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Education and Inspections Act 2006

Section 35: Funding of voluntary aided schools: meaning of ‘capital expenditure’

161.Paragraph 3 of Schedule 3 to the 1998 Act imposes a duty on the governing body of a voluntary aided school to meet all capital expenditure in relation to the school premises.

162.Section 35 amends the definition of capital expenditure in respect of a voluntary aided school that applies for the purposes of Schedule 3 to the 1998 Act as it applies to England.

163.The current definition of “capital expenditure” is set out in Article 13 of the Regulatory Reform (Voluntary Aided Schools Liabilities and Funding) (England) Order 2002 (SI 2002/906). The Order contains a list of expenditure that is to be treated as capital expenditure.

164.Section 35 provides that “capital expenditure” in respect of voluntary aided schools shall be expenditure which is capitalised in accordance with proper accounting practices. This approach will as far as possible take standard accounting practices and concepts as its starting point, thereby avoiding the need for an exhaustive list in the legislation. This reflects the approach taken in section 16 of the Local Government Act 2003, which defines capital expenditure in relation to a local education authority.

165.There is power to provide that specified kinds of expenditure are (or are not) to be treated as capital expenditure for individual schools (by direction) or more generally (by regulations).

166.This section is intended to ensure that the definition of capital expenditure reflects modern accounting practice and that optimal procurement arrangements are available to voluntary aided schools.

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