Schools cash crisis deepens

The extent of the cash crisis in London's schools is exposed today, with one now more than £1 million in the red, the first to have run up a seven-figure shortfall.

Lister Community School in Newham is the most dramatic example yet of how headteachers are struggling to retain staff while coping with cuts in government funding.

Tim Harrison, London secretary of the National-Union of Teachers, said: "A growing numberof schools like this are running up massive deficits, not because they are badly managed but because they are being told to do more while we receive lessmoney. We fear it's just the first."

Lister is one of many schools caught up in a battle between Education Secretary Charles Clarke, whose department funds local education authorities, and the council chiefs responsible for passing the money on to schools. Headteachers say their budgets are not going up by nearly enough to fund the wage rises agreed for teachers.

The Government claims some councils are holding back money; councils claim they have not been given enough to meet increased costs.

Lister has a deficit of £1.2 million which Newham council has allowed it to run up while it looks at ways to make more savings.

The 1,300-pupil school has been praised by Ofsted inspectors for improving its results, scoring around the national average in key tests. It also excels in performing arts. Chairwoman of governors Christine Price said she was worried the improvements could be jeopardised by cuts to reduce the deficit.

Last year's £5.75 million budget has been increased to £6million - a rise of 4.3 per cent - but this is far short of what the school needs, she said. Last year's 10 per cent pay rise for London teachers alone has pushed it into the red.

In addition, its 90 teachers have received top-up rises because they are classed by the Government as working in inner London. But when it comes to education funding, Newham is classed as being in outer London and therefore gets less funding.

Lister has also succeeded in retaining highly qualified staff - a key Government aim - but this means its wages bill and pensions contributions are higher.

"We are, in effect, being punished for success," said Ms Price.

Newham councillor Graham Lane, education spokesman for the Association of Local Government, said he would be negotiating with Schools Minister Stephen Twigg next month over the "ridiculous" fall in funding.

He said: "If Charles Clarke is prepared to work with local government then I think we will find a solution but if the Government plays the game of mirrors and tries to blame everyone but itself, I think that there will be a very serious situation."

Elsewhere, Coulsdon High School, Croydon, is planning a four-day week as its £300,000 shortfall means losing four staff.