Select Committee on Deregulation and Regulatory Reform Fourth Report


  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]


  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.


  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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