Schools to take control of funding

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Schools will be guaranteed control over 90 per cent of their funding under plans to be unveiled this week by David Blunkett, Secretary of State for Education.

Schools will be guaranteed control over 90 per cent of their funding under plans to be unveiled this week by David Blunkett, Secretary of State for Education.

Mr Blunkett will tell heads that they can have almost all the cash allocated to spend at their discretion, but he will draw the line at giving schools control over the cash to run their own bus services, as proposed by the Conservatives.

Schools are to be given control over 85 per cent of their funding from next April, but a local government Green Paper this week will signal that the proportion will be raised. "We believe the optimum level of delegated funding is around 90 per cent," a Whitehall source said. "It means that school heads can shop around for the best value in their areas."

The Green Paper, produced by the Local Government minister, Hilary Armstrong, will also propose sweeping changes in councils' funding, including the abolition of controls on the money they spend on buildings and large items of equipment.

It could mean pupils being allowed to use cash cards to buy their school meals. In one county, the introduction of electronic cashless machines for school meals has already started, but the tight controls on capital spending by councils have stopped it spreading.

Whitehall officials said the use of cash cards for school meals had led to an increase in the uptake of the meals, generating more surpluses for the school-meals service. "Without the limitations of the current system, all schools could be considered for the scheme now," one official said.

It could also open the door to councils that want to help the private sector to regenerate urban areas. One council tried to create a project with a firm of private developers, but the firm pulled out because of the inflexibility of the capital control regime in the council.

In another council, attempts to use the income from its swimming pools and sports halls to finance the building of new sports facilities were blocked because it was not allowed under the capital spending controls.

The Green Paper will propose that councils will be free to spend on capital schemes without interference from Whitehall, provided that they stay within their overall limits for revenue support grant agreed with the Department of Environment, Transport and the Regions (DETR).

The Government is refusing to back down over its most controversial proposal, for allowing local authorities to set a local supplementary council tax on businesses.

The Green Paper will emphasise that local businesses will retain a say over how much they are levied. "It has been alleged that the supplementary business rate will raise an extra £2.75bn without giving commercial companies any say. That is absolutely not true," said a DETR source.

"Councils will have to put in place a partnership with business which the majority of businesses will have to agree to before any additional tax can be levied."

Under the plans, they will be able to raise 1 per cent of the national business rate, which could add £40 a year to the rate bill for a business with a rateable value of £10,000. Over two to five years, the sum could be raised to between 2 and 5 per cent of the national rate, equivalent to £200 on a small business.