Schools can go into the red, says minister

Schools facing a cash crisis this year were told by a minister yesterday that they could go into the red to avoid making teachers redundant.

Stephen Twigg told the National Association of Head Teachers' conference in York that setting a deficit budget for this year was one of the options to be considered to avoid damaging cuts. To do so, they would have to reach agreement with their local education authority to tide them over until extra cash – in the shape of a further increase in education funding next year of more than 11 per cent – found its way into their budgets, the Schools minister said.

In the past, some local education authorities have refused to allow schools to go into the red, believing such a move will just save up trouble for the future.

Officials for the Department for Education and Skills insisted last night they were not "encouraging'' schools to declare deficit budgets. But that would be a way round any school having to declare staff redundant this summer, only to find they had enough money to re-employ them the following April.

Headteachers said last night the very mention of the option showed ministers were "rattled'' by the prospect of widespread teacher redundancies this summer.

If the declaration of deficit budgets does become wide-spread, it is likely to increase pressure from local education authorities and teachers' unions on Chancellor Gordon Brown to release extra cash to schools over the next 12 months.

David Hart, general secretary of the NAHT, said after the conference that he was writing to Charles Clarke, the Secretary of State for Education, asking him to allow any school to go into the red if that was the only means of protecting key staff and services.

"I have asked for a universal licence for every school that wants to set a deficit budget this year on the understanding they will have a reasonable amount of time to get into balance,'' he added.

He said schools could only go down that route if they were convinced there would be extra money coming to them over the next couple of years. "Otherwise they are mortgaging their future.'.

Mr Twigg also outlined plans to offer teachers a two-year or three-year pay deal in an attempt to bring "more stability and predictability to school budgets''. He said he was anxious to avoid any repeat of this year's growing crisis over school budgets.

John Dunford, general secretary of the Secondary Heads Association, said the three-year plan was just a "smokescreen'' to divert attention from this year's problems and to sweeten the pill.

Meanwhile, delegates at the NAHT conference voted unanimously for a resolution warning that it would be impossible to implement government plans for modernising the teaching profession without substantial extra resources they say they need. Mr Hart said the headteachers' union might withdraw from talks on modernisation this summer if further cash was not made available.