Smaller school budgets require close management

The Department for Education (DfE) sets national standards but responsibility for financial management and cost reductions lies with schools themselves, with local authorities responsible for exercising effective oversight.

It is essential that the financial management framework for schools is capable of alerting the DfE to any systemic issues that may require action or intervention.

Schools' financial management capability has improved - for example, more schools have employed or have access to a school business manager. In the current financial environment, however, more schools have to manage with less money, and strong financial management is more important than ever.

Many schools consider that they need to reduce staff costs but require direction on the best approach.

Local authorities do not publish systematic data to demonstrate how they are monitoring schools' financial management and that they are intervening where necessary and many local authorities are set to devote fewer resources to monitoring and supporting schools' financial management. 40% of authorities responding to an NAO survey do not believe they have sufficient resources to provide effective support to schools and almost half of those authorities are planning to reduce the amount of staff time spent on support.

The report recommends that the DfE should make clear how it is going to review the working of the financial management arrangements.

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