with them. This is illustrated by insurance firms refusing cover for flooded areas or a public school excluding a troublesome (or not too bright) student.

Anonymous said...

heineken - LMAO !!

Sceptical Steve said...


It was a serious tactical error to post an education story during Half Term. Every school's Dave and Diedre Spart are sitting at home with nothing better to do than compose annoying posts.

The only good thing about it is that at least most teachers can spell and write grammatically correct sentences, even if the content's a bit dubious.

Vienna Woods said...

JohnT wrote

...Common sense should rule, not the meddlesome manipulators of statistics.

Exactly! My view entirely.

Anonymous said...

The 5% levy on unspent balances sitting in bank accounts is about the amount of interest the schools would have got, so their initial capital is still there.

Also, the 5% does not go to central government but is distributed amongst other (admittedly, probably less prudent) local schools.

Wrinkled Weasel said...

heineken said

"If Coco the Clown had a blog, it would probably be something like this."

I met Coco the Clown. He was derided and laughed at in public,for most of his working life, often with remarks about his appearance. When he visited my school in the 1960s to talk about road safety he was the subject of mirth and schoolboy sniggers

Your cheap jibe would make his hair stand on end (something he could do at will with the aid of a clever wig and some thread.)

Let Coco rest in peace.

Little Black Sambo said...

Anon 11.52
"if it wasn't for socialists you wouldn't have the National Health Service and education for all"

For an up-to-date view of the NHS read this, and weep:

As for education your statement is simply untrue. There was no socialism when education was made compulsory, and even before that almost all children went to school Now that socialists have got hold of it, of course, illiteracy in school-leavers has risen from 1% before the war to 33% in 1997, with another 17% finding reading so difficult that they don't actually do it. That is despite spending more time at school than any previoius generation.

Anonymous said...

Thank you Eeyore (aka WW).

Windsor Tripehound said...

you're forgetting - schoolboy error - that everything good is socialist and everything bad is Tory.

Silly me - I forgot the BBC's Golden Rule.

And as for me thinking that Churches had anything to do with education, how daft is that?

Anonymous said...

Are you trying to demonstrate the unelectability of the Conservative party Iain? The job of schools is to educate, not to run like efficient businesses.

Not everything is about money.

Can you tell us what, while this dysfunctional school has been hoarding cash for a project that would empower the head to strut around with his balls out, will happen to the generation of kids whose educational needs have been sidelined?

Anonymous said...

'It needed a Labour Government to introduce \beveridges proposals, the Tories wouldn't'

A tad unfair, even though mostly true.

almost everyone in the health services rejected any notion of a NHS. Doctors were livid at such a thought.


Anonymous said...

Businesses can't carry over a profit?

Of course they can. Anything after a tax on that profit is retained.
This is why the new car or second office in the Maldives appears or a 'loan' to a political marginal(possible tory)seat.

As a Governor of many years, I am unaware that capital is not allowed to be carried over. We did it on a few occassions.

Trouble is, and was,that kids obviously missed out.


Anonymous said...

Multsumesc, and cu placere at the same time, Vienna Woods, I knew we agreed on some things!

Anonymous said...

Little Black Sambo said...

"Now that socialists have got hold of it, of course, illiteracy in school-leavers has risen from 1% before the war to 33% in 1997.

They must have had a different definition of 'literacy' before the war.

I don't know where you got your 33% from. According to the National Foundation for Educational Research, an extremely small percentage of school leavers are functionally illiterate (no more than about 1%).

Also, there has been very little change in literacy of school leavers since UK-wide surveys started in 1948.

Anonymous said...

The real problem with this proposal from the government is that it isn't clear what it actualy entails, nor is it yet finalised as consultation ends on October 26.

As someone said, there is already a clawback system in operation. The new proposals are in addition to that. The new bit is supposed to be 5% of 'surplus' revenue. The question is what does 'surplus' mean.

The government claim that it will still be possible to accumulate reserves for proper purposes but people are suspicious - I wonder why.

Capital projects are not the only reason why a reserve might be required. For example, any (government-determined) backdating of teachers pay has to be met from the school budget not extra dosh going into the school.

If it's really a matter of removing over-funding from a school (- and I knew a Head in the midlands who was constantly amazed at the funds available to schools in the South) there's probably nothing wrong with it.

I'm sure Iain will give the final decisions full coverage.

Anonymous said...

"The real problem with this proposal from the government is that it isn't clear what it actualy entails, nor is it yet finalised as consultation ends on October 26."


The final bit of your comment above isn't quite right. This proposal was finalised; the consultation was really only to ensure that the draft legislation enacted the policy proposal properly. It's only the media attention on the issue that has led the DSCF to start back-pedalling furiously. They're now saying that the policy itself is up for debate. But respondents to the earlier consultation almost universally panned the idea:

Most respondents also disagreed with the introduction of a levy on balances saying that any such measure could be counter-productive. It was suggested that it could lead to schools spending unwisely to avoid the levy and it could result in well managed schools being penalised [p.5]

I'm the chair of a primary school's Finance Committee. We aim to spend everything, but we do so prudently in order to avoid overspending. Also the Local Authority has a tendency to send us unexpected dollops of money at the end of the financial year which, while welcome, can often push us into surplus. It's just not as simple as schools greedily hording their budget.

Little Black Sambo said...

Literacy in school-leavers.
By coincidence there was a documentary on Channel 4 (Dispatches) last night on this very subject. They quoted the same official statistics as I did, but added that since the gradual and reluctant reintroduction of the traditional method of teaching reading (strongly opposed by the NUT) the percentage has fallen from 33% to 25%. In Dumbartonshire, where they have returned entirely to synthetic phonics, the percentage was too small to be expressed: there were only 3 illiterate children. Anon's figure of 1% as an achievable measure of illiteracy tallies with the actual figure in 1939. So, as he says, it can be done.

Roger Thornhill said...

An MP should work in the private sector for at least n years before being eligible for office. The public sector is part of what they run and as such should not "count".

Anonymous said...

Little Black Sambo said...
"Literacy in school-leavers.
By coincidence there was a documentary on Channel 4 (Dispatches) last night on this very subject."

The Channel 4 programme was about PRIMARY schoolchildren not school leavers.

Anonymous said...

andrew said...

"The final bit of your comment above isn't quite right." This proposal was finalised;..."

Andrew: Sorry I didn't get on the net yesterday and have only just seen your reply.

Thanks for the additional information, which I hadn't been aware of.

However, the government website says things like:

"Q So should schools be aiming for zero balances?

A No. Schools may accrue surplus revenue balances from one year to the next in support of strategic, long-term, financial planning. It is the accumulation of excessive balances which have no clear purpose which we are tackling."

"Q What is an excessive surplus?

A DCSF guidance defines an "excessive" balance as over 5% of budget for a secondary school and over 8% of budget for a primary or special school, after taking into account money committed to specific projects.

Q What do you mean by committed balances?

A At the moment, there is considerable scope for local discretion and so there is variation in the approach taken by different local authorities about how they record committed and uncommitted balances in their section 52 statements. As a general guide, committed normally means savings earmarked for specific, often capital projects, or contractual obligations. The authority's scheme must define what is meant by 'committed'."

That seems to me to mean that whatever may or may not have been previously 'finalised' the proposal still left a lot of room for 'consultation' i.e. the lea's definition of 'committed'.

I am a member of a primary school's finance committee. Like I said, our previous HT said she knew HTs in the South with so much money in their budget that they literally did not know what to spend it on.

Anonymous said...

Hi Anon.

The 'committed' funds test does not apply to the new 5% deduction. 'Committed' is only relevant in the context of determining an excessive balance, for the old clawing back scheme.

It's a straight test - if you have a surplus at the end of 2006/07 then 5% of it will be deducted from a future budget.

Anonymous said...

Hi Andrew

Just call me confused.

All I can say is that I found the web site I quoted by following a link. The link was contained in a (published) letter sent from my lea's D. of Education to the Dept. of Ed (- the letter was complaining about the new 5% levy). It was supposed to be relevant!

I look forward to reading the final decisions when they are released (in days according to G Brown at PMQs).