Examination of Witnesses (Questions 80-99)
MR DAVID
BELL AND
MR JONATHAN
THOMPSON
14 JUNE 2006
Q80 Paul Holmes: With primary schools
one of the greatest impacts for the benefit of school pupils and
teachers has been that primary school teachers who never had non-contact
time in the past now do, but that is not something you can off-set
against supply teacher costs or exam invigilation costs. For most
primary schools that has been an extra cost. They have had to
use school budget money to bring in classroom assistants and supervisors.
The class teacher is getting half a day a week off but they are
not using their expertise to teach that class. That might be an
educational efficiency for the teacher and the pupils in the long
run, but equally those pupils are missing half a day of lessons
with a qualified teacher. I have seen good examples in Chesterfield,
for example, where they have a sports graduate to do the sport
who can do it far better than a generalist primary school teacher.
So there can be benefits but it is certainly a financial cost
because they are having to pay extra people who have never been
paid before in order to free up half a day a week for every teacher
for non-contact time. How do you count that as a cash gain?
Mr Thompson: Just to make sure
we are clear, we did not score the freeing up primary teachers'
non-contact time as an efficiency in the efficiency review although
I do understand the point you are making. We did not score that
as an efficiency in the review that we are talking about.
Q81 Paul Holmes: How do we as a select
committee or the National Audit Office or anybody else judge your
figures on the efficiency gains if you aggregate it all up and
you cannot give us the exact figures? Can you give us figures
now or in a letter to the Committee?
Mr Bell: I can provide you, if
you wish, with the data requirements that are against each of
the key strands of the efficiency review. We have a set of measurements
that we have to be able to demonstrate that we have generated
the efficiency and those are subject to audit. What I might suggest,
rather than providing you with a complete set, is that I provide
you with a couple of examples. I think that might be more sensible
to do that. We could certainly provide you with the names and
examples but to some extent you have some examples in your own
mind of how this has actually been done. Perhaps if we provided
you with a bit of a briefing note on the approach to measurement
efficiency and sent you one or two very specific examples under
each of the headings that would be helpful. [3]
Q82 Paul Holmes: You have to make £4.3
billion efficiency savings over three years and you are one year
down the track. According to the departmental report on page 96
you say you have made £875 million so far although you can
only report on £578 million. I am not quite sure what the
difference there is. Is it £578 or £875?
Mr Bell: We always knew that we
had a very, very steep trajectory because the big savings would
be kicking in, but the data to generate those efficiency savings
in a sense was a year behind because you have to wait until the
end of the academic year. Perhaps Jon can give an update.
Mr Thompson: The answer to your
question about page 96 is that under the OGC's definition of how
you can score an efficiency we can only score the 578 number but
we know that some of those will undoubtedly grow. Although we
know we can score 578 we know this will lead to the higher number,
the 875. That is essentially the difference. That 578 will lead
to 875; at this point we can only score the 578 number.
Q83 Paul Holmes: Would the hard-headed
statistician ask if that is an aspiration that is going to lead
to this or is it a commitment or a priority.
Mr Bell: I can assure you that
my feet are held to the fire on this one. Jon and I were with
the Head of the Office of Government Commerce where there was
a very detailed scrutiny through our numbers and through our actions
that we are taking to be able to demonstrate that. At the departmental
level, since taking over as permanent secretary, I have set up
and chair an efficiency and reform board within the Department.
I think it is really important that I take a personal part and
really drive the questions in the Department and out to the system,
at the same time as the head of OGC is holding me to account so
we are getting this very substantial priority within the Department.
Q84 Paul Holmes: Would the higher
figure of £875 million mean that in one year, in 33% of the
time, you have made 20% of the efficiency saving and you are confident
that in the final two years you will make 80% of the efficiency
savings.
Mr Bell: With that question I
think you might have been there at the meeting with the OGC because
that is precisely what they have been asking. Our view all along
has been that the big savings will kick in as we have expected
them to against our trajectory. So yes, we are confident that
we will meet the overall target. Do not forget this has to go
to 2008 to see this through, but we are confident, yes.
Chairman: We will move on now to education
expenditure and the CSR.
Q85 Stephen Williams: I want to turn
to what the Department might be expecting out of the comprehensive
spending review. The Chairman, in his introductory questions,
referred to the relative status of education expenditure as part
of a government priority. Currently your Department has a 5.7%
share of GDP at 2005-06 figures as compared to Health's 7.3%;
that is a 1.6% gap, compared to 1997 of 0.7%. Are you lobbying
internally for that gap to be stable or are you resigned to the
fact that it will continue to widen or do you actually want to
narrow it?
Mr Bell: I am always afraid of
being accused of giving bland answers but I think it helps if
I just explain the process to you. We are very much in the early
stages of the comprehensive spending review. All the Departments
are carrying out a range of work. We are looking at a funding
pressure, we are looking at elements of our expenditure, we are
trying to project ahead. It really is at that stage. As the process
moves on obviously the Ministers in the Department have to consider
what we can identify as their key priority and that will form
the conversation between ministers and officials in the Department
and in the Treasury and ultimately CSR decisions are made. I really
cannot say much more than that because we are still at the early
stages of what has gone in and what discussions we have been having
with the Treasury.
Q86 Stephen Williams: Over the period
of the Labour Government annual increases in education have been
around about 4.6%. The Institute of Fiscal Studies have calculated,
based on information that is currently in the public domain, that
future increases—ie after the comprehensive spending review—may
be 3.4%, that is 1.2% less than what the Department has been used
to over the last nine years. Are you planning on a similar figure?
Mr Bell: I think it is true to
say that we recognise that the context might be tougher than it
has been previously and therefore that requires us to look very
carefully at what priorities we have. I can assure you we are
looking at all options at the moment. That is a proper part of
the exercise; I hope we would have been doing that even if it
had not been for the comprehensive spending review. I think we
do accept that the situation might be different in the future
and we really have to drill down hard on priorities and certainly
ministers will have to have that kind of conversation in due course
when they speak to their Treasury counterparts.
Q87 Stephen Williams: You cannot
be sure where your position is within overall government expenditure
relative to other Departments. You are effectively accepting that
there is going to be a deceleration in expenditure.
Mr Bell: You would expect me to
be planning for all sorts of options under the comprehensive spending
review. We have to plan for a context where the situation might
not be as good as it has been in previous years and that is what
we are doing. I think you would be very surprised if I gave you
any other answer. We have to plan for all sorts of options under
the comprehensive spending review.
Q88 Stephen Williams: Can you look
at the mix of expenditure on different sectors within the Department.
On average of the last five years—from 2001 to the current
year just ended—Department expenditure has gone up by 62%
but within that there are huge variations. Your own Department's
funding direct to schools has gone up by 123% whereas right at
the other end of the scale the funding for higher education has
gone up by just 15%. Is that a gap that you expect to be perpetuated
in future?
Mr Bell: Do not forget that we
are moving into a new era when it comes to funding arrangements
in higher education and I think some of those big questions about
the future funding of higher education were precisely what was
debated a couple of years ago in this building, about what needs
to be done to provide universities with the funding needed for
the future. You are right, of course, to highlight the very substantial
increases in schools expenditure—not just in the current
expenditure but obviously capital expenditure—but that has
been seen by the Government as an essential priority but equally
I could point right across a whole range of other areas where
increases in funding have been made. You are right, the schools
expenditure has grown very substantially since 1997.
Stephen Williams: That is the schools
expenditure direct by the Department. Schools expenditure by LAs
has gone up by 13% so the figure there is not so dramatic.
Q89 Chairman: Is that a comment?
The permanent secretary might want to come back on that?
Mr Bell: No, that is fine.
Q90 Chairman: The 13% is right, is
it, via LAs?
Mr Bell: Sorry, I think I missed
the point there.
Q91 Stephen Williams: The dramatic
increase in schools expenditure is actually direct funding from
the Department, £4.9 billion in 2001 to just under £11
billion in 2005-06. That is 123%. The funding via local government
has only gone up by 13%. Yes, there has been an increase in school
funding but it is actually coming directly from the Department
according to the table we have. What I am actually pursuing is
the expenditure on higher education relative to other sectors
including FE which has done relatively well compared to higher
education. Are you actually saying that in the future you are
not expecting government funding for higher education and to have
significant increases because you are expecting the increase on
HE to come from tuition fees or even from the universities' own
income?
Mr Bell: I cannot commit beyond
what is within the spending review period but obviously part of
the discussion to date around the new variable fees was to provide
support to higher education institutions to do what they do and
do better given the pressures on higher education. I certainly
cannot comment beyond the spending review.
Q92 Stephen Williams: Moving to value
for money, Rob Wilson has alluded to some of the areas where he
felt perhaps the expenditure had not got the return that the Department
would have hoped for. This Committee in an earlier session heard
that £500 million had been spent on the literacy programme
but some of the witnesses suggested that had not led to a discernable
increase in reading and writing standards. Do you think, given
your previous experience in Ofsted, that the huge amount of money
that the Government has put into certain areas has actually got
a significant educational return?
Mr Bell: Yes, is the answer to
that. We know that throughout the period from 1997 to now attainment
has been rising at every key stage. On your very specific point
about literacy and numeracy, it is worth reminding ourselves that
in 1997 just over 55% of students achieved the appropriate levels
and now that figure is just under 80%. That seems to be a very
real piece of evidence that attainment has improved. We know that
teaching quality has improved and if we see a direct connection
between teaching quality and what goes on in the classroom, that
is a very significant measure of improvement. We know from research
from Ofsted that the new teachers coming out are probably about
the best trained we have ever had so I do think there is very
substantial evidence of improvement. If you get into the more
technical questions—which I know the Committee has been
looking at—about productivity, then we know that that is
a more tricky area. There is no doubt about that; that is a tricky
area. You will also be aware I am sure that the Office of National
Statistics is about to embark on a consultation exercise to try
to dig deeper into the question of productivity in the education
system. There have been very real and measurable gains in our
education system over the past few years and I do not think we
should under estimate them.
Q93 Stephen Williams: In a letter
from the National Statistician to you yesterday, Mr Grice, suggested
that one of the ways that the Department could improve its productivity
measurements is to use the OECD's programme for international
students assessment. Is that something which the Department might
look into?
Mr Bell: We have used it previously.
We use those international benchmarks and in fact on the basis
of some of those international benchmarks we have seen very substantial
improvement. I would not want to present the argument that somehow
those international comparisons put us in a perfect position on
every measure. Some issues they do throw up concerns, for example,
we have fewer students in education and training at the age of
17 than many of our international competitors. We have to be aware
of how we use those but there is a pretty positive picture to
tell on the international comparison side. It is important that
you do use international data to try to judge how well the system
is doing. Clearly we are working, as you would expect, very closely
with the ONS and thinking through this productivity question.
I think it is terribly important, as I am sure it is to everyone
here.
Q94 Stephen Williams: The Department
has asked the Treasury to undertake a review of the funding of
SEN; has that review been completed yet?
Mr Thompson: There is a joint
review with the Treasury which forms part of the landscape of
the spending review and will report through the spending review
either in November this year or the following March.
Q95 Stephen Williams: As I understand
it, the information we have been given is that it is a base line
funding review. Are there any other strands of educational expenditure
being reviewed from scratch or is it just SEN that is being reviewed
in that way at the moment.
Mr Bell: There are other reviews
as part of the spending review process; we will look at other
areas of expenditure. For example we have been looking at schools
for the current expenditure; we have been looking at 14-19 expenditure;
we have been looking at children with complex needs. We have been
undertaking a very detailed analysis of what is being spent, what
we have got for that and what the funding pressures are.
Q96 Jeff Ennis: I have a supplementary
question in term of the future spending review. Is there not a
danger that if you do realise £4.3 billion of efficiency
savings that the Treasury will come back and say that you do not
need any extra money in the next review round; you have actually
achieved all these efficiency savings you can carry on doing so.
Mr Bell: I cannot predict what
the Treasury will say. The most serious point about this is that
it is really important to be able to demonstrate that this additional
investment in education is not only generating improvement but
actually has the capacity to generate further improvement because
people are really carefully using what it is they have been given.
I hope it is a powerful case to make for investment, that investment
is being used sensibly and wisely.
Chairman: I want to move to higher education
now. Gordon, would you like to start?
Q97 Mr Marsden: Can I ask you what
your view is about the pay settlement which has been agreed for
the higher education sector?
Mr Bell: It is not for the Government
or the Department, as you know, to comment on that. That has been
a debate between the employers and the trade unions. It seems
on the face of it to be a good settlement and hopefully that will
now be accepted on the basis of putting it to the members and
unions concerned. This has really been a discussion and debate
between the employers and the trade unions.
Q98 Mr Marsden: What this dispute
has thrown up into sharp relief are many of the issues that this
Select Committee and its predecessors have been banging on about
for years, particularly the historic low levels of pay in the
sector and particularly in key subject areas where graduates could
go off into other employment rather than teaching or lecturing
in higher education, earning four, five, six times as much in
some cases. Are you concerned not just about the actual settlement
but about the continuing underlying implication in that, not least
in terms of the targets that the Department has been set both
by the Prime Minister and the Chancellor competing with other
world class universities as part of the global economy.
Mr Bell: I have spent a lot of
time since starting this job and talking to vice chancellors across
a wide range of universities to try to get a sense of all those
issues. We are certainly not complacent about the supply of staff
and the supply of high quality staff. I hope that the funding
settlement that we hope will be agreed is going to go some way
towards addressing some of the concerns that have been expressed.
Equally vice chancellors have said to me that there are a lot
of areas where they are offering good career prospects for academics
and in some areas are not short. In other areas the competition
for talent is tougher; there is absolutely no argument about that.
I hope that what we have got under the settlement—which
we hope will be an agreed settlement—will assist us in providing
the right number of the right quality. I am not complacent about
it but I am not suggesting that we have a major crises in terms
of recruitment to universities in academic staff but I will keep
in mind particular pinch points.
Q99 Mr Marsden: That is exactly what
I am suggesting in particular areas, not least given the demographic
implications. There are a very large number of long serving academics
who are about to retire or have already retired. You do not want
to be bland and I do not want to be a Stalinist, but is there
not more to be said for the Department looking much more sharply
with HEFCE about specific funding and specific focus on those
pinch points. One can think of science, economics and mathematics
as particular examples.
Mr Bell: Obviously we do, with
HEFCE, look at the labour market as it were, in higher education.
We know what the issues are and the points in the subjects you
have described. I think we have to be very clear, however, that
the particular decisions that universities make in terms of numbers
of staff they appoint in particular subjects are decisions for
the universities and the decisions about funding methodology and
so on are with HEFCE, the funding agency. We do not in any sense
stand back from this and say that we are not interested. We keep
looking very carefully at it.
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