| The effectiveness of increased expenditure
The Chancellor's budget book for 2004 claimed a direct relationship between the increased investment in education since 1997 and improvement in GCSE results in particular. Our evidence showed that with lower levels of investment GCSE results had improved to at least the same extent in earlier periods in the 1990s. The Government needs to take great care in making claims about the effectiveness of increased investment in education in increasing levels of achievement which the evidence cannot be proved to support. Links between expenditure and outcome remain difficult to establish.
Schools' funding
The DfES declined to undertake the survey of schools which we requested in our report last year to establish the extent of funding problems in schools in 2003-04. A survey by the Audit Commission found that there was no widespread funding crisis. This confirmed our conclusion that the DfES reacted to perceptions of crisis rather than an actual crisis.
The consequences of the problems with schools' funding in 2003-04 have been far-reaching. Given that the settlement for 2003-04 was distributed using a new funding formula, it is remarkable that within eighteen months the whole rationale for that original change, that the funding system needed to be fairer and more redistributive, has been abandoned in favour of a highly pragmatic near flat-rate system, with three year budgets being introduced in 2006. This change has led to the loss of LEAs' ability to make any executive decisions about schools' funding in their areas and will, we believe, inevitably lead to far greater involvement of the DfES in day-to-day management of the school system.
The DfES seems content to say that the formula spending share system failed, but that it does not matter to what extent and for what reasons it did not deliver the desired result. This is incredibly short-sighted. There is no proper evidential basis for saying that change is merited, and no way of being confident that the changed system will adequately address any problems that exist. For a Department that believes in evidence-based policy the DfES has remarkably little evidence to support the changes it is making.
Staff reductions
We accept the principle of the Gershon review's proposals to increase efficiency in public services and to redistribute resources to the front line. However, the 31% proposed cut in DfES staffing has clearly not been effectively worked through. It may or may not produce the strategic department that the Government wishes to see. In order for us to understand fully what is being proposed, the Department should make public both the detailed reasoning behind the headline 31% staff reduction and a comprehensive assessment of the risks in making that reduction and the ways in which they are to be managed. In particular we need to see evidence that schools' funding will in future be overseen effectively without a large new bureaucracy.
Management capabilities of the DfES
We have identified financial management and project management problems within the Department, and it clearly needs to address its methods of working in order to limit the possibility of similar problems in the future.
Further Education
Much of the education for 14-19 year olds is provided by further education colleges and the proportion is likely to increase as greater encouragement is given to vocational education and training. One of the issues that has been raised with us is the differential in funding per student between schools and further education colleges. This is particularly relevant to sixth forms. It makes no sense that a student undertaking a course at a further education college should, other things being equal, be less well funded than a student taking the same course at a local school, but progress towards equal funding is painfully slow. Greater urgency is needed. Further education colleges should not be seen as a means of providing education on the cheap.
| 
