Fraser Nelson Fraser Nelson

Gove to Treasury: let schools borrow!

For all the good intention of Michael Gove’s school reforms, there have been only a few dozen new schools so far. When I interviewed him for The Spectator earlier this month, I asked if there was much point to all this if the successful schools could not expand (and, ergo, add capacity to the system). Crucially, Academies cannot borrow because the Treasury doesn’t allow it – a relic from the Gordon Brown control freak days. How much of an impediment is this? I didn’t run his answer in the magazine version of the interview as this is a fairly technical point. But as Brown knew, it’s on seemingly dull issues like borrowing powers that can decide the success or failure of public sector reform that he so loathed. Anyway, here’s the exchange.

FN: Even a corner shop can’t expand without the ability to borrow. Is this not a huge, obvious and unnecessary restraint on the expansive creative abilities of the good schools to who you have just given freedoms?
MG: Yes, it is. But because Academy schools are regarded as part of the public sector we can’t allow them to borrow according to the accountancy rules.
FN: Well, change the rules then.
MG: You’re telling me, I’d love to change the rules but I have to accept the fact that these accountancy rules are set by bodies, statistical and other bodies, over which I don’t have control. I think that we should allow Academy schools and other organisations which are essentially social enterprises to borrow but the rules on public sector borrowing overall prevent us at the moment from doing so. It’s a point I’ve tried to address. There are a number of institutions in the UK which exist to safeguard public money. You have the Office of National Statistics, the National Audit Office and the Public Accounts Committee.

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