£1.8m debt handed to council as school becomes academy Policy means taxpayer picks up tab while authority is forced to make cuts elsewhere

ABIRMINGHAM school will wipe out a £1.8 million debt – handing it to the council taxpayer – when it converts to an academy on New Year’s Day.

The debt has been built up after two years of chaos and poor financial management at Small Heath School in Muntz Street. But under the government’s academy policy it stays with Birmingham City Council.

The school has endured a rocky few years having been rated as ‘outstanding’ in 2014 when inspected during the Trojan Horse scandal. But it was plunged into special measures within a year, prompting a clear-out of management and governors.

There were then prolonged strikes during 2015 as the new management clashed with teachers and staff. The interim executive board has been replaced twice since then and, after stability was restored, took the decision to become an academy, leaving its huge debt with the city council.

The council said the debt had been built up during the crisis and was a result of a reduction in sixth form funding due to low numbers, a fall in deprivation funding and rise in staff and agency worker costs.

The council’s Labour cabinet member for education Carl Rice said: “I’m very uncomfortable with this because there is a £1.8 million deficit.

“A large number of schools have deficits, and a smaller number have quite large deficits, Small Heath being one of them.”

Cllr Rice said that by law when a school converts to an academy the council has to write off the debt.

“I’d hope my colleagues from other political parties will be aghast at it as I was. But we have to pick up that deficit,” he added.

His predecessor Brigid Jones added: “We have had to fund a £1.8 million deficit because of Government policy. In the same meeting we have taken the decision to close 14 day nurseries and cuts to the arts budget.”

And the council’s education director Colin Diamond said that they are now issuing warnings to schools under council control to better manage their budgets

“We’ve inherited a culture of financial permissiveness here, where enormous deficits have accumulated over many years,” he said. “There are still a few of these deficits lurking out there, but there are no new ones growing.”

It was pointed out that although the council is footing the bill, the money will not come from the general fund for day-to-day services or impact on other school running costs.

A Department for Education spokesperson said: “Local authorities are financially responsible for all maintained schools up until they convert to an academy and we have worked closely with Birmingham City Council to support them during the conversion of Small Health School. Where a school with a deficit is to open as a sponsored academy, the deficit remains with the local authority. Councils should work closely with schools becoming an academy to ensure that they manage the risk of an increasing deficit.” It was also pointed out that a council can take over a maintained school’s finances if it suspects there is a deficit.

The school has not responded to our email or answerphone message.

I’d hope my colleagues from other political parties will be aghast at it as I was. But we have to pick up that deficit Labour cabinet member for education Carl Rice, right