When the sums don't add up

Schools governors are setting illegal budgets, and risking personal bankruptcy. Francis Beckett expl

The biggest cut in many years in funding for Britain's schools has passed virtually unnoticed. Until head teachers started to look closely at the sums, they thought they were getting an increase. Then they realised that it was all done by mirrors.

Schools in many areas of southern England face the prospect of sacking teachers. Just how bad it is depends on where you live. In Barnet, north London, where I live, it is so bad that some school governing bodies plan to set a deficit budget without a recovery plan. This is illegal, just as it was when Ted Knight's Lambeth councillors did something similar in the 1980s, and were threatened with surcharges that could have ended in the loss of their homes and bankruptcy. But respectable, law-abiding school governors are doing it all the same, because the alternative would be in effect to destroy their children's schools.

The schools minister David Miliband said in December that, under the government's new "fairer and simp-ler" funding formula, schools would get an extra £1.4bn this financial year. Yet by March he was saying it was £2.6bn. No one knows why, as the formula had not changed. The most charitable explanation is that Miliband forgot what the first figure was, thought of a new number and doubled it. Whichever figure he is claiming now, he says it amounts to a minimum increase of 3.2 per cent per pupil.

So how come school governors in Barnet this month looked gloomily at figures showing that, to live within their new budgets, some schools might have to make as many as 20 teachers redundant?

It is mainly because the government has made agreements with the unions that greatly increase schools' financial commitments. For example, it requires all schools to offer performance-related pay, but gives them only one-fifth of the cost. The rest must come from Miliband's £1.4bn (or £2.6bn, depending on when you happened to be listening to him). There are also increases in basic pay, London weighting, national insurance, and employers' pension contributions. Young teachers in London have been given pay rises amounting to 12-13 per cent. The government has also agreed to free teachers from much of their administrative work, but still demands that the work gets done, and has not given schools the money to pay anyone else to do it.

Costs have gone up about 11 per cent. Schools are getting an average of 5-6 per cent more money. Secondary schools face deficits of up to £500,000 each.

My daughter's school, Copthall, a girls' comprehensive where half the pupils do not have English as their mother tongue and nearly a fifth are eligible for free meals, has been lavishly praised by Ofsted. But because of Miliband's "increase", the only way it can balance its books in the coming year will be to make about 15 teachers redundant. That, at a stroke, would turn a successful school into a struggling school. Nearby, East Barnet School has no reserve money to fall back on, and salaries consume 83 per cent of its budget. Just to stand still, it needs £300,000 more than it has been given. Its governors could find only three ways to live within the new budget: to make eight or nine teachers redundant; to make all support staff (including technicians and office staff) redundant; or to stop spending any money on books, materials, furniture, equipment, decorating and supply teachers. As at Copthall, the governors have agreed a deficit budget.

The local Tory council made things worse. When the government had finished slicing bits off it, the council tried to take off another £1m from the £148m the government expects it to pass on to schools. This allowed the Education Secretary, Charles Clarke, to pose as the teachers' friend, demanding that Barnet should stick to the funding level the government recommended. The council was shamed into letting schools have £600,000, and its stranglehold on the other £400,000 may yet be broken. But the shortfall in school budgets across the borough is not £1m: it is £8m.

Miliband, too, makes noises like someone who cares about schools. "We want head teachers to have three-year budgets," he says. "This will help schools to plan for the long term." It would, except that schools are promised the same cheese-paring budget for the next two years. If schools were assured that it was a one-year blip, they could make deficit budgets for this year, with "recovery plans" for future years.

But it isn't. This is the future. Unless Clarke and Miliband put their plans into reverse, history will remember them as the ministers who charted the course for the long-term decay and decline of Britain's state school system.