§ Mr. Gordon PrenticeTo ask the Secretary of State for Education what powers she has to intervene where school governors set deficit budgets.
§ Mr. Robin SquireA local education authority school governing body which sets a deficit budget will normally be in breach of its duties under its LEA's scheme for the local management of schools. It is for the LEA to decide how to proceed if the situation arises. If the governors of a school have been guilty of a serious breach of the scheme requirements, or of financial mismanagement more generally, the LEA has power to suspend their right to a 615W delegated budget and take over management of the school's finances.
Governing bodies of GM schools are under an obligation to remain solvent under the terms of their financial memorandum with the Funding Agency for Schools. Should a GM school submit a deficit budget it would be for the Funding Agency for Schools and the school to agree upon the action to restore the school's financial position.
In the last resort, my right hon. Friend has the power, under sections 68 and 99 of the Education Act 1994, to direct a LEA or a governing body that she considers to have acted unreasonably or to be in breach of its statutory responsibilities to take corrective action.