Opt-out schools told spending spree must end

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Education Editor

The body which allocates funds to opted-out schools has almost run out of money for new building projects. The Funding Agency for Schools' decision to abandon the annual bidding round for capital grants is a further setback to the Government's faltering grant-maintained policy.

Cecil Knight, chairman of the grant-maintained schools advisory committee, said the schools were disappointed but encouraged by the chance to use their initiative. "I am desperate for new classrooms. We will approach private sources for money and consider borrowing against our assets."

Mr Knight will soon have his prayers answered. Michael Heseltine, the Deputy Prime Minister, will shortly announce plans - opposed by Gillian Shephard, the Secretary of State for Education, to force schools to find private finance for major projects, and one of the major provisions of the Nursery Education and Grant Maintained Schools Bill, now going through Parliament, will allow schools to borrow against their assets.

Capital for new building has been one of the main inducements to schools to opt out, because capital funding for grant-maintained schools has been more generous than that for local authority schools.

Last year, 250 schools received a total of pounds 60m in the annual bidding round. Since opting out began in 1990, schools have received around pounds 200m for building projects.

Last summer, 906 schools submitted bids but the agency says that existing commitments to improving the 1,099 grant-maintained schools' buildings will mean that it has only enough money to carry out urgent health and safety work and to make provision for increased pupil numbers. It has pounds 138m for capital spending in 1996-97.

A letter to chairmen of governors from Michael Collier, the agency's chief executive, says: "The chairman has made clear to ministers during recent weeks that many priority needs in grant-maintained schools will not be met in the short term. Nevertheless, ministers were unable to hold out any hope of additional funding being available to the sector."

Mr Collier adds: "It is clear that it is inappropriate to continue to offer grant aid for projects through the traditional bidding round. The settlement for 1996-97 and the guidelines for the following two years afford no scope to finance any bids from schools for 100 per cent funding- other than for basic need and for the most urgent health and safety schemes."

Martin Rogers of the Local Schools Information Service said: "This is what we predicted all along; that as the sector grew the money would run out. One after another, the funding advantages which lured schools into opting out are disappearing before their eyes."

Opted-out schools will continue to receive some money to spend on buildings through an annual allocation. The money for each pupil is being increased from pounds 20 to pounds 24, plus the existing grant of pounds 12,000.

The agency said it would still invite bids from time to time. Schools will be able to apply for money from a pot of pounds 4m to match sums they have raised from private sources. An agency spokesman said the pilot for this scheme showed that schools of all types were successful in raising private funds. A spokesman said: "The new arrangements are a way of making the available money go further."

Asked whether the changes made opting out less attractive, he quoted a head teacher who said recently: "Any school which opts out for the money is very quickly going to be disappointed. The main stimulus for opting out is greater managerial flexibility to make the most of what you have."