Proportionality
30. Before we could be satisfied that the burdens
set out above were proportionate to the benefit expected to result
from their creation, we asked the Department to clarify four issues.
Firstly, we noted the concerns of many VA schools, expressed in
responses to consultation, about the potential financial implications
of any backlog of capital work liability for which would be transferred
to them. We asked the Department whether it had assessed the likely
total backlog of such work; and whether it was satisfied that
no individual school would be substantially disadvantaged by the
transfer to it of liability for items which had suffered from
significant under-investment.[32]
Secondly, we noted that the aspect of the proposal designed to
provide for the protection of governing body capital expenditure
on 'excepted buildings' which they do not own was framed so as
to cover only caretakers' dwellings. We asked whether it should
apply to all such buildings.[33]
Thirdly, we asked for clarification of the benefits of setting
a statutory de minimis level.[34]
Finally, following detailed consideration of the responses to
consultation, we also asked the Department for their response
to concerns raised by the National Governor's Council about the
legal implications of taking on liability for items which are
the subject of a considerable backlog of repairs.[35]
FINANCIAL IMPLICATIONS OF BACKLOG OF CAPITAL WORK;
PROTECTION OF GOVERNING BODY EXPENDITURE ON 'EXCEPTED BUILDINGS';
LEGAL IMPLICATIONS OF BACKLOG OF REPAIR
31. In respect of the potential backlog of capital
work, the Department responded that it had not been able to assess
the likely total; but noted that its proposal to provide not only
100% funding for a fiveyear period in respect of any agreed
backlog of conditionrelated work in excepted buildings,
but also up to 100% funding for any work 'in exceptional circumstances',
should provide the additional safeguards needed for governing
bodies. By way of a practical illustrative example, it added that
it would probably regard any school facing a major problem (such
as the unforeseeable sudden need for a complete replacement boiler)
as being exceptional, at least in the first year or so of operation
of the proposed new arrangements. We are heartened by the Department's
reassurances on this issue. In particular, we note the example
given of a situation which would be likely to be regarded as 'exceptional':
we trust that this will offer reassurance to the many consultees
who expressed concern about this very possibility.[36]
32. The Department's response to our question regarding
the protection of governing body expenditure on excepted buildings
was to agree that the proposed amendments to Schedule 22 of the
1998 Act should be extended to include all excepted buildings.
It restated its view that, in practice, only caretakers' dwellings
would be affected; but accepted that it was conceivable that there
might be examples of other such buildings where the situation
would apply. We welcome the Department's decision on this matter,
and recommend that the proposal be amended accordingly.[37]
33. The Department has not yet been able to respond
formally to the last of our questions in paragraph 30 above. As
with insurance arrangements, and the arrangements for claims and
payments, which we discuss below, we would not wish to delay progress
on the proposal on the basis that this potential problem is unresolved.
However, we expect to receive assurances on this point before
coming to a conclusion on any draft Order which may return to
us for secondstage scrutiny.
34. With the caveat in the preceding paragraph,
we are thus now satisfied that the burdens set out in paragraphs
25 to 27, and in paragraph 29, above are proportionate to the
benefits expected to result from their creation. As noted
above, the reassignment of liability for premises-related work
will result in a considerable reduction in administrative burdens;
and VA schools will enjoy considerable additional freedom to determine
their own priorities for the funding of premises-related work.
The Department has put sufficient measures in place to ensure
that neither LEAs nor VA schools as a whole, nor any individual
school or LEA, will be substantially disadvantaged as a result
of this proposal. The transitional provisions appear to make sensible
arrangements for the funding of existing projects.
SETTING OF A STATUTORY DE MINIMIS LEVEL
35. The burden which would be created as a result
of the setting of a statutory de minimis level would be
that expenditure below that level which might otherwise have been
classified as capital expenditure (and thus been the responsibility
of the governing body) would be classified as revenue expenditure
(and thus be the responsibility of the LEA). The setting of such
a level is, however, standard accounting practice, and has the
benefit of ensuring that the bureaucracy of processing many small
claims for capital grant is avoided; so it would appear that this
represents a relatively straightforward and sensible measure.
36. Funding arrangements for VA schools mean, however,
that the position is rather more complex than might at first appear.
LEAs across the country currently apply a wide range of different
de minimis levels of their own, ranging, in examples quoted
by the Department, from nil to £25,000. They will therefore
have to adjust the Fair Funding (revenue) budgets of VA schools
(compared with other schools) to reflect any difference between
their own de minimis level and that set nationally in respect
of VA schools by this Order.[38]
Whilst this will represent an administrative burden for LEAs,
it is not a new burden, since such adjustments ought already to
be made to take account of the current funding situation (although
we understand that this is often not the case).[39]
Furthermore, we regard it as preferable to the only alternative,
which would be for the Department to adjust its capital funding
allocation to each VA school in the light of the de minimis
level applying in the relevant LEA.
37. The Department also claims that "setting
a statutory national level for VA schools might cause some LEAs
to reconsider their own arrangements", and thus of itself
help to simplify arrangements. We are very sceptical about the
possibility that this will actually happen: we note the view of
one consultee, a representative of an LEA, who remarked on the
unlikelihood of the LEA changing its de minimis level -
which may apply across the whole of its functions - simply to
improve its relations with VA schools.[40]
Nevertheless, in view of the benefits as set out above, and of
the impracticality of any alternative - and bearing in mind that
protection against the possibility that £2000 might prove
to be an inappropriate or unworkable level would be provided by
the designation of this as a 'subordinate provision', which could
be changed by Order subject to the negative resolution procedure[41]
- we are satisfied that any burdens created as a result of
the setting of a statutory de minimis level are proportionate
to the resulting benefits.
32 Appendix 1, para 2. Back
33
ibid, para 3. Back
34
ibid, para 4. Back
35
Appendix 3. Back
36
Appendix 2, page 35, para 5. Back
37
Appendix 2, page 35, 'Protection of governing body expenditure
on excepted buildings', para 1. Back
38
For an example of why this is the case, see Appendix 2, box on
page 37. Back
39
Explanatory memorandum, para 67. Back
40
Response from Brighton & Hove Council. Back
41
See 'Subordinate provisions' below. Back
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