WYRE Forest schools have had a stay of execution from Government plans to take money from schools' budget surpluses.

Kevin O'Regan, Wolverley CE Secondary School headteacher, criticised "a very foolish proposal" which would have allowed Worcestershire County Council to claw back part of both primary and secondary schools' revenue excess for a particular year.

The scheme was drawn-up by the Department for Children, Schools and Families but, Jim Knight, minister for schools and learners, has now backed away from bringing in the levy in the short term, but left the door open for other future proposals.

Mr Knight, in a written ministerial statement, stated his department would "continue to monitor" overall surplus balances at schools and warned there could be "further action" during the spending review period, running from now until 2008.

The county council already has powers to take back schools' surplus cash but the rule change would make the levy compulsory.

If the plans had gone ahead following consultations in October, Wyre Forest schools could have been exempted for the current financial year due to the education shake-up as all schools officially closed, along with their budgets, at the end of August.

Charlotte Redmund, government department spokeswoman, said: "We are in favour of good financial planning and schools' saving some funds but we have an issue with excessive amounts being carried on."

At the moment, secondaries can carry forward five per cent of their revenue budget from the previous year, and primary schools eight per cent.

The Government plans would have brought in a five per cent levy on any surplus money above that threshold to be taken back by the county council and redistributed by its education chiefs.

Mr O'Regan hit out at the "heavy-handed" plans arguing they would encourage schools to "spend every penny they've got."

He said: "The Government is concerned by the amount of money schools are carrying over but this is a heavy-handed approach to take five per cent. It's a very foolish proposal."

Dave Seddon, principal of Baxter College, Kidderminster, and Elgar Technology College, in Worcester, was in favour of the levy and believes it would benefit schoolchildren's education.

He said: "You look at some of the surplus budget figures of some schools and it's inappropriate they've got such savings held back when it should be spent on the kids."

He added all schools could cost-up development plans for major in-house education schemes and claimed it was a "red herring" to say the levy plans would affect schools' short and long term financial planning.