Examination of Witnesses (Questions 20-39)
16 JUNE 2004
MR DAVID
NORMINGTON AND
MR STEPHEN
KERSHAW
Q20 Mr Turner: So it was actually the
Department that advised ministers that this was a reasonable aspiration
to spend public money?
Mr Normington: The Department
with the Funding Council advised ministers, yes.
Q21 Mr Turner: Thank you very much. We
can see the result for ourselves. Moving on to schools' funding,
could you remind us, please, of the milestones which led up to
what was called the funding crisis last year when, for instance,
the ODPM made its decision about changing funding for local authorities,
when ministers made the decision about passporting, when ministers
made decisions about the standards, and how those milestones have
moved, where they have moved, with the result that there has not
been a funding crisis this year?
Mr Normington: I am not going
to get all the dates right. What we have been trying to do this
year, compared with the previous year, is to bring all the decisions
forward by about two months, if possible, and 29 October last
year was the point at which we were able to provide most of the
detail about the education budgets for 2004-05, albeit that was
then followed by the local government settlement some weeks later,
but the whole process was brought forward by six to eight weeks.
Q22 Mr Turner: So every school should
have known its full funding allocation by 31 March this year?
Mr Normington: If the local authorities
had made that possible, yes, but it is in the hands of the local
authority then to set the local budgets and to allocate the money,
albeit within quite a tight framework which we had set, which
included floors and ceilings.
Q23 Mr Turner: Do you know how many schools'
did have that knowledge?
Mr Normington: No, I do not, but
a lot more than the previous year when they went on not knowing
about it until well into July.
Q24 Mr Turner: Finally on this subject
of schools funding, do you think there is a causal link between
the amount of money that is spent and, for example, the GCSE results?
Chairman: Andrew, I am sorry, will you
hold that question to David Normington. That is a section which
we will be covering. I really think it pre-empts other people's
opportunity of questioning. Could you stay on school funding per
se?
Mr Turner: In that case I have finished.
Q25 Jonathan Shaw: The Government has
introduced a sustainability fund, a transitional grant—
Mr Normington: Yes.
Q26 Jonathan Shaw: —to ensure that
school deficits are cleared by 2006. Why 2006? What is the thinking
behind that?
Mr Normington: Simply that we
do not think it is going to be possible for every school deficit
to be wiped out in one year. This is about trying to do it over
a two-year period and to provide the transitional support over
that two-year period. I do not know the precise number of schools
with deficits at this moment, but the last information we had,
which was at the point before they entered this problem, ie the
end of March 2003, about two and a half thousand schools had deficits.
Q27 Jonathan Shaw: Could some head teachers
be forgiven for being rather irritated that some schools are getting
bailed out when they have managed their budgets sufficiently?
You might have two schools with a very similar catchment, the
same numbers, et cetera: head teacher A has managed his budget
well, head teacher B, it is questionable whether they have managed
the budget well and a set of similar circumstances?
Mr Normington: Yes. Of course
it can be very irritating indeed to a school that has managed
its budget well to find that happening, and that is why in the
£120 million transitional relief we are providing we are
making it a condition that those schools with deficits have to
have a plan for sorting them out. Yes, it looks like a reward,
but it comes with strings attached about what you have to do to
get yourself back into financial stability.
Q28 Jonathan Shaw: What happens if in
a few years' time those schools are in exactly the same position?
Will there be another £120 million?
Mr Normington: I sincerely hope
not. It will depend why they are in deficit, of course. Sometimes
it is a short-term issue—they are not all incompetent—but
at the moment, in the present system, it is the local authority's
responsibility where a school is in deficit to discuss with that
school and to make sure that action is taken to handle it. If
you look at the pattern—I was looking at the pattern of
numbers of schools with deficits over recent years—it has
gone up and down around the figure 2,000. So it is sometimes 1,800,
it is sometimes two and a half thousand. It is in that range.
Q29 Chairman: What is that as a percentage?
Mr Normington: I suppose it is
about 10%. Two and a half thousand would be about 10%.
Q30 Jonathan Shaw: What about the other
end of the scale where we have got schools building up large reserves?
Have you any feelings about that? Why are they doing that? Why
are they not spending it on the children at the school? Is it
because they are worried about future stability?
Mr Normington: Yes. I mean, we
worry about that, of course. The equivalent . . . I have just
talked about two and a half thousand schools having deficits.
Of course, just over 20,000 schools had a surplus and it adds
up in aggregate to about a billion pounds. Quite a lot of that
is capital money which they have accumulated for a building project
which they are waiting to start or which is spread over a period,
but quite a lot of it is not. It depends, but you do hear of head
teachers saying, "I am saving it for a rainy day". Actually
one wants them actively to be using their resources for the benefit
of the school and wants to leave them with that decision, but
one does not want them building up big bank accounts against some
future problem.
Q31 Jonathan Shaw: You said in your opening
remarks that you were trying to do a lot of things?
Mr Normington: Yes.
Q32 Jonathan Shaw: And some things perhaps
do not always go right. From what you have just described, in
a fair judgment, do you think this is the best use of public money?
On the one hand you have got schools that are not managing their
budgets, giving them money, even rewarding them, you could say;
on the other hand you have got a billion pounds built up. Is this
one of the things that the Department cannot manage? Is it too
difficult? It is one of the core issues?
Mr Normington: It is one of the
core issues. I think we are trying to ensure that schools . .
. It is a highly devolved system. There are 25,000 budget holders
out there. We are trying to ensure, with a lot of support, that
they get better and better at managing that budget. I think if
we want them to be confident about managing those budgets and
not having large reserves built up, we have to give them more
certainty and stability in those budgets so that they have confidence
to spend the money, so they do not fear that next year it is going
to be a problem. We have admitted that we got it wrong last year,
and we were taken to task in your Committee's own report for it,
so we are putting our hands up and saying we got it wrong, but
other people in the system got it wrong too. I think that our
responsibility is to provide a stable framework. If we could move
to a three-year budget for schools, and that is a big "if",
but if we could do that and give them that certainty, I think
I could say to a school, "Why have you got a reserve built
up? What is your three-year plan for making sure you are using
those resources effectively?" If you are doing it on year
to year basis you will always feel on the edge, and I think many
schools do feel that.
Q33 Valerie Davey: If I can follow straight
on from that: it has taken a good while to build up the confidence
of heads that there is going to be a year on year increase in
school budgets; it is not going to be cut back suddenly?
Mr Normington: Yes.
Q34 Valerie Davey: Having established
that, however, if we are going to project forward, although the
budgets will be increased, they will not be increased at perhaps
the same percentage in future years. Is that dialogue being entered
into with school head teachers?
Mr Normington: We are having a
dialogue with representatives of all those involved in funding,
including local authorities, about 2005-06. We have not yet talked
about 2006-07, 2007-08, partly because the Government has not
yet taken any decisions about the system it is going to use for
providing security to schools in schools funding at that point,
and partly because it is related to the spending review. One thing
we learnt from our problems last year was that we needed to be
talking much more to school representatives of head teachers and
local authorities about the details of this. That is what your
report said and that is what we have been doing, but it is not
yet about 2006-07 and 2007-08.
Q35 Valerie Davey: So is that core funding,
that absolute basic funding which we are talking about, the totality
of budgets and LEA budgets, of course, with the additional local
factors there, but I think I would have been a bit concerned if
I had read yesterday's article in The Guardian about the
complete taking out of the Standards and Effectiveness Unit. I
know they have been anticipating that, but how did they know that
those additional funds for very special projects were going to
go completely?
Mr Normington: No, it is really
important . . . This headline: "The Standards and Effectiveness
Unit is going", needs some explanation. This is simply a
re-organisation in the Department. There will continue to be a
unit focused on primary and secondary standards, which is the
core job of the Standards and Effectiveness Unit. The standards
fund, which has been administered by that unit and others, will
be retained. I think it is about £2.9 billion at the moment,
and it will be retained. In fact, one of the things we had to
do last year was to stop the plan to move more of the standards
fund into the local authority settlement in order to stabilise
funding, so that is still retained, but over time we need to move
to fewer and fewer school budgets so that the money is not tied
to lots of small things. We are trying to work to a position where
there will be, I guess, a local authority settlement, and central
funding comes in the smallest number of streams with an emphasis
on the outcomes you want from that and not on the processes and
plans you need to put in place to achieve it.
Q36 Valerie Davey: I am sure head teachers
will be delighted to hear the last part of your answer—
Mr Normington: I hope so.
Q37 Valerie Davey: —that we are
not going to be bidding, bidding, bidding; but if I had gone to
a head teacher yesterday with this article, would they have been
able to explain that, or would they have been as alarmed as I
was?
Mr Normington: I do not know whether
they would . . . I hope they would not have been alarmed. I do
not suppose so many of them read it, but that article is about
what we are doing to the Department, it is not about the reduction
in funding streams. Part of the reform of the Department is that
we do not represent as much of an overhead and burden on the system
and that the system is given more freedom to achieve its outcomes.
I think they will get that from that message, from that article,
and I hope they will be very pleased with it. I think the Secondary
Heads Association's General Secretary, in a gentle way, says,
"That looks like good news for us", but they know it
is coming because it is something we have been talking with them
about.
Q38 Chairman: When you reflect on what
happened the year before last, you said that you got it wrong.
In a sense it was worse than that, was it not, because you blamed
other people, you blamed local authorities, and that was very
damaging. Your job, in a sense, is maintaining a good relationship
with the departments that deliver education in this country, and
it did not do anyone any good when you in a sense falsely claimed
that it was all their fault, not yours. Was there ever any kind
of attempt, not to say sorry, but to apologise in some form, and
what are you doing about building relationships that were very
damaged at that time?
Mr Normington: We have said sorry.
Charles Clarke has said sorry, and we have said sorry to them
and I have said it from public platforms. I know that this sounds
as if it is trading words, but we did not think we were setting
out to blame local authorities in that way. We were trying to
make a point, which is true, which is that we share responsibility
and we need everybody in the system to be working to make sure
that the local funding system works, and we were trying to get
local authorities to share that. They certainly interpreted it
as us trying to shift the blame. It does not matter what we think,
that is what they thought, and that damaged relations, it damaged
relations with secondary heads. What is so frustrating about this,
as you know, is that at this point we had made lots of progress
in building a shared sense of endeavour with secondary head teachers.
We had probably got as far as I thought it was possible to get
at that point and it was all set back by the school funding problems
and we had to start rebuilding those relationships.
Q39 Chairman: It is a strange situation.
Here is a government that is pouring money into education and
you manage, in the midst of these days of plenty, to get it wrong
in terms of your relationship and also get it wrong in terms of
the funding. The fact is you have put in a report, you said you
have put a sticking plaster over it for a couple of years, but
you may—and this is coming back to my reference to "Groundhog
Day"—you may be in exactly the same position very shortly,
because according to our inquiry you have not sorted the basic
problem. That is true, is it not? You have put a sticking plaster
over it for two years?
Mr Normington: It is an interim
solution, and until we get certainty about what the long-term
position is, it will feel like an interim solution. Two things
are better though: one is that we know quite a lot more than we
did about the detailed position, and, secondly, you could continue
with this arrangement that we have. The arrangement we have put
in place which guarantees an increase to every school is a way
of providing security to schools, and you could roll that forward—you
could do—but until we are clear what the long-term position
is, there will be a feeling that this is a two-year sticking plaster.
It is a bit better than a sticking plaster, because it has stabilised
the position and ensured that schools are getting an increase
and that is in a sense the answer to the question. There is a
lot of money going into the system. This approach we have adopted
ensures that they do know that and they do see it, albeit that
they have lots of demands to put against that.
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