Select Committee on Education and Skills Minutes of Evidence

Examination of Witness (Questions 180-199)

7 JULY 2004


  Q180 Chairman: But the low morale period produced the best result in terms of value for money. John Major's years, only a 3.4 increase in expenditure, gave a 4.4 increase in grades?

  Mr Clarke: I was taking that as half being the Conservative period and half the New Labour Government coming in, but I may be wrong on what you are saying. It is difficult to have this debate without the full figures we are talking about. I think the general point I want to make, Chairman, is that money is important, but those who say that money is the solution I do not agree with at the end of the day. Money is an important part of the solution, but it is not the only part of the solution; and there is evidence that money not being spent in the best possible way, which we try and deal with in various respects and we try and improve where we are, which is why we signed up to the Gershwin Proposals on Efficiency, and so on, to try and get the best value out of our money, but the single most important factor in delivering our result is the morale, engagement, capacity of all the people who work in education who are the vast majority of the expenditure that we do. That is why we have to focus on that in particular.

  Q181 Mr Gibb: Secretary of State, I want to follow on from the Chairman's questioning, because the issue here is: is this expenditure properly focused on improving attainment? And I was interested in your answers to his questions about expenditure: "It is a necessary but not a sufficient condition." I totally agree with that—you do need expenditure to pay the proper salaries to teachers so you get the quality of teaching that we want in our schools and continue to have in our schools—but you also said that you have schools with broadly similar social intakes, free school meals, etcetera, that are getting widely differing results. My question is: how are you focusing that money to ensure that those schools that are not delivering these results do?

  Mr Clarke: Two things. Firstly, money and, secondly, management focus, if I can put it like that. As far as the money is concerned, there is a whole string of funding streams that we established, Excellence in Cities being the well-known one, the Mutual Incentive Grant, the behaviour money, which is focusing on some of the parts of the country and the types of schools where there have historically been the lowest results. I was very pleased, for example with the GCSEs last year, to see that schools in those areas were doing better that the average and indicating some success simply looking at the money aspect of what has gone on. Secondly, in both our Key Stage 2 and Key Stage 3 strategies, we are focusing directly and explicitly on the particular schools which are performing at less than the level they ought to be and less than the medium for their particular free school meal bands. So we are identifying in a particular LEA which are the schools which are performing less well than they ought to be and providing training and management support to enable them to address the steps they have to take to try and move it forward. So we do try and target in both those ways. One is a slightly blunt instrument; the other is much more focused on the areas where we are not getting the best "bets for our bucks", if I can put it like that, in terms of educational output.

  Q182 Mr Gibb: In the Labour Manifesto in 1987 Labour said, the Government said, they were going to concentrate less on structural changes and much more on obtaining within schools, and things like setting was one of those issues. Do you think you have made improvements in the amount of setting in secondary schools?

  Mr Clarke: I do not know what the figures are at the moment. I would be pretty surprised if there was not more setting now than there was then.

  Q183 Mr Gibb: There is slightly more.

  Mr Clarke: We have tried, in a variety of ways, to encourage those kinds of approaches. The house system is something that people have talked about as well from that point of view. So there are areas there, but at the end of the day this is a matter for the professionalism of teachers. The question for us is how we encourage and develop the professionalism of teachers in each of those areas, and new institutions like the National College of School Leadership were particularly defined and created in order to try and promote those types of approaches in a much more creative way. I was talking yesterday, by chance, with somebody I met at the Lord Chancellor's party, a bursar of a small primary school, who talked about the course she had been on at the National College of School Leadership and her ability to transform the finances of this small school and get more resource and more value for money. She said she had saved £28,000 in the small school which she then could spend on more positive things. That is a small example, an anecdotal case of course, of the way that institution, the National College of School Leadership, had instantly improved performance and value for money.

  Q184 Mr Gibb: I do not want to overdose on this issue: I will just ask one more question on the setting issue. You did say in the Manifesto—you said this was an issue for the professionalism of teachers, but I wonder why it was in the Labour Manifesto to do something about setting, and 60% of lessons now are still in mixed ability classes?

  Mr Clarke: The reason why we put it in the Manifesto is that we stated that is what we thought ought to happen. We then asked ourselves the question, having stated it, do we try and do anything to encourage that? And so we do. We set up organisations like the National College I mentioned, like the Key Stage 3 strategy—a set of different initiatives which are interventionist, and I make no apology for that, because it was necessary to drive things forward in that way and they made a positive different. Do I think we were wrong in what we did? No, I do not. I think it was the right thing to do. Do I think we should pass a law and say all schools shall be set in ways A, B and C? I do not think that either. I do not think that would be an intelligent way to go, but I think it is perfectly reasonable for a political party to set out to the electorate how it wants to see improvement in the areas of key public services.

  Q185 Mr Gibb: You mentioned Key Stage 2. I wonder whether we are getting value for money in Key Stage 2 as well in recent years. There is no doubt the literacy strategy did improve reading in the Early Years, but then it seems to have stagnated from 2000 onwards with 75% of 11 year-olds achieving Level 4. Is the money going into the right areas in primary schools as well? Why have we got this plateau of 75%?

  Mr Clarke: We think it is going into the right areas, but you are quite right, the flat-lining in the main indicators is perhaps my single greatest area of concern across the whole of the policy of the department, and we have worked very hard to try and improve it. There are some technical explanations for that, but, even so, that does not reduce the power of your point in any respect whatsoever. We have worked very hard in precisely the way I have described to target the lower performance schools in their particular area and I hope we will see improvements. The only thing to say is we made a significant improvement right away and we are now dealing with groups of children where the issues are more difficult to resolve than was the case right at the beginning. There was a serious low attainment point and large numbers of children throughout the country were not getting to those basic levels then who, with a relatively small adjustment, were able to do that, and so literacy and numeracy made that change. We are now moving into groups of children where that is less easy to achieve and so it will be a long and difficult process to be able to achieve what we have to do, but I do not think that that should move us towards a cynical approach that says there is nothing we can do about this, we just leave it to the luck of the gods, because the responsibility we have to the children who are not easily performing at KS 2 level is fundamental, and many of our key problems in older people now with literacy and innumeracy in large numbers is due to failures in the past, and I simply have an absolute responsibility to try and get this right. We are ready to say maybe we have done it wrong in area A, B or C and listen to what people have to say to take it forward, but what I am not prepared to concede is that we should not somehow be trying to press and drive this forward in the strongest way that we can. There is plenty of room, as I say, for not trying an argument about whether we are doing in it in the right way, and I am happy to engage in that discussion, but the argument that somehow we should not have targets or we should not be involved in this approach, just let's leave it to whatever to come round, I cannot identify with.

  Q186 Mr Gibb: Where do you stand on the phonics on language to date?

  Mr Clarke: I have had interest both in my constituency in Norwich and a number of people are arguing in this. I have listened to the presentations that are made. I have put all those who have made representations to me in contact with the people in our department and elsewhere who are dealing with these matters, and there is a debate that is taking place. I do not think it is appropriate for me as Secretary of State to say that this is the precise teaching method that should be used, and, to be candid, I am not at all sure that I consider myself professionally qualified to say this is the right way that it should happen. That is why I said what I said earlier. I welcomed genuine discussion about what was the best way to deal with it, but the professionals at the end of the day have to resolve the best way of making progress.

  Q187 Mr Gibb: Coming back to expenditure, the future figures for expenditure do not look as high as the last few years: 3.8% in 6/7, 3.5% in 7/8. Will this mean that you will not have the necessary expenditure to continue raising standards?

  Mr Clarke: I think two things. We certainly will have the necessary expenditure. We have got money there. There is an increase in real terms, as you have just indicated, coming through, and that is what is needed and what is necessary, but—it is the point that I made to the Chairman—if I were relying on expenditure alone, I would say we will make relatively slow progress. So I have to rely on more than just expenditure. I have to rely on improving professional standards, reform and all those areas that carry through, and that is precisely what we try and do. The second point is that getting value for money out of that expenditure is very important and making sure the money is well spent; and there have been many representations to us that we ought to be trying to give heads or governors of schools a much clearer sight of how they can use their spending to improve results. That is why the Prime Minister announced at the National Association of Head Teachers Conference at Easter that we were committed to three-year budgets for schools at the same time going with the school year, because we felt, on the basis of a large number of points made to us, that using that money in a very positive way and being able to plan ahead as to what you achieve will be a major part of the change. So I think the money that has been allocated is certainly sufficient for what we have to do, but it is a question of improving where we use it.

  Q188 Mr Gibb: Finally, would it be better value to fund all schools directly rather than through local education authorities?

  Mr Clarke: I do not think so myself. I think the idea of trying to fund 26,000 schools by a National Funding Agency is difficult to see how that would work well. I think local authorities have a very important role to play, both in strategic leadership and in allocating resources, and many of the newspaper reports recently about what we are thinking about is wide of the mark. We want to give a very strong role to local authorities in what they do and carry it through because the idea that the Department for Education and Skills could press a button here and sort it out there I think is the wrong view. So I think local authorities should continue to be the vehicle through which education is funded in that way. What I do think is that we want to achieve certainty in the funding regimes, which is why we have had the passporting regimes thus far; and I am in favour of strengthening that certainty that can be offered by ensuring that money that is intended for schools does go to schools and then to strengthen it even further by establishing a three-year budget regime for each school so that they can use the money in the way you have described; and that does require, or imply, I should say, some changes in the balance of the relationship. Some people have argued, as you imply, I do not know if it is the Conservative position, that there should be a National Funding Agency for all schools. I do not myself think that is a feasible way of doing it in an effective way. I think local government should be and should continue to be the system by which schools are funded.

  Q189 Chairman: When we did our inquiry into school funding some time ago we suggested that your response had been—we criticised you because you had tried to pass the buck on to local authorities. We thought, very clearly, it was not local authorities, and the evidence that has come in I think strongly suggests "It was not their fault, Guv", it was your fault as a department. We also suggested that your response had been a bit of a sticking plaster job that would last perhaps for a year or two but the same problems would come back to haunt you. Are you satisfied you have now got it right?

  Mr Clarke: Half. I did not accept your criticism at the time and I do not accept it now.

  Q190 Chairman: Which one?

  Mr Clarke: The one that, "It was all my fault, Guv".

  Q191 Chairman: What about the first part that you did try and blame local authorities, did you not?

  Mr Clarke: Not really. I said—I can't recall the formal—I will send you the text, if you are interested, but what I said at the time was that the funding of schools was a shared responsibility between local government and the DfES and that both bore responsibility. That was interpreted in some sources as me blaming local government, which I did not think was a fair thing to say.

  Q192 Chairman: The Deputy Prime Minister seemed to take that view, did he not?

  Mr Clarke: The Deputy Prime Minister is a very wise man! I am glad to say we have a full and frank conversation on many issues at many times, but, taking your question seriously, I think it was extreme to say that it was a sticking plaster job. The fact is we have achieved a situation where funding for this year (2004-05) is, broadly speaking, stable, that local government has worked well with local schools in their areas to eliminate deficits and carry them through; and the funding that we have given for that has been used in general very constructively and we have got to a situation where people have felt for 2004-05 we are on a reasonably stable basis. We then have to go to 2005-06, where precisely the same issues come around, as to whether we can passport effectively how we carry it through and what kind of minimum guarantee we establish and take it forward, and we will see how that goes. I am confident when we make the announcement about 2005-06 we will be able to carry it through again based on that partnership between the Department and local government. You are quite right; I think it is quite a ramshackle system in the way that it operates and does not give schools the certainty that they want about where they are going, which is why the Prime Minister announced that we want to move to a change, as I say, of three-year budgets which are based on the school year. I intend that we will announce proposals to get to that state of affairs, so that in place of the—I do not accept the word "sticking plaster", but—

  Q193 Chairman: You said "ramshackle". They are pretty close, are they not?

  Mr Clarke: Okay. You are the engineer more than I, but let's just say ramshackle is the word I used and sticking plaster is the word you used. Sticking plaster implies first-aid, ramshackle implies it is a structural problem that is there in the system, and I do not know anybody who, in defence of the current systems of local government finance, is perfect and it certainly has led to issues for schools, which is why we want to make proposals to change that in the way that I have implied and as set out by the Prime Minister over Easter, and we will make proposals in that direction to try and give schools the certainty, first, that money will come through, money intended for education does come through to education, and, secondly, to ensure that each school has its own budget on a three-years basis where it can plan and develop and see where it is going, and that is the essence of where we are. Some interpret that as a proposal to take local authorities out of education. That is not the case. We believe that local authorities have a very major role in education both in relation to the strategic role and in relation to distribution locally and in relation to school improvement, and, most important of all, in the development of the children's trust approach, which is central to everything that we are doing; and I will set that out very clearly when I make a statement on that shortly.

  Chairman: I want to stay with school funding for a second and bring Jeff Ennis in, and then I will go back to the spending budgets with David Chaytor.

  Q194 Jeff Ennis: Thank you, Chairman. Charles, in terms of the schools funding issue, David Normington in recent evidence to us indicated that obviously a number of schools have been suffering from a deficit budget situation, and he quoted that the latest statistics from March 2003, before the funding problems occurred, showed that we had approximately 2,500 schools nationally in a deficit situation. Has that situation stabilised now since March 2003? Has it got better or worse?

  Mr Clarke: It has improved significantly, because what we did was we provided a fund to all local education authorities which indicated there were schools in the position that you described, Mr Ennis, and asked them to discuss with those particular schools a funding package which would bring them out of deficit either in one year or two years to get them to a state of affairs where that issue could be addressed. All local education authorities have now done that, and they have addressed the situation in their area and have agreed plans with the schools in their locality to bring them out of deficit. In my own county, Norfolk, for example, the county council made an announcement just a couple of weeks ago about what the exact amounts of money were for each school to take them out of that situation; and the highest amount of money given to an individual school was nearly three-quarters of a million pounds, which is a very significant amount of money to deal with the situation and take it out, and certainly my county council has addressed the question with the money we provided very constructively with local schools. I believe that is happening throughout the country with every LEA, and is therefore significant in reducing that March 2003 figure which you set out. That is not to say there will not still be problems, but I think we have been able to address what has been a systemic problem, in some cases acute in some schools, in a very strong way.

  Q195 Jeff Ennis: We have already spoken about the Government plans for increased expenditure up to 2005-06. Will schools funding be allocated after that according to the Formula Spending Share, or will you be looking for some other mechanism for distributing?

  Mr Clarke: Principally by the Formula Spending Share the idea is to get to a state of affairs where the formulae reflect what the overall position . . . I may have misunderstood the question. Are you talking about the allocation to individual schools or the allocation to local education authorities?

  Q196 Jeff Ennis: Both actually.

  Mr Clarke: Let me take them separately. Let me deal with the allocation to local education authorities. We are hoping to bring together the Formula Spending Share allocation for LEAs on the various formulae we know together with our standards fund, which are more targeted, into one stream of funding where everybody knows where they are, rather than having separate bidding streams; and so it will strongly reflect the Formula Spending Share but it will not only be about the Formula Spending Share because of the targeting, which I was referring to in my answer to Mr Gibb earlier on. Secondly, when you get down to the individual schools the local authority will have its own local formula for distribution locally and will be constrained in that by some of the requirements we place about funding schools with particular difficulties and particular issues. So that will not be a pure formula locally, it will reflect the priorities which national government is setting in those areas; so both those areas will have a combination of a formula plus a targeted funding.

  Q197 Jeff Ennis: We have already referred to the fact that over the next three years the actual real in terms increase in schools funding is going to drop quite drastically by 6% in 2005-06 to 3.5% in 2007-08 and Nick Gibb asked a question on this; but in my perception, will that be perceived, do you think, as a cut when it comes to the heads allocating the budget for those future years, and do you anticipate that there will be further problems with schools funding because of this, and what advice will you be giving to schools to manage expectations on budgets?

  Mr Clarke: Firstly, I think it would be absolutely wrong to describe it as a cut. A cut is a minus figure in real terms, and if there were to be a cut in real terms that is a real issue of concern. The only areas where that could conceivably arise without minimum guarantees is in areas of falling rolls, and, even there, we have established a basic bottom line, even in those situations, to prevent cuts taking place. So anybody who described it as a cut, in my opinion, would be seeking to be deliberately misleading. Secondly, we have had unprecedented—I use that word advisedly—increases year on year in recent years in school funding. I have never expected that that would continue indefinitely at those levels, and I think anybody who did would be mistaken. Thirdly, I think there are serious issues implied in the last part of your question about the management of the resource and expectations, as you rightly say. I myself think that one of the key areas, an area, by the way, Chairman, for which I have taken responsibility because it was a mistake that was made, is in raising expectations about what the money—what the financial situation would be so that people somehow thought you could go on, and go on, and go on without facing up to that situation. I believe the financial management regimes that we have put in place since the issues last year mean that is far less likely and that schools will be able to manage their situation through, but I again come back to the point: if we are able to establish three-year budgets in the way that I have said, that will make it much easier for schools to know where they stand. At the moment they are not quite certain what is coming next year. They hear things. There is a contingency. "Maybe we should be prepared to lay off a teaching system to whatever it might be because we do not quite know what is coming through." Then a bit of transitional funding comes up." That's okay", so there we are. It is not a satisfactory way of proceeding, which is why we need to get on to the proper three-year budgeting arrangements that I was describing, and that is what we will do.

  Q198 Jeff Ennis: One final possibly wider question, Chairman, moving away from schools funding. The Department itself, Charles, has become notorious over recent years for quite large under-spends at the end of the yearly budget situation. There has obviously been a variety of reasons for that occurring in each of the different years. Are we going to be in a situation again this year where we have got a significant—

  Mr Clarke: I do not think so. I have been working very energetically to reduce the idea of under-spend. I am strongly of the view that money exists to be spent rather than to be under-spent, and I know that is the view of the Committee. There are perfectly good reasons why it arose at each juncture, and I understand those and I make no criticism in saying so, but the Department is working very hard indeed to ensure we are not in that position. I hope very much that we are not; in fact I would like to say I am confident that we will not be in a position of repeating that state of affairs.

  Q199 Mr Chaytor: Secretary of State, does the Department still believe in evidence-based policy making?

  Mr Clarke: Yes.

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