Conclusions
56. There are a number of issues here to do with
the operation of the DfES in general. Certainly mistakes have
been made. In the case of ILAs, the objective of expanding
training was given such a high priority that the caution normally
associated with Government policy implementation was completely
overlooked. With schools' funding, although we may never have
a clear picture of the extent of the problems, one difficulty
was the way in which the settlement for 2003-04 was presented
by Ministers, leading all schools to expect large sums of extra
disposable income which in many cases did not materialise. The
lessons here for the Department are clear: always have a rigorous
risk assessment, and do not oversell a policy particularly where,
as with schools' funding, accurate forecasts of the outcome are
not available.
57. Government Departments have an unimpressive record
generally with projects involving IT procurement. They are often
poor clients, lacking the necessary skills to ensure projects
run as they should. The National Audit Office and the Office of
Government Commerce have compiled a list of common causes of failure
in IT-enabled projects across Government and the DfES has clearly
not been immune from them. The causes are:
"1 Lack of clear link between the project and
the organisation's key strategic priorities including agreed measures
of success.
2 Lack of clear senior management and Ministerial
ownership and leadership.
3 Lack of effective engagement with stakeholders.
4 Lack of skills and proven approach to project management
and risk management.
5 Lack of understanding of and contact with the supply
industry at senior levels in the organisation.
6 Evaluation of proposals driven by initial price
rather than long-term value for money (especially securing delivery
of business benefits).
7 Too little attention to breaking development and
implementation into manageable steps.
8 Inadequate resources and skills to deliver the
total delivery portfolio."[48]
58. Not all the difficulties for the DfES are of
its own making. The Department cannot offload all the risk of
a venture onto its private sector partner. If the work done by
a private sector partner is flawed, it cannot just be written
off, because the Department has a duty to discharge its responsibilities
in all circumstances. Ultimately, if anything goes wrong the Department
will have to pick up the pieces. As the argument for using the
private sector to undertake particular projects generally includes
an expectation of "risk transfer", the apparent difficulty
of transferring risk away from the Department points to a long-term
difficulty in the particular use of contractors to deliver major
initiatives.
59. This helps to explain why there appears to be
little competition in providing services to the Department. If
the risk is never completely transferred, then the tender will
demand a large number of quality standards and safeguards which
only a very few companies are likely to be able to provide. So
Capita won the tender for ILA computer system, it runs the Teachers'
Pension Scheme, it won the tender for the EMAs computer system
and, most recently, it won the tender for the Primary and Key
Stage 3 strategies. The press notice announcing the award of this
last contract was at pains to stress the rigorousness and impartiality
of the tendering process.[49]
There is no reason to doubt this, but, as David Normington told
us, "[Capita is] very, very big in the education world",[50]
and in these matters the size of a company and the resources it
can bring to bear are crucial. Nor is this a criticism of Capita.
Given the way in which these processes work, there will always
be a company which fills the role that currently Capita fills
with the DfES. In short, there is little real "market"
here.
60. The Department does appear to have learnt some
lessons from recent events. It has recognised the need for comprehensive
risk assessments on major projects, it has taken steps to monitor
more closely the flow of funds to schools and it has instituted
a funding system for schools which above all other considerations
is predictable.
61. All of this has meant a greater central control
of certain functions, and it is at this point that several of
the Government's policies can be seen to have conflicting objectives.
Funding for schools is decided centrally with LEAs acting as agents
of the Department with no say in the manner of distribution; monitoring
of spending is being undertaken centrally; responsibility for
management and coordination of children's services across England
has been given to the department. And yet it is at this time that
the DfES, along with the rest of the public sector, is being asked
to make considerable efficiency savings: 1460 fewer staff by 2007-08,
800 more staff relocated outside London by 2010, and a total of
£4.35 billion in annual efficiency savings by 2007-08.
62. Virtually the whole of the public sector will
be in transition over the next five years as the Gershon proposals
are implemented, and the Government will no doubt argue that the
DfES along with other organisations has to contribute to the success
of those changes. At the same time the DfES will be implementing
the wide-ranging policy changes that we have discussed in this
report across all schools and all children's services. We have
identified financial management and project management problems
that have occurred 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.
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