Schools could mortgage sites to get cash

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The Independent Online
SCHOOLS may soon be allowed to raise extra cash by taking out mortgages on their buildings. John Patten, Secretary of State for Education, and Stephen Dorrell, Financial Secretary to the Treasury, are considering a rule-change which they believe will increase the links between the private and public sectors.

The ministers hope that banks and building societies will see schools as a low-risk investment and will be encouraged to lend them money to help pay for much-needed repairs and new buildings.

At present, universities can take out mortgages against their buildings, but schools cannot. Local authority schools can sell off their land or buildings with permission from the council, but opted- out schools are not allowed to do this.

In a speech to the Confederation of British Industry's conference in Harrogate, North Yorkshire, yesterday, Mr Patten said there were many commercial opportunities in the 'newly liberated' state education sector.

Already, he said, universities were raising more than a quarter of their income - pounds 1bn a year - from private sources, and he hoped they would borrow more freely against their assets in future.

He said there was also scope for schools to become more entrepreneurial. 'I have an open mind on bolder and more radical ways of bringing the dynamism of the private sector into state education. My colleague, Stephen Dorrell, and I are giving further thought to that.'

A spokeswoman for the Council of Mortgage Lenders said it was difficult to tell at this stage whether schools would find it easy to take out mortgages. 'What our members would need to do is to work out what the school's financial situation was and whether it would be able to sustain the repayments required on a mortgage. I guess that is going to come down to their individual financial status,' she said.

A spokesman for the Department for Education said later that discussions on the subject were at an early stage.