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Education: What not to do when the cash runs out

by
15 February 2019

There are several ways in which schools can raise additional money, says Howard Dellar . . . and several ways they should not

ISTOCK

SPENDING yesterday’s money or tomorrow’s money rather than today’s money is a risky business, especially if you’re a school.

Schools are currently being encouraged to generate income from parts of the land or buildings that are not needed for their day-to-day purposes; or they might let bits of the school in the evening, at weekends, or in the holidays. They are even being encouraged to sell land that is truly surplus.

Twenty years ago, there was a fuss about schools selling playing fields. They are now being actively encouraged to consider this.

The Trusts (Capital and Income) Act 2013 allows the increase in value of the assets of charities (whether land or shares) to be treated as income. There are restrictions and safeguards, of course, but realising this asset is a perfectly legitimate decision for school trustees to take: it balances present needs against future ones.

School sites constitute one of the largest assets within a diocese. These can be split into two types: existing school sites, and funds held from the sale of previous school sites. The latter form what are called the Uniform Statutory Trusts (USTs) held by each diocese for certain uses by its schools.

Existing school sites cannot be treated under the 2013 Act. But trustees could generate income from them. That income would have to be used for the particular school, not for the general running costs of a church multi-academy trust. Also, it must not be used to meet either capital or revenue costs that are the responsibility of the local authority or the Department for Education.

It should not, for example, be used to increase the general pupil capacity of a school; but it might be used to provide specialist sports, music, worship, arts, or health or leisure facilities that the State is not going to fund. Specialist teaching, educational trips, or special experiences are all possible.

It might be possible at times to use such income to enhance the quality of capital works. If any of this is done, it needs to be agreed with the local authority or government, and recorded as enhanced private value in the land or buildings of the school.

The assets held in Uniform Statutory Trusts (mostly investment-fund shares, or land that used to be a school site), on the other hand, can be treated under the 2013 Act, and, in some dioceses, could produce a substantial one-off revenue windfall.

USTs, however, have restricted purposes: they cannot be used to underwrite the general costs of diocesan boards of education (DBEs).

The capital can be used to buy new church-school sites, or teachers’ houses, or to meet the Church’s share of voluntary aided schools’ capital projects. It might be used also for the capital “extras” summarised above.

The revenue (including revenue gen­erated by the use of 2013 Act) can also be used like the capital, and, in addition, could go towards the cost of providing “advice, guidance, and resources” in respect of the “management of” or the “education provided at” church schools.

It can be used to meet costs relating to church-school inspections, and it can meet the staff costs involved in providing advice, inspections, and capital projects. So its uses are wide, but not unlimited.

Like much legislation, the wording leaves room for doubt and argument, and sometimes abuse. The revenue generated is surely intended as a supplement to the income provided from parish share, not as a substitute for it. It does not seem intended to fund the core DBE functions under the DBE Measure.

Even more, the expenditure of extra revenue generated by the use of the 2013 Act is a one-off expedient. Dioceses should approach it with caution.

Howard Dellar is head of the Education, Ecclesiastical and Charities Department at Lee Bolton Monier-Williams. He writes in a personal capacity.

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