Budget proposal for school loans

Giving loans to schools in deficit is “like giving a credit card to someone who is in debt,” a Monmouthshire councillor has said.

Cllr Jez Becker has compared Monmouthshire County Council’s plan for helping schools get rid of their deficit to giving a credit card to someone in debt.

The proposal is included in the council’s 2020/21 draft budget and offers schools the chance to borrow up to 10 per cent of their budget, which can be spread out over 10 years.

It also includes plans to extend the repayment of the deficit from three years to four years.

School balances across Monmouthshire currently total a deficit of £882,645.

It is anticipated that 16 schools will finish the year in a deficit, including Monmouth Comprehensive which is forecasting a deficit of £480,000.

In the council’s economy and development select committee Cllr Becker said: “The possibility of school loans for schools who are in a deficit position, that sounds to me like giving a credit card to someone who is in debt.”

The cabinet member for resources Cllr Phil Murphy said that it could help schools get out of a difficult position, potentially interest free.

Cllr Murphy said: “It would substantially reduce the amount they have got to find each year and therefore any savings that they were going to make, potentially they can reinvest in standards of extra-curricular activities or whatever they want to do.

“They wouldn’t have to spread it out over 10 years they could pay it quicker if they want to.

“It’s giving schools the opportunity of being far more flexible with their recovery plans.

“If they go into deficit, once they are on a loan basis, the authority will take back their budgetary control from them.

“So, they are not allowed to go into overdraft once they’ve cleared it with a loan.”

The public consultation for the council’s budget proposals ends tomorrow.