Examination of Witnesses (Questions 20
- 39)
WEDNESDAY 12 OCTOBER 2005
SIR DAVID
NORMINGTON, MR
STEPHEN KERSHAW
AND MR
STEPHEN CROWNE
Q20 Mr Evennett: I would like to
push Sir David on one point when we were talking about the media
and improving the position of standards and increasing funding,
but you did mention in your reply to the Chairman how it was not
just the media who said that things have not been improving, but
it has been employers and universities. They say that standards
of new recruits in English and maths have not improved and in
fact in some areas they have gone down. How do you answer that?
Sir David Normington: Well, they
do say that and, as an employer myself, I sometimes see that the
standards of English and maths are not good enough amongst those
coming into my employment. This is the half-empty/half-full thing.
Things have really improved, but I do not think it is yet good
enough. The focus that I was describing on what happens in the
11-19 phase includes a continuing and renewed focus on English
and maths because the standards are not yet good enough, but they
are improved.
Q21 Mr Evennett: But that is the
debate, is it not? Some people say they have not improved, that
they have gone down. Rather glibly you are saying that they have
improved, but we have evidence that they have gone down.
Sir David Normington: No, we have
evidence that they have improved and I am absolutely clear that
at every phase, at Key Stage 2, at Key Stage 3, 14-year-olds and
at GCSE, standards have improved and are improving. This year
we will see some of the best results at all those stages that
we have ever had. We are actually beginning to see the investment
in primary schools in English and maths coming through into GCSE
this year. That is really encouraging. You would expect to see
that, but it is not good enough yet, I accept that, and employers
are not seeing enough of it and there is a historic problem to
make up as well. I hear employers myself saying that, I hear it.
Q22 Mrs Dorries: Last time you were
here you were asked to prove, if you could, as a given that the
level of input and investment in education had actually improved.
Now, you seem to be saying today that the reason why the standard
is half full is because of that investment. Now, before you actually
said, "I would like to be able to prove a link. I would like
to be able to do that because I cannot". Actually on August
19, Lord Adonis said that the better results are the product of
the increased level of investment in education, so which way is
it? Is it that the results are better because of the increased
investment or what because you said not and Lord Adonis said it
is.
Sir David Normington: No, I did
not say not. I said I could not prove a direct link between investment
in one area and an outcome. I am absolutely certain that the investment
we have made in facilities and in teachers over this period and
actually focusing on those key stages, improving the materials,
improving the quality of the teaching, I am absolutely clear that
that is having its impact. What I cannot prove, and I still cannot
prove, is for a given level of investment you will get a given
level of output which is the conversation we were having at the
time. I cannot say to you that if we put £100 million in
there, we will get this amount of performance out, but I am absolutely
confident that the investment is producing the improvements partly
because of how you can trace the improvements to places where
we have put our effort.
Q23 Mr Chaytor: Sir David, you argue
that the theme of the next few years will be decentralisation
for schools, that your Department is nationalising the funding
system. Two weeks ago the Government took a decision to postpone
the re-evaluation of council tax on the grounds that it wanted
to wait for the outcome of Sir Michael Lyons' wide-ranging review
into the future of local government. If the Lyons Review argues
for much more decentralisation, including in terms of funding,
where does that leave your new nationalised funding system?
Sir David Normington: Well, of
course it is for the Government to decide how it reacts to a message
of that sort. I think it is possible to say that some things ought
to be ring-fenced and some things ought to be devolved. One effect
of course of taking school funding out of local authority and
local taxation is that for the other services, local taxation
is a bigger share of those other services which in a sense will
mean that in those services there will be more devolution. We
can use the term "nationalised", but what we have done
is ring-fenced the money. It is called the Dedicated Schools Grant
because we are saying that this is the money for schools. Yes,
it is a national amount of money, but two things: the local authority
will set the formula; and, secondly, there will be much more discretion
for schools to spend it as they wish with much less prescription
from us as to what they should spend it on because we are reducing,
and it is true, we have had lots of budgets. On top of the local
settlement, we have had lots of other budgets and we are reducing
all those. We hope to reduce them to a very small number, we are
in the process of doing that, and that will give schools much
more discretion and certainty over their budgets. Now, we can
call this a nationalisation, but we of course think it is more
devolution to the front line within that system.
Q24 Mr Chaytor: Would you have gone
down this line had there not been a degree of tabloid hysteria
after the introduction of the previous changes in 2003? Is this
simply a response to pressure brought by some schools and some
local authorities at that time?
Sir David Normington: We did not
need to do this in order to stabilise school funding. What we
did in the years after the problems we had with school funding
was to introduce the minimum funding guarantee. We did that within
the former system, the system which we are leaving, and that did
stabilise funding. We could have stopped there, so I do not accept
that the policy change we are now making was necessary because
of the problems we had. It was thought to be, as I have described,
an important way of stabilising and securing certainty about school
budgets.
Q25 Mr Chaytor: But the minimum funding
guarantee was necessary as a response to the problems that we
had.
Sir David Normington: Yes, because
it meant that basically every school was guaranteed that they
would have an uplift in their funding year on year and that is
what we introduced immediately afterwards.
Q26 Mr Chaytor: Could I just pursue
the minimum funding guarantee and ask what effect that has had
on the changes that were previously agreed to be brought in from
1 April 2003 along with the abolition of the earlier system?
Sir David Normington: Inevitably
to some extent they have damped the effect of the redistribution.
Q27 Mr Chaytor: Exactly to what extent
has it been damped? Has it not been sabotaged rather than damped?
Sir David Normington: I do not
know about sabotaged. Stephen Crowne is the absolute expert on
this.
Mr Crowne: When we introduced
the new formula which did redistribute money around the system,
we did that within the system of floors and ceilings to ensure
that the changes we are proposing were manageable. Basically the
pace at which you can go depends on how much resource is in the
system because any system of floors and ceilings is going to cost
you some money. In other words, if you have to protect the position
of those who would lose relatively, that will consume some resource.
There is no doubt that the minimum funding guarantee, as it were,
defined what our floor was going to be. In other words, you had
to ensure that every local authority had funds to meet the minimum
funding guarantee requirements, but I cannot answer the question
of how much that damped the system because it all depends on what
the overall envelope of resource looked like. I would say to you
that what the effect of the MFG was, was to make the changes in
the formula manageable over time. The judgment then is at what
level you set the minimum funding guarantee.
Q28 Mr Chaytor: But the abolition
of floors and ceilings and the replacement simply by a floor has
essentially stopped in its tracks the process of redistribution
which was agreed under the previous formula.
Mr Crowne: I do not think I would
go that far. I would say it has certainly extended the timescale.
If you have a higher floor, you are bound to take longer to get
to the new formula distribution. That would be the case if you
had a minimum funding guarantee or not if you set the floor at
a given level. I would argue that the purpose of the new minimum
funding guarantee is to give the required degree of stability
at an individual school level; it is not to stop the formula change
happening.
Q29 Mr Chaytor: So will the principles
of the formula established in the previous organisation still
be followed through, but over a longer period of time? Are we
still going to see a redistribution from those local authorities
essentially in the south-east who have benefited enormously for
the previous 15 years from the funding system to those local authorities
largely in the north who have been penalised under the previous
system? Are we still going to see this process of redistribution?
Mr Crowne: Ministers are currently
consulting about issues in this area. What we have said for the
Dedicated Schools Grant which comes in in 2006-07 is that every
local authority's grant will be based on their actual spend in
2005-06, and, as you will know, that varies around the formula
position quite markedly, and then we will guarantee for every
local authority a 5% per pupil uplift in each year and that is
to underpin the minimum funding guarantee. The question then is
what you do with what is left over and there is a substantial
chunk of money, maybe up to £½ billion in each year,
and what we are now consulting about is how that money should
be distributed. Clearly one of the options would be to use some
or all of that money to make progress towards the formula distribution,
but there are other options and indeed a number of local authorities
are very interested in other options. We are looking at the responses
now and no decisions have been made, but I am sure Ministers will
have in mind the possibility, the option of making progress towards
the formula distribution.
Sir David Normington: If I may
just add, if you look beyond the next two years there is a major
question about what the right formula is. Some of what we are
doing immediately needs to be about stability as we change the
system because we know that these big changes in the system are
the things that cause all the upset, as they did before, and we
have committed ourselves to having minimum funding levels in two
years, but then saying to ourselves in that period, and with others,
"Have we moved to a longer-term system?", and hopefully
not have such a dependence on minimum funding levels because they
do have the impact you are describing.
Q30 Mr Chaytor: So in 2009 there
is going to be no change in the system?
Sir David Normington: Well, I
do not think there is going to be any change in the overall system,
but I think it is an open question as to what the distribution
formula is at that point.
Q31 Mr Chaytor: But you would accept
that it would be a gross reversal of policy if the gap in the
minimum funding guarantee was to widen the differentials between
per pupil spend whereas the purpose of the previous changes in
2003 was to narrow the differentials?
Sir David Normington: Well, the
purpose of the previous one was really to ensure that the distribution
formula was based on a number of factors which included deprivation
and so on. There are all sorts of things in that formula. It is
always the case, you know, when you make a transition in local
authority funding that you put floors and ceilings in and you
damp the effect over a number of years, sometimes of a lot of
years. I think in police funding that was done partly because,
otherwise, you have very sharp cliff edges in funding and also
in 2003-04 the introduction of the new formula did bring about
quite a shift. I know about Bury because of course they put in
a memorandum to this Committee.
Q32 Mr Chaytor: I think it was the
third submission received by the Committee. The urgency of it
is significant.
Sir David Normington: I know about
that. The important thing just to say about Bury is that in 2003-04
it did, as a result of the new formula, get a significant shift
in its funding. I know people are not very happy about the level
they have got to, but it was a big shift and it has had, therefore,
over this period one of the biggest increases in funding of all
local authorities, partly reflecting some of the things that you
are continuing to say. The Bury spend per pupil is just below
the national average.
Q33 Mr Chaytor: But we are talking
about a whole class of local authorities here, not just this one.
Sir David Normington: Yes, but
every local authority has their case, as you know.
Q34 Mr Chaytor: The new system will
provide for some compensation in terms of the schools that are
losing pupil numbers, so there will be an adjustment to give slightly
extra funding to compensate for the fall in rolls and slightly
reduced extra funding for those schools that are increasing their
rolls.
Sir David Normington: That is
right.
Q35 Mr Chaytor: How does this fit
in with the whole process of devolution because successive governments'
thinking has been that as we move to a more market-based system,
more popular schools will expand and the less popular schools
will go to the wall, but what you are doing here is actually intervening
in that process to limit the effects of parents choosing particular
schools?
Sir David Normington: Only in
the transition. I think this is about trying to avoid very sharp
drops in funding because of course if you lose pupils suddenly,
it is not always easy to take those costs out just like that,
so some of this is about the transition really and it is not about
stopping the process of resources following the pupil, which is
the basis of the system, but it will just take a bit longer.
Q36 Mr Chaytor: Can you see any ways
in which the local formula could be manipulated by local authorities
to take advantage of the particular features you have put in?
Are we going to see an army of consultants being recruited by
local authorities to teach them how to beat the system?
Mr Crowne: It is a difficult question
to answer!
Q37 Chairman: Well, the answer is
yes, of course!
Sir David Normington: Actually
the answer is no, I think.
Mr Crowne: In answer to your last
question, I certainly hope they are not going to recruit an army
of consultants. What we do want to do though is ensure that the
framework within which they define their detailed formula is clear
about the principles, and the principles have been established
for some time, that 75% of the budget could be allocated on a
pupil numbers basis, but there is plenty of discretion about the
other 25% and that is absolutely right because different local
authorities in different circumstances are facing different challenges.
As to whether individual local authorities would somehow manipulate
this, I do not really see that. The discretion is there for a
purpose. They need to respond to local circumstances. We have
given schools forums the ability to scrutinise. We are encouraging
local authorities to work very closely with their schools forums
and indeed for the first time we are giving schools forums some
decision-making powers which have been devolved from the Secretary
of State, from the centre to local level, so the system will operate
with a greater degree of transparency. There will be more opportunity
for those with a local interest to ask why certain decisions are
taken and we are already beginning to see, I am glad to say, a
degree of more transparency in the way the local systems operate.
I am very confident that we are going in the right direction.
Mr Chaytor: If one of the aims of the Department
is to make the system more simple, I have to think of the explanation
you gave us of the new system for school funding. We could not
understand it and our specialist adviser found it too complicated,
so heaven help many of the local authorities that have to find
their way through it, but we can come back to that.
Q38 Tim Farron: On the theme really
there about clarity, I am concerned about public and democratic
accountability for the success or other performance of the school
system. Do you think that the new system will provide that clarity
about where schools funding actually comes from or do you think
that there may continue to be ambiguities about who is responsible
for different roles of local authorities in the Department?
Sir David Normington: It will
be clear. It ought to be clear that all the money is coming from
central government, except for the amount that comes from the
local authorities, and it ought to be clearer, but it is nevertheless
the case that in our system we share responsibility and, therefore,
there is scope for one lot blaming the other really and sometimes
that happens, so I—
Q39 Chairman: It happens all the
time!
Sir David Normington: Occasionally.
The national/local position is there, it remains in place and
I think it will be more transparent, as Stephen Crowne was saying,
about what money is coming into the schools' budgets and why.
I think one of the troubles has been that there have been so many
pots of money and it has not been very clear which pot came from
where. There will be basically two or three main streams of funding
coming in in due course, sources of revenue funding, and I think
that will be a lot clearer, but I do not promise that this will
be completely clear to the local taxpayer; I think that will continue
to be an issue.
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