Examination of Witness (Questions 180-199)
7 JULY 2004
RT HON
CHARLES CLARKE
MP
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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