Examination of Witnesses (Questions 80
- 99)
WEDNESDAY 12 OCTOBER 2005
SIR DAVID
NORMINGTON, MR
STEPHEN KERSHAW
AND MR
STEPHEN CROWNE
Q80 Mr Williams: So that anomaly
will be removed?
Sir David Normington: —which
is very important. I should make one qualification. As I said
before, it will be possible for local authorities to continue
to raise local taxation to supplement what is coming from the
dedicated schools grant. Whether they will decide to do that I
do not know but it will be possible for them to supplement the
national financing.
Chairman: We are going to move on to efficiency
savings. I apologise, Sir David, I should have said I have a particular
interest in education for sustainability. If you look at a particular
article in The Telegraph yesterday you will have seen that,
and I should have declared that interest.
Mr Evennett: A very good article too!
Q81 Mr Evennett: First of all, we
are having rather mixed messages from you today, Sir David, about
centralisation and devolution and I am concerned. I personally
am more into power to schools and localities and I am very concerned
about the areas we have had heard about so far. We must go on
to efficiency savings. Obviously you are very aware of the government
initiatives to cut down the number of civil servants to make them
more efficient. Also following the Gershon review your Department
has got to deliver a huge amount of annual efficiency gains by
2007-08. I believe you are on the record as saying that two-thirds
of that saving of a large amount of money will come from the schools
sector, and it is obviously of concern how the schools are going
to manage. What advice are you going to give them to do that if
we are going to have those huge efficiency savings within a few
years? Would you like to comment on that first of all?
Sir David Normington: May I make
one preliminary comment which is there is an issue about reducing
staff numbers in the Department for Education and Skills which
we are doing. I will talk about that if you like. Inevitably that
is quite a small amount of money. The big amount of money is obviously
somewhere within the £60 billion that is spent on education
and the big efficiency savings come from getting better outcomes
or greater efficiency from the use of that money. We are committed
over three years to producing £4.35 billion efficiency savings.
That is the first thing. The second thing to say is that it is
true that we are looking broadly to the schools sector, which,
after all, is the biggest consumer of resources, to produce those
savings, but it is important to understand that what we are looking
to do is to give them more headroom in their budgets, not to take
money away from them. This is not about taking money away. If
I can just take a small example, but a real one. We are looking
to see how we can reduce the cost of school insurance. Indeed,
we are looking across the whole area of procurement policy in
the education system to see how we can get best value for the
things that everybody has to do. If we make those savings, what
we will do, effectively, is negotiate a number of national or
regional contracts which hopefully will lower costs. It will then
be up to the school to make use of those, but any money they then
save will be kept by them. This is not about taking that money
out. Similarly, a substantial chunk of money comes from the more
productive use of the school workforce. There are very big changes
happening in schools in terms of how they use their workforce,
designed to relieve teachers of jobs that are not about the core
job of teaching and learning, and getting those jobs done in a
more efficient way, either by technology or by other staff and
so on and thereby releasing productivity in the system. We are
very well down that road this year and that will release real
resource for the school. We have some real examples of how we
are doing that. I am sorry it is a long answer but a lot of the
savings are in helping schools to make more of the money they
have got, not taking money away from them.
Q82 Mr Evennett: Again, it is centralisation,
is it not? It is you telling them rather than leaving it to localities
and schools themselves?
Sir David Normington: I do not
think so. I think local authorities do this too and we will be
working with local authorities as well. To go back to the school
insurance example. We will not be telling them who to use for
insurance. We will just be telling them that there are these deals
that we think will lower the cost.
Q83 Mr Evennett: I did not mean that
side, I think they are excellent. I was talking about how they
use the staff within the school. Of course it is excellent to
go for the insurance because you have the expertise in your Department
which presumably the schools or local authorities will not have.
However, if you are talking about what jobs should be done within
schools, is it really your role?
Sir David Normington: I think
what we are trying to do is encourage schools to think differently
about how they use their total workforce. Again it is up to them.
I need to give you a specific examine, if I may, just very briefly.
We have a very good case of a secondary school which I will not
name, which through the process that I am describing of getting
them to think again about that workforce modelling and how they
use their workforce, has decided they will try to stop using supply
teachers altogether and they will take that budget (which they
discovered was £200,000 on supply teachers which was not
very productive and was not very efficient for them) and employ
three more trained people called "cover supervisors",
to ensure that if a teacher is away they can get somebody who
knows the school and its ethos and rules into that classroom and
make sure they are supervising the work. That has cut the costs
for them and they have saved money. They are absolutely delighted
with how it has brought better order to their school and they
think they are getting better use of the workforce out of it.
There is real benefit there. One thing we have done here is we
have got a national remodelling team, a team of expert people
usually drawn from schools, who are supporting schools who are
finding it difficult to think this through. Lots of schools do
think this through. The one I described decided this itself and
saw this itself. There are lots of good models like that to spread
round the system. That is of real benefit to them.
Q84 Mr Evennett: What you are really
saying is that you are going to give advice but you are not going
to impose and that the cuts that there may be (or the efficiency
savings) will not have an impact on the education?
Sir David Normington: I have to
account then for whether we have found the £4.35 billion,
so there is the issue of—
Q85 Chairman: How much is that per
school?
Sir David Normington: It is 2.5%
of the total budget. I do not know what it would come down to
for an individual school. I would not expect it to be the same
in every school.
Mr Kershaw: It is across the whole
system, not just schools of course.
Q86 Chairman: And what savings would
you expect for an average comprehensive school of 1,500 pupils?
Mr Kershaw: If you said that about
a third of the savings (efficiency gains, not cuts) were coming
from the schools sector, that would be £1.5 billion or so
in year three. You would have to divide that by 20,000 schools.
I guess you are going to have to do some complicated weighting
for large secondaries as opposed to very small primaries. It is
quite a complicated sum to do.
Q87 Chairman: There is an army behind
you there.
Mr Kershaw: I think someone will
have to get their calculator out!
Q88 Mr Marsden: I would like to take
up two issues. Perhaps first of all I could just speak about your
administration costs. The Department's Annual Report says that
staff numbers will have reduced by 31% from 2003-04 to 2007-08
but your annual administration costs only appear to be £6
million lower, in 2003-04, £243 million and 2007-08, £237
million. Why do you not expect to make a greater saving?
Mr Kershaw: Because there is a
short term and a long term issue here. In the short term, of course,
we have had to use and invest some of our existing running costs
over this period in voluntary release schemes and so on for folk
who are leaving. That is one of the ways in which we have managed
to secure quite significant staff reductions without compulsory
redundancies. That has had to be paid for over the next couple
of years. In the period ahead you will then see some quite significant
reductions in our cost limit because then of course the returns
really come in in terms of a much smaller number of staff. I think
you are just describing a transitional arrangement. In the short
term we have to fund the staffing reductions of some of the people
moving on and out. Longer term it will represent some quite significant
savings.
Q89 Mr Marsden: What sort of anticipated
savings on administration costs could we see in 2009-10, for example?
Mr Kershaw: I think it is quite
hard for us to predict that at this stage because that depends
to some extent on the next spending review and we will get into
trouble if we pre-empt that kind of negotiation.
Q90 Mr Marsden: We can guess can
we not, that the next spending review, at least in terms of all
the press comment, is going to be rather severe and therefore
the impetus for you to make administration cost savings will be
rather great?
Mr Kershaw: It will and I think
we can expect a very challenging conversation with the Treasury
which will be about demonstrating that those savings have been
played back into the front-line and also about efficiency gains
in terms of money that is already at the front-line, as Sir David
has said. This is the area where we will need to demonstrate we
have used that money in a quite different way and we have got
it out through the funding system either into schools or further
education or wherever; so I think you are right, that pressure
will be on us very directly.
Sir David Normington: We are expecting
to save over this period and it is right that we have to invest
to save this. This does not get reflected in this three-year £21
million reduction in our admin costs in 2005-06, £21 million
in 2006-07 and £44 million in 2007-08. We would expect in
the period beyond that to see the full savings that we are making
in the three-year period reflected in our annual cost budget.
The Treasury will not let us get away with it.
Q91 Mr Marsden: Nor will we, I suspect.
Sir David Normington: Even more
so, I do not suppose you would either, nor do I want to.
Q92 Chairman: Sir David, we will
be watching you very carefully. We do not want any "Del Boy"
tricks, a Trotter approach to this, what we usually call "smoke
and mirrors"!
Sir David Normington: I have been
called many things but Del Boy is not one of them!
Q93 Chairman: But you take my point.
We do not want to see these savings—and it is not just Gershon,
it is the Lyons Report too—I have to say, I do not know
about my colleagues but I have not seen many civil servants from
your Department moving out, I have not seen a substantial number
coming to Huddersfield and setting up there because it is much
cheaper and more pleasant to live there or Barnsley or Guildford
and other places but I have not seen it. Quite honestly, most
of us do not think the Lyons thing is working at all. Why has
Ofsted not moved out yet? Why have we not seen some really significant
changes out of this overheated London and South East to places
where graduate employment will be very welcome. Why has it not
happened?
Sir David Normington: You will
see 800 posts—
Q94 Chairman: 800. Out of how many?
Why do we not have a substantial number? Why do you not say this
Department could do even better with the move of a large number
of civil servants out of London?
Sir David Normington: We have
done that. The majority of my Department is already outside London.
Q95 Chairman: Where are they?
Sir David Normington: They are
in Runcorn, Sheffield and Darlington. The majority of staff are
outside London. It is the minority of staff in London and I am
committed to moving more outside London. We are also committed
to moving the remaining NDPBs, the QCA and the TTA, out of London
substantially. That is all on the record. That is what we will
do. However, in the meantime we are also reducing our staff and
I think, just to put this on the record, I have 760 fewer staff
than I had two years ago. Ofsted are reducing by 500 in this period.
These are real job losses, they are happening.
Q96 Chairman: Okay how much outsourcing
are you doing? For example, I know Capita have got a big contract
from you and they immediately announced that they are shifting
much of their work to India. I have to say that both the transfer
of responsibilities out of government out of the Department to
Capita and then to see them get transferred out of this country
seems to me a Del Boy sort of tactic. You might say we have got
less people working for us but you have outsourced them. How does
that account?
Sir David Normington: Those figures
do not include the Capita contracts. They were there before.
Q97 Chairman: Are you pleased they
are outsourcing to India?
Sir David Normington: I do not
think I know precisely where they are outsourcing to because the
main contract—
Q98 Chairman: It has been in the
newspapers, Sir David.
Sir David Normington: Yes I know,
but the main contracts that they run for us they run from Darlington
where they have built up their employment since the outsourcing
of the teachers' pension scheme a few years ago. The other contract
they run is a contract about school improvement which is about
employing a force of local advisers to support schools in Key
Stage 3 particularly. You cannot off-shore that. They are all
in this country. So I do not think in the contracts they run for
us—and I stand to be corrected—there is major outsourcing
to India.
Q99 Chairman: What about sector skills
councils, why do they predominantly appear to be in London and
the South East? They could be anywhere. You hear rumours it is
because the chairman lives somewhere. What sort of basis is that,
that you have a sector skills council in London and the South
East because of the convenience of the chair? It is probably the
wrong chair if that is the case. Why are the sector skills councils
not distributed around our country?
Sir David Normington: I do not
think I have a full list. I could provide a full list of where
their headquarters are. [3]The
Sector Skills Development Agency, which is the one I do control,
is between Rotherham and Sheffield.
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