Schools miss out on cash surplus

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Schools could miss out on millions of pounds if the Department for Children, Schools and Families does not improve accounting procedures, a report says.

The DCSF has under-spent by £4.4bn over the past nine years and last year could have spent an extra £250m on schools, the National Audit Office said.

Progress was being made, but the lack of spending "must be having an impact on schools", the NAO said.

The DCSF said the report showed it was on the right track to improve.

The DCSF has built up a surplus of £1.9bn in cash to be spent on schools, and has a further £2.4bn available to be spent on capital projects - mainly its Building Schools for the Future (BSF) programme, the National Audit Office (NAO) said.

This is because the department was too optimistic about the progress of this scheme, it said.

The NAO concluded in February that Building Schools for the Future, which aims to refurbish or rebuild every secondary school in England by 2020, was already behind schedule.

The head of Parliament's public accounts committee, Edward Leigh, has previously called the government's BSF ambitions "fanciful" and its targets "unrealistic".

Forecasting

The NAO monitors the efficiency of government departmental spending.

Its head, Tim Burr, said the DCSF needed to understand better the costs of its strategic objectives.

"It also needs to improve its management of financial risks and to use the introduction of new finance systems to improve financial reporting and forecasting," he said.

But it was making progress toward integrating financial management into corporate and strategic planning.

The report mentions that the DCSF is one of three government departments which has not yet introduced a system called accruals accounting, where expenditure is recognised by the accounts at the time it was earned or incurred, rather than when it is actually paid or received.

Schools are also building up large surpluses which are cause for concern, the NAO says.

By 31 March 2008 40% of schools had what the NAO calls an "excessive surplus".

A spokesperson for the NAO said that either the department was not feeding through this money to schools, or the money was getting stuck at local authority level.

Either way this "must be having an impact on schools", he said.

The DCSF's financial management "needed to be sharper", he added.

The general secretary of the ATL teaching union, Mary Bousted, said it was "shameful" that children were being taught in temporary huts while the government had a capital underspend of £2.5bn.

"We need more than a better system of financial management - there needs to be proper accountability," she said.

Schools minister Jim Knight said BSF was "delivering really good schools".

"We have always been clear that we will not release funding until projects proposals are in really good shape. The taxpayer would expect no less.

"By the end of this current spending review period in 2011, all the funding made available to the BSF programme will have been allocated to projects."

He added that schools and local authorities must work to reduce balances over the next three years.