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Queen's recommendation having been signified


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Business of the House

Order read for resuming adjourned debate on Question—[28 June].

Question again proposed,

9.59 pm

Mr. Eric Forth (Bromley and Chislehurst): As I was saying when I was genteelly interrupted the other day, the issues raised by the motion are quite wide and complex. Not least among them is the fact that, looking at the dates that we contemplate for private Members' Bills, particularly when we do not have the opportunity of knowing the substance of the Bills, it is extraordinary—

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.—[Mr. Heppell.]




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Teaching Vacancies (Advertising)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]

10 pm

Mr. Eric Joyce (Falkirk, West): A couple of months ago, I read in bold print on the front page of The Times Educational Supplement that more—[Interruption.]

Mr. Speaker: Order. Hon. Members should not walk in front of an hon. Gentleman who is addressing the occupant of the Chair.

Mr. Joyce: More than 9,000 teaching jobs were advertised in that edition of the newspaper. The figure was intended to catch the eye of teachers looking for new jobs. What struck me, however, was the amount of advertising revenue that the newspaper must have been receiving, mainly from the state education budget. Although the advertising rates varied depending on the size of advertisement taken out by schools and local authorities, it seemed reasonable, comparing rates with the size of the advertisements in the newspaper, to assume that the average advertisement cost more than £200. If so, by my reckoning, that single edition of the TES could have generated about £2 million in advertising revenue just from the teaching vacancy advertisements.

That certainly was a bumper edition of the TES, and teaching vacancies have seasonal peaks and troughs. It would be misleading, therefore, to extrapolate a year's revenue from a single edition. Instead, I asked the previous Minister for School Standards, now the Secretary of State for Education and Skills, how many teaching jobs were estimated to become available each year in England and Wales. I was given a figure of about 55,000, although that did not cover quite a large number of jobs of which the Department might not be notified.

If we therefore assume that the vacancies were filled at the first advertisement and that the average cost was only £200, that would be an annual revenue from teaching vacancy advertising in England and Wales alone of well over £10 million. However, there is a great deal of evidence to suggest that the true figure is rather higher. There is good reason to suppose that state expenditure on such advertising could be closer to, or even more than, £20 million, perhaps considerably more. As that is a great deal of money, it is worth expanding on both the demand and the supply side of the teaching recruitment market.

On the demand side, schools need to advertise in response to staff turnover and school expansion. In the past, when the numbers of teachers chasing jobs were great, it might have been possible to have 50 or more applications for just one job. Currently, however, that is usually not the case. In some parts of the country, advertisements for a maths post, for example, are likely to elicit only three to four applicants even before any short-listing process. In such circumstances it is quite usual for jobs to be advertised more than once.

Staff turnover rates vary across the country, but turnover in high-demand subjects can be very high indeed, as can turnover in schools in metropolitan areas. No school wants to be left with a gap at the start of the year, so in those circumstances advertising becomes very aggressive. Particularly in shortage subjects, each school

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is aware that it is chasing the same few applicants as other schools in the area. Schools might use various tactics to attract staff, and an important one is the advertisement itself. It is not purely a matter of stating that a job is available; the advertisement needs to grab the attention of potential applicants and persuade them that that is the job and school that they want, rather than the 15 or 20 others that could be on offer.

How do schools achieve that? They do not do it by placing a dinky little advertisement. It is certainly a case in which size does matter. When teachers looking for new jobs are faced with four or five pages of adverts on their subject area, eyes tend to be drawn to the larger box adverts. These can cost between £300 and £500 each, which leads to an inflation of the costs borne by schools.

One school that I know of—one without significant staffing difficulties that no doubt spends rather less than others—has still spent more than £12,000 this year on advertising, 95 per cent. of which is through the TES. However, another has spent more than £40,000 in one financial year. While this must look like a small element of a school budget of well over £2 million—or, in Scotland, of a local authority budget that is many times that—the fact is that labour costs and other fixed costs dominate the budgets of all schools. The cost of advertising looms quite large with regard to that truly flexible part of a school's budget.

This year, some schools have received very welcome additional funding for recruitment and retention. For a school of more than 1,000 students, this could be as much as £25,000 to £30,000, depending on how the local authority wants to slice up the cake. Schools would like to spend this on funding imaginative ways of limiting staff turnover, by enhancing opportunities within the schools, for example, or by offering support for new staff, particularly in areas where the cost of living is high. But to some extent, scope for imaginative uses of this extra money is limited by the high cost of advertising. That is why driving down that high cost is so very important.

Schools and local authorities represent the main driver on the demand side in the teacher advertising market. When it comes to staff recruitment, schools and local authorities basically want three things: first, a cost-effective means of reaching a wide audience; secondly, scope for a quick response time as regards requests for information and the processing of applications; thirdly, in a broader sense, promoting the attractions of the school. At present, the plain fact is that the market is not delivering what schools and local authorities want.

Simply put, advertising is unnecessarily expensive and leads to unnecessarily long response and administration times. The main supplier of teacher vacancy advertising is The Times Educational Supplement, or TES. The overwhelming majority of expenditure by schools and many colleges is spent there. It is true that some rivals nibble at the margins, but there is no doubting the fact that the TES dominates that market. The market operates in a way not dissimilar to a monopoly.

During my own extremely modest business education, I was taught that a market environment consisted essentially of five elements: buyers, suppliers, competitors, threats of new entrants and threats of new products replacing the need for one's own. It is instructive to apply this elementary template to the case in point.

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Buyers in this case are, on the one hand, schools and local authorities who pay for the adverts and, on the other hand, teachers who pay through the cover price to look for jobs. Since revenues from the former hugely outstrip the latter, it is the purchasing power of the former—the schools, essentially, and local authorities—that acts as the driver. If a sufficiently large critical mass of schools and colleges chose other mediums, the teachers would follow. However, they do not, because there is only really one prime supplier: the TES.

As I have mentioned, there are other niche suppliers, such as The Guardian, The Scotsman and the regional press, which focuses on higher education, part-time vacancies and so on. However, they lack the wherewithal and the habit of readership to compete head on with the TES. Indeed, even these rivals at the margins can manage to compete in the modest way that they do only because they are already in the business of producing and delivering newspapers in high volumes. That very fact restricts any new entrants to the market since, by general consent, it would not be viable to publish a competitor to the TES without the supply chain and economy of scale benefits afforded to that publication.

It is clear that there exists no effective competition in the market as it is currently structured. Teachers buy or borrow the TES because that is where the jobs are, and schools advertise there because it is where all the teachers are looking for jobs. The net effect of this on pricing is predictable, and it is exacerbated by competition between schools, particularly in shortage subjects.

There remains one component of the simple market environment that I have not yet touched on: the threat of new products entering the market that replace the need for one's own. This Labour Government created the position of Minister for E-commerce and are emphasising educational technology because it is plain that the internet has exciting potential radically to restructure certain markets, to the benefit of both consumers and the companies that seek to operate within those markets.

The market that we are discussing tonight is a classic case in point. I believe that, at present, there is a form of market failure in advertising for teaching vacancies caused not by any questionable practices—indeed, the TES is an excellent newspaper—but simply by an overwhelming dominance of a single supplier, combined with high barriers to entering the market.

The situation could be transformed overnight by using the internet. Many dotcom companies have failed recently, but that is primarily because of the speculative element of their business, with the supposed demand for novel products as well as methods of delivery. In the case of teaching vacancy advertising, we know that there is a predictable demand. Should the market make the leap from a heavy newspaper to the web pages, the other benefits of an internet business would apply, minus the risks faced by dotcom companies in other markets.

Some farsighted companies have seen this already. For example, Schoolsnet offers unlimited recruiting advertisement for schools for the princely sum of £300 a year, which is something of an improvement on the £12,000 to £40,000 that I mentioned earlier. Of course, that low price reflects the current relatively low demand, since without the critical mass of subscribers, very few teachers use the service; but it also reflects the low set-up

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costs of the medium, and points the way, ultimately, to much lower costs for the buyers of the advertising service delivered.

I am not convinced that the structure of the market would necessarily change all that much, and I suspect that one or two suppliers would still dominate, because of the convenience for teachers of having most jobs advertised in the same place; but I believe that the threat of new entrants will be made far more meaningful with web-based advertising, and that will inevitably lower the costs for schools and local education authorities and remove the modest costs faced by teachers altogether.

It is difficult to miss the fact that the best internet site advertising teaching jobs is none other than that of the TES, which includes all the jobs advertised in the newspaper. A switch of the main medium would still leave the TES with a striking advantage over organisations such as Schoolsnet, gained from a critical mass of advertisers, and hence readers—or perhaps, in future, loggers on. Indeed, the site is so good and so complete that I suspect that News International already has that contingency well planned for—I commend it for that—but the fact remains that the internet provides meaningful scope for a critical mass of advertisers to switch together to a new competitor, which gives more power to their elbow. The switch could begin on a geographical or a subject basis or, more likely and more meaningfully, it could be agreed en masse among schools and LEAs to switch, or threaten to switch, at the same time.

I have spoken to a number of teachers and local authority administrators on the subject in the past few weeks, and it is abundantly clear to me that the conditions now exist such that a determined effort by budget holders to work together to secure a better deal would very likely meet with success. Schools would continue to compete keenly for the best staff, but with hyperlinks patching the main advertising sites with the schools' own, the cost of such competition would be much lower than at present, and perhaps restricted to in-house web design costs. Moreover, the dissemination of information about schools and jobs would take place instantaneously and applications would be progressed far more quickly, and without the expense of surface mail.

The time has come when, if the TES will not provide website advertising with direct links to schools' own sites at a cost much lower than that of advertising in the newspaper, someone else will. The Department for Education and Skills must now galvanise schools by urging them to seek the best deal and to work together to maximise their bargaining power with the present prime supplier—the TES—or potential future suppliers; and the time has come for the Scottish Executive to watch developments carefully, so that it can learn from practices down here, just as we learn from practices there.

Up to now, the DFES and the Scottish Executive have rightly left the decision on where to place advertising to budget holders at school and local authority levels. I would not want to see a departure from the principle that it is up to those budget holders to decide where to spend their money, but many of them would welcome advice from the DFES on the best way of securing partnership across the country and driving down the cost of advertising.

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It is one of the notable successes of the Labour Government that all secondary schools and the great majority of primary schools are now on the internet. It is a fact of professional teaching today that teachers are comfortable with that medium. Teachers would welcome a change of format that would make the task of applying for a new job more user friendly and perhaps even enjoyable.

I end by reiterating the fact that I believe that the TES is an excellent newspaper that provides a broadly sound service, and I suspect that it is up to the challenge that lies ahead. There is undoubtedly scope substantially to lower the costs that I have spoken about, and it is now time for the DFES to encourage schools and local authorities to press that case with vigour.

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