Schools hoard £400m of taxpayers' cash

England's schools are still hoarding hundreds of millions of pounds of taxpayers' money, official figures show.

More than £400 million handed to schools to spend on pupils' education was left sitting in school bank accounts in 2009/10.

But the numbers of schools who have "excessive balances" - effectively holding on to Government cash - has dropped since 2008/09, suggesting that schools began dipping into their reserves in anticipation of funding cuts across the public sector.

Statistics published by the Department for Education (DfE) show that 6,014 schools had "excessive balances", which is defined as more than 8% of the budget for primary and special schools, and 5% of the budget for secondary schools, and not currently allowed by Government.

These schools had an average excess of £67,681. In total they were hoarding £407 million.

More than a quarter of schools (27.7%) held an excessive balance, the figures show.

The figures reveal a drop in the number of schools holding any extra cash, with 90.6% of schools (some 19,668 in total) holding a surplus balance in 2008-09, with £1.8 billion in total.

But while tens of thousands of schools were holding on to thousands of pounds, there was a rise in the number of schools in debt.

Some 1,968 schools showed a deficit in 2009/10, up from 1,848 in 2008/09. The average deficit per school in 2009/10 was £82,022, with 9.1% of all schools in deficit.

The Association of School and College Leaders (ASCL) said the figures show that education is already being hit by funding cuts.

ASCL general secretary Brian Lightman said: "The inequalities in the current funding system have led to the weak financial position many schools now find themselves in. We welcome the Government's commitment to develop a national funding formula that may remove these inequalities. However, the current funding regime has led to more than one in six secondary schools in England having a deficit at the end of last financial year.

"With all schools facing real-terms budget cuts from April 2011 I have no doubt that education provision will be affected. For some schools these cuts will be nearly 5% in real terms.

"This will lead to increased class sizes, reduced curriculum choice and a reduction in teaching materials including ICT.

"Schools will make every effort to minimise the direct impact on young people's education but these cuts are bound to have a negative impact on all students."

A DfE spokesman said: "These figures relate to 2009-10 for when the previous government was in power. Whilst the number of schools with a deficit has risen slightly, the number of schools in deficit is still lower than from 2002-03 to 2006-07."

He added: "Every school should be working continuously to improve its financial management, including effective budget planning, to ensure it continues to deliver effectively for its pupils.

"That's why we announced in the White Paper that we would be removing the requirement for local authorities to have a claw back mechanism.

"We will be reviewing guidance on claw back arrangements including on the level of balances deemed to be excessive, and we intend to consult on further changes to arrangements."