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October 23, 2007 3:00 PM

Local MP, Tim Farron has today written to Ed Balls to ask him to scrap Government plans to impose a 5% "tax" on school cash balances - a "tax on prudence".

The Government consultation period on this change ends this Friday, 26th October. The proposed change has caused outrage amongst schools, which are faced with losing money which they have saved up for major capital projects. 20,500 schools (90% of the total) would be hit under the plans, which would affect even monies already committed to major building projects. The change would cost schools £85m in 2008/09 - or over £250m over the next three year spending review period.

Tim Farron said:

"This Government plan is absolutely daft - it is a tax on prudent schools. It is particularly outrageous that the Government plans to raid monies which are already allocated by schools for major capital projects. In some cases, schools have saved for years for new facilities - some will now have to do their own fund raising to make up for money taken back by the Government.

"Does this Government really believe that it knows better than 23,000 Head Teachers and Governing Bodies how to spend the money given to them?

"Most dotty of all is the proposal to take money away from schools based on their cash balances in March this year - even if these have now been spent! This could force some schools into staffing cuts for next year to cover money lost!

"I am today writing to the Secretary of State, Ed Balls, urging him to scrap this proposed change. The consultation period ends this Friday, and all those who are affected by the proposals should let the Government know their views."