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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 479-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE EDUCATION AND SKILLS COMMITTEE
PUBLIC EXPENDITURE ON EDUCATION AND SKILLS
Wednesday 2 November 2005 RT HON RUTH KELLY MP Evidence heard in Public Questions 143 - 206
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Education and Skills Committee on Wednesday 2 November 2005 Members present Mr Barry Sheerman, in the Chair Dr Roberta Blackman-Woods Mr David Chaytor Jeff Ennis Tim Farron Helen Jones Mr Gordon Marsden Stephen Williams Mr Rob Wilson ________________
Memorandum submitted by the Department for Education and Skills
Examination of Witnesses
Witness: Rt Hon Ruth Kelly, a Member of the House, Secretary of State for Education and Skills, examined Q143 Chairman: May I welcome you to our proceedings? It is very nice to see you here. I do hope you had a very good visit in Yorkshire, particularly in Huddersfield, yesterday. I am very sorry I could not be there to greet you, but I believe my colleague Helen Mountford was with you for part of the visit. I hope you enjoyed visiting Greenhead, which is the number one college in A level results in the country, and New College not far behind. That is my advertisement for Huddersfield. Can I also say that this is a momentous time for us in the Education and Skills Select Committee because here we are at the beginning of a new Parliament, there is an education White Paper that we have a great interest in, and education, as ever, is in the forefront of the Government policy agenda? Secretary of State, would you like to open with a short opening statement? Ruth Kelly: Certainly, Chairman. I thought I would say a few words about the White Paper that was published just last week. Q144 Chairman: Can I tell you that when the questioning arrives we are going to divide it fairly in half on school funding and financial matters and then we will shift to the White Paper? Ruth Kelly: Fine, Chairman. Let me start by saying a few words about the White Paper, if that is all right. The basis of the White Paper is about making sure that every child, no matter what their background, has the opportunity to develop their talents to the fullest extent. It will have a most profound effect, I think, on those children who live in very difficult circumstances where life is often tough and aspirations particularly low. Our first task in the White Paper, but also in schools, is to make sure that what goes on in the classroom is tailored to what every individual child needs. The White Paper contains, I believe, a powerful package to this effect, using increased resources, a reformed school workforce and greater availability of ICT. There is a particular emphasis on catch-up classes for those who have fallen behind, particularly in the basics of literacy and numeracy, or indeed who arrive at secondary school without having mastered the basics; and there are proposals on stretch for those who would benefit from an extra challenge in the classroom as well. There is a strong section in the White Paper on discipline following the publishing of the Steer Report, and we set out a tough new approach to ensuring discipline and good behaviour in our schools. To make this tailored approach work, however, I strongly believe (and the White Paper sets out why) we have to engage parents in their children's education. Our experience in areas such as the SureStart programme show how important that is. Many parents are already involved in their children's education. We now have a huge challenge to make sure that all parents who want to be involved are involved, but particularly those parents who are hard to reach and find it difficult engaging with school life. We need to make sure that every school is a good school, building on the enormous progress that has already been made. Without this we will condemn too many of our young people to a sub-standard education. Of course we will continue the investment that we have already seen in our school buildings and also in the number of teachers and support staff, but sometimes very decisive action is needed at the school level; so we will be taking tough action on schools that persist in special measures and on schools that do not make sufficient progress. That may mean poorly performing schools federating with successful ones or, indeed, being replaced by the new Trust School or, indeed, in academy specific circumstances. We all know that choice and access is too skewed in the current system. For those who can afford it, this can sometimes be moving house or opting for a private school. In the White Paper what I set out to do is to give more choice to those parents who cannot afford those options; and so the White Paper focuses on transport, which picks up on some of the proposals that have been put forward by the select committee, on choice advisers and opening up more options and admissions and an attempt to do just that. I would like to say, Mr Chairman, a few words about admissions. Admissions are a crucial part of the school system. We are encouraging more schools to move to a self-governing status where they become their own admissions authority, but I want to be absolutely certain about what this means and it what it does not mean. The White Paper does not mark a return to the device of 11-Plus, a free-for-all in admissions, nor does it mean that the most disadvantaged children will lose out; in fact the opposite. School admissions arrangements will continue to be within the law and have regard to the code of practice, and I am committed to making regulations to guarantee that looked-after children, for example, will have priority in admissions just as those with statements of special educational needs already do; and where there are doubts about the fairness of an admissions policy, then the important role of the school adjudicator comes in, and the school adjudicator will be able to consider objections to admissions arrangements even in self-governing schools. Local authorities, indeed, parents and schools will have a right to make objections to any admission arrangements that are set on the basis that they may not be fair. So if a school which is its own admissions authority draws up the catchment area, for example, that the local authority does not think does justice to the children living in that area, it could object to the school's adjudicator, which is on a statutory basis, about those admissions arrangements. The White Paper, indeed, sets out a clear role for local authorities giving a coherent, more strategic and I think more powerful role as a champion of parents and pupils in their area. This means increasingly commissioning, rather than providing, education with a duty to promote choice, diversity and fair access to schools. So local authorities will not only, as they do now, enjoy a sufficient supply of basics, letting popular schools expand or federate, closing schools that are poor or fail to perform, running competitions to open new schools, but they will also respond to parents' concerns about the range and quality of schools on offer, support parents when their children are changing schools, engage parents when a failing school is put into special measures; and this applies particularly to those parents who would not naturally have a voice heard in the system. Local authorities will help all schools improve their standards and intervene decisively in those schools that are falling below expectations, issuing warning notices and taking radical action promptly, and they will have a stronger role in 14-19 provision as well, working very closely with the local LSCs to ensure high quality provision of 14-19 education in every area. If this is the role of the local authorities, the actual provision of schools will increasingly come through the new Trust School arrangements that we are proposing. Trust Schools will be based on fair funding and fair admission. Quite different to the old grant maintained schools. They can be delivered through a locally managed system - again, completely different from the old GM school arrangements - and the opportunity to acquire a trust will be open to every school, and we will make sure that the school's commissioner acts to help ensure that potential trusts focus their interest on weaker schools, schools in disadvantaged areas and those which are in need of greatest support. As we know from specialist schools and academies, the opportunity to form a link with an external partner who can bring drive and support is a key to drive real school improvement. I think, Mr Chairman, this is a package that addresses the needs of every school and, indeed, every pupil in every community. It will target more resources for those with the greatest need and help close the attainment gap between disadvantaged pupils and others, it will put personalisation and discipline at the heart of the schools reform agenda and it will increase choice, but particularly for disadvantaged groups. Q145 Chairman: Thank you for those opening remarks, Secretary of State. Can I open the questioning by getting a bit of a timetable from you? We are quite interested in looking in some depth at the White Paper, as you would imagine, and we would like some guidance on how quickly the legislation necessary to implement the White Paper will come about. Do you have any idea how much of the White Paper will need new legislation and when that will be introduced? Ruth Kelly: No, Mr Chairman, the precise dates for the introduction of new legislation are always subject to change and will depend on negotiations within government and other government departments and so forth, but the timetable that I envisage for the White Paper is that we will be consulting on its contents, making sure that we get the details right, drawing up new legislation between now and Christmas, perhaps into the New Year, with legislation following, and the first reading some time after that. There will be new legislation required. Q146 Chairman: In your mind do you have February pencilled in or April? Ruth Kelly: I should think it would be rather earlier in the New Year than April. Q147 Chairman: Thank you. That gives us some guidance. Can I start the questioning in earnest by asking you this? We have looked at the figures very carefully in terms of expenditure of the Department. It is no secret that there has been a great increase in expenditure in real terms as a per cent of GDP over a number of years, but it is also no secret that that is plateauing now, it is levelling up, and it is going to be, within two years, more in line with the growth of GDP. At the same time there is not just the White Paper but a lot of reforms going on in the Department, and the White Paper you have just talked about is only the latest. In a sense the Committee is concerned, because changing is a very expensive period, it costs money, but at the same time your income is going to be levelling out and, as a percentage, perhaps diminishing. Are you going to be running into trouble delivering all these new policies and all these changes at a time where you have a lot less resource? Ruth Kelly: I do not think so, Mr Chairman. Let me say why. First of all, investment is going to continue and we have a commitment that was set in our manifesto that education as a proportion of GDP would continue to rise across this Parliament; so I expect to see significant investment in education over the coming years. That is not to say that the rate of growth will be the same. Of course that is variable and will depend on the economic situation of the time. However, investment in our schools, and particularly in capital, will continue, and, in fact, through about BSF programme, we are committed to a very long-term strategy for improving the capital stock of both secondary schools and, indeed, more recently we have set ourselves a strategy for upgrading the capital stock of primary schools as well, and that capital investment will deliver our programme, including on the schools White Paper. For instance, in Building Schools for the Future local authorities - and this brings me into the second part of today's session - will have a clear role for setting out their educational vision for an area. To have really significant capital sums at your disposal as a local authority is a huge lever which will help you and enable you to carry out this role effectively; so it is quite possible to argue that they will find it easier in future to undertake the radical change to education that we envisage than they have in the past. The second point is that what we are trying to do through the schools White Paper and in other areas of the Department is to become more strategic and devolve increasingly to the front-line the detailed decision-making that in some cases used to take place more centrally, and, the more that we can do that the more we can trust our front-line partners, including our teachers and support staff and our head teachers in schools, the easier that will become. It will enable us to reduce the number of staff needed in the Department, but also see, I think, greater efficiency secured at the front-line. Q148 Chairman: At the moment, Secretary of State, you do not have a permanent secretary, but we did interview him I think the day before he moved to the Home Office. He was not very convincing when we asked him about this change in the nature of the Department from a normal department to a strategic department. Indeed, some of the unions involved in your Department are rather unhappy about this. They cannot really see much of a change; they are feeling a bit unsettled and perhaps loss of some confidence in their future, but all in all, from Sir David down to your regular workers and members of trade union, there is a worry that this strategic change is not apparent? Ruth Kelly: I hope I can reassure you, Mr Chairman, that I do still have a permanent secretary, even though his departure has been announced. Sir David Normington, thankfully, will be with us until the New Year before he transfers to the Home Office; so there is continuity in policy and in leadership in the Department. However, you are right to draw attention to the fact that we have to and are becoming a more strategic department. To give you one concrete example, it used to be the case that there were over 40 or 50 separate funding streams going to schools which the Department centrally monitored, evaluated, held to account, had policy teams working out how that money should be spent, which schools had to apply for, which they then had to spend their time not just bidding for, and so forth, but filling in evaluation forms and sending them back to the Department to be accounted for. In future schools will have their devolved money and they will have basically two large separate funding streams. This is a radical simplification of the allocation of funding to the front-line that enables not just us to take a more strategic approach to the nature of our relationship with schools but actually schools themselves to have a more strategic approach to how they handle that money and account for it. When you combine that with our completely new accountability system that we have through the school improvement partnership, the new relationship with schools, which streamlines the accountability of schools so that they have a single conversation with the local authority school improvement partner about how well they are doing and how well each pupil in their school is performing rather than a myriad of separate accountability frameworks, I think you will be able to see the direction of travel in which we are shifting and why that will enable us to both release staff but also use that money more effectively in supporting the front-line and improving teaching and learning. Q149 Chairman: The direction of travel might be encouraging, but will you not have a rather nasty accident some way along the road if, on the one hand, our concerns about lack of funding materialise (and you know more about the Treasury than most people in this room), but, on the other, out of that treasury, out of Gershon, you are going to have, I think, 4.3 billion savings. This could derail or push you off the road, could it not? Where are you going to find £4.3 billion savings that is going to be, not fudged, but you are going to be held to account by the public accounting authorities? Ruth Kelly: I think we are completely capable of meeting the 4.3 billion within the timescale that we have been set to achieve it, and, as I think the Committee is aware, we will be subject to the National Audit Office making sure that we do achieve the efficiency savings that we have set out to achieve, and we have been very transparent about how we are going to do that. We will achieve it, for example, through better use of teacher time - more productive time. Our workforce reforms are all about enabling teachers to spend more time preparing their lessons and delivering high quality lessons to pupils and less time carrying out administrative functions that can easily be done by support staff in the school. It is a very good example of teachers being able to work more efficiently and, indeed, effectively and will help and allow them to raise standards. Q150 Chairman: So you are going to save the money in schools? Ruth Kelly: A lot of it will be saved in schools because most of our money is now devolved to the front-line. There will also be savings through better procurement practices, working with schools and others to achieve savings in procurement and cash savings in schools through that as well which they will then redirect. They have a real incentive to go down this route because they will be able to redirect that money towards the front-line. Q151 Chairman: With the front-line you include further education. Would you be able to be more generous, as the demographics will, in any event, save you money, with less and less children coming through. I think on a previous occasion the ministers told us you could save 50,000 teachers. You could do without 50,000 teachers because of the demographic change. Is there any thought in your mind that would shift that to this FE sector where there are many complaints to members of this Committee that there is insufficient funding for all sorts of adult education? Ruth Kelly: If you go back far enough, there have been drives for efficiency savings in the past and they have not borne fruit because the people at the front-line have not seen the real benefits of achieving those efficiency savings in terms of their own ability to invest more in the front-line and to drive up standards of teaching and learning. What this government has done in contrast is to say to the front-line that, if you achieve the efficiency savings, which you have a real incentive to meet, you will be able to reinvest that money in improving standards of teaching and learning. Q152 Chairman: You are dodging a bit here, Secretary of State, if I may say so. Is there a chance that some of this saved resource could be shifted to FE, because there are a lot of complaints about continuing in education at the moment? Ruth Kelly: Mr Chairman, you will well know my personal commitment and, indeed, our department's commitment to see the participation rate rise from 75 per cent to 90 per cent over the next ten years. Clearly there will be a big demographic shift in secondary schools. Not just yet, but in a few years' time, that will start to have a real impact in the classroom. I would like to see some of that dividend being used to help increase the staying-on rate, which will mean being used to support 14-19 specialist pathways and making sure that that happens on the ground and that people do have more choices to follow courses that suit them, learn in ways that suit them but also to stay on. I hope more and more students will chose to do that. Q153 Chairman: In terms of shifting resource, there has been a disturbing story running around this week that our opportunity to host what some people call (I know we are not supposed to) the Skills Olympics, but the summit for the focus for skills in 2011 is under some threat even to make a bid because the Department is being rather mean with its money. Are you aware of that? Surely you want the Skills Olympics to come to Britain in 2011? Ruth Kelly: I am determined that we use resources in the most cost-efficient way that we can. We have put in already an initial expression of interest in the Skills Olympics, and we are seeking external sponsorship to help us do that. I am sure that your Committee would agree that that is the right way forward, to try and draw in external partners in this sort of bid. We already have had some very strong commitments externally and we will continue to seek them. Q154 Chairman: Secretary of State, the word on the street, as I like to say, is that you are giving the people organising this only four months to sponsorship before making a decision. We have several years to deliver on the sponsorship. Surely four months to get the sponsorship in place is too short a time? Ruth Kelly: We have already had major pledges of sponsorship. Q155 Chairman: You will do everything you can to bring the Skills Olympics here? Ruth Kelly: Yes, but we have to do it in a cost-effective way, and that is what I am absolutely determined to do, because there are risks attached. Q156 Chairman: You will not put up an impossible bar? Ruth Kelly: I will not put up an impossible bar, I will put up a realistic one, but I have a responsibility to the tax-payer to ensure that we use tax-payers' money to best effect, and we have to be absolutely clear about what the costs and benefits of holding the Skills Olympics are. Personally I think the benefits could be very large. It certainly could raise the profile of skills in this country; it could excite the interest of many people who currently are not considering pursuing further skills to do so. However, we have to be very clear about what the potential costs are as well, and it is important that we take both sides into account. Chairman: Thank you for those opening replies. Secretary of State, we will mull over them. Q157 Mr Chaytor: Secretary of State, the Government is proposing a revolution in the autonomy of the difficult schools, but at the same time you have nationalised the funding system. Do you see some contradiction between those two? Ruth Kelly: I do not agree with your premise that we have nationalised the school funding system. What we do have is a system where the funding that goes to schools is now on the Department's balance sheet. Where that sits on the balance sheet I do not think determines how that money flows or, indeed, the accountability for that money. In fact local authorities, both in the White Paper but also in the funding system, have an incredibly important role to play, just as strong a role as they have had in the past and in some senses stronger in terms of the White Paper measures, for allocating the money which is now ring-fenced by government for the use of schools, and, indeed, in some areas local discretion has increased, for example, through the schools forum where the schools forum now have an input over how that money is used, their views have to be taken into account. They can in some circumstances, for instance, take local decisions about how schools funding links in with the Every Child Matters agenda and so forth, decisions that could only in the past have been taken by the Department. So the local funding formula is still drawn up by local authorities who are responsible for distributing money. Q158 Mr Chaytor: What proportion of total school spend is subject to the local funding formula as against the national prescription? Ruth Kelly: If you are trying to get at what the new funding allocation mechanism will be, of course, we are consulting on that, but what we have said is that local authorities will be responsible for distributing the money which is allocated to them through the national funding formula. Q159 Mr Chaytor: The Government is determined that for the current three-year period there will be a minimum funding guarantee, so there is no discretion of local authorities there? Ruth Kelly: There will be two minimum funding guarantees. There will be a minimum funding guarantee at the level of the school, because you rightly point out that this is an issue but that schools have asked us for stability and security of funding as an absolute priority at the moment, but there will be clear priorities that the local authority has because we are also saying that local authority funding will increase by a specific amount over the spend that it had in the previous year; so it will be able both to meet the minimum funding guarantee and have some headroom to distribute according to local priorities and local need. Q160 Mr Chaytor: If you wanted a real market system in our schools and if you want the more popular schools to expand more freely, should not the funding system allow that to happen? What you are effectively doing is putting a damper on it to prevent the full consequences of a market system developing? Ruth Kelly: We are putting a damper on this, and I think, for absolutely good and sensible reasons, very rapid movements in funding can be very disruptive for a local area. Q161 Mr Chaytor: Does that not undermine the whole basis of a market system? Ruth Kelly: Not at all. Indeed, 75 per cent of the money follows the pupil immediately, so there are quite strong incentives for the school to expand and so forth. You would not want very rapid changes to hit schools, and indeed they us that they want some security of funding. I think local authorities accept that as well. The minimum funding guarantee is on a per pupil basis, so that does help provide some security for schools, and the fact that only 75 per cent of the money follows the pupil provides an extra element of security for schools as well. Q162 Mr Chaytor: In the 1997 election manifesto the Government was committed to reviewing the funding formula for local authorities and made some changes in that Parliament. In the 2001 manifesto the Government said it would reform the funding formula for local authorities and did so from 2003. The impact of the minimum funding guarantee is to stop those changes to a fairer system in their tracks. Are we going to see the implementation of the principles of the ending of SSA and the shift to FSS in this Parliament, or has that now been abandoned completely? Ruth Kelly: I do not accept that the implementation of the minimum funding guarantee prevented the redistribution that I presume you are talking about in its tracks at all. What the minimum funding guarantee did was introduce a floor to the changes so that no authority or particular school would lose out disproportionately very rapidly. I think that most people accept that that was a sensible precaution to take at the time; indeed, if you look at funding changes throughout government, when redistribution is considered there is normally a floor set in place to minimise disruption. It is clearly the case that we are consulting on the new funding formula at the moment. We are currently considering those responses and should have something to say on that fairly shortly. Q163 Mr Chaytor: So you are saying that the process of redistribution as outlined in 2003 will continue? Ruth Kelly: What I have said is that we are consulting on that. We put out the consultation paper in July, we are currently examining the responses to that and I will make a statement shortly. Q164 Mr Chaytor: Am I right in thinking that there is still half a billion pounds to be allocated to schools in the next financial year? Ruth Kelly: If you are talking about the headroom that there is between the minimum funding guarantee and the total of the GSD, there is a substantial amount of headroom. I cannot tell you what that figure is off the top of my head, but what I have said is that a substantial proportion of that I would like to see directed towards the personalisation agenda which will enable schools to direct resources to those pupils who have not attained the necessary levels when they start secondary school in English and maths, and so forth, and also help them provide extra lessons for the most able. Q165 Mr Chaytor: That is going to be used to shape the curriculum in individual schools rather than address the problems of funding between local authorities? Ruth Kelly: You are right. What I have been talking about is how the headroom should be used within schools, but local authorities will still have to distribute that between schools, and clearly there still is the issue about relative local authority funding. Q166 Mr Chaytor: Can I ask finally, do you intend that all schools will be subject to the same funding mechanism in time? Ruth Kelly: This is something of local discretion. Local authorities will still set their local funding formula - we will not be doing this from Whitehall - and there is a rough and ready funding allocation mechanism which enables us to distribute funds through the direct school grants to individual local authorities, but local authorities will then have the discretion to allocate that between their local schools on the basis of relative and even priority. Q167 Mr Chaytor: But currently academies are outside of that system. Ruth Kelly: They are. Q168 Mr Chaytor: Will they stay outside that system or will there be a common system for all schools, including academies? Ruth Kelly: No, academies will still be funded from Whitehall. Q169 Stephen Williams: I think David has covered most of the questions we had, but can I ask you a question about the dedicated schools grant that David referred to as the nationalisation of school funding? At the moment my own local authority, Bristol, has historically over-spent over the old SSA and funding formula share. When the dedicated schools grant comes in next year will that overspend be protected and funded directly from your Department? Ruth Kelly: It will be based on last year's funding levels, so, yes. Q170 Stephen Williams: You say, yes. Ruth Kelly: It will be based on the actual spend last year. Q171 Stephen Williams: There are also authorities that historically have under-spent as well. I think there is roughly 100 million of underspend and 200 million of overspend. Is this new dedicated schools grant going to adjust just for that straightaway? Is it going to be phased? Ruth Kelly: You will have to wait to see the precise details. What we have said is that it will be based on actual spend last year plus a minimum funding guaranteed element. Q172 Stephen Williams: Local authorities obviously will be starting to put their budgets forward soon. How soon will they get certainty over what their budget for next year will be? Ruth Kelly: Quite soon. Q173 Chairman: So we are absolutely sure, Secretary of State, we are going to continue with the minimum funding guarantee after the next two years? Ruth Kelly: What we have said is that we will review the operation of the minimum funding guarantee after two years, and, of course, it may need adjustment in the light of different priorities at the time. Q174 Chairman: You are not worried that you will run into the same sorts of problems that you had last time? Ruth Kelly: I think security and stability of funding is an absolutely critical element for us to look at and to try and ensure that schools have stability and funding. We have a system at the moment that guarantees that the minimum funding guarantee will meet all cost pressures no matter what they are. I think over time we will have to take a very good, hard look at that and see what efficiency savings really mean at school level. Q175 Mr Wilson: I would like to dig, if I may, Secretary of State, more into the efficiency savings that Chairman touched on at the start. Your Department says: "Our efficiencies are in the main efficiency gains." Could you give me your understanding of what that means? Ruth Kelly: For example, if a teacher uses ICT to teach and uses an interactive white board and uses a prepared digital curriculum, we know that it takes less time for that teacher to prepare a really high quality lesson. That is a clear efficiency gain. Q176 Mr Wilson: How then will it be apparent in 2007/8 that the Department has made this 4.3 billion of savings compared to 2004 when this all began? Ruth Kelly: Because savings will be audited by the National Audit Office at all levels, they will be audited at the level of the front-line, including the level of the Department, so we will see whether and how these efficiency gains materialise. Q177 Mr Wilson: Have you any idea how the National Audit Office will evaluate those savings? Ruth Kelly: Yes, they have very clear mechanisms, which are set out, as to how they are going to do this and, indeed, the Department's technical efficiency note, which has been put on our website, I think, is one of the most transparent in government and will enable them to do that fairly easily. Q178 Mr Wilson: In that case will the Department be able to provide detailed evidence of the new expenditure that it has undertaken using the money from the efficiency gains? Will you be able to catalogue where you have made the savings and what it has been spent on? Ruth Kelly: This is something that schools or other front-line services, just to take schools as an example, do all the time. They make efficiency gains, for example, through the greater use of ICT or through workforce reform, and, as a result, they improve the standards of teaching in the classroom and results rise. How precisely you capture what impact that has on teaching and learning is quite hard, but how long it takes a teacher, for example, to prepare a lesson is something that can be captured quite accurately and, indeed, that is the sort of measurement which will take place. Q179 Mr Wilson: History has shown that efficiency savings are particularly difficult to sustain, and even your Department has had a failure to do that in the past. How are you going to expect teachers and governors in schools to make these savings, because you have to find most of them in schools, when they are not experts in making efficiency savings? Will they not need some sort of help to do this? Ruth Kelly: They get a huge amount of help to do this. If you are looking at workforce reform in schools as a model, which is about using teachers and sports staff more effectively as part of the school team, our national remodelling team, which is effectively the operations arm of our Department, was out there in schools helping to make this happen on the ground, and schools have had access to that very intensive personal support to make their staff more productive. They have also had a huge range of training days and so forth. If you are looking at procurement practices, that is something that we can issue central guidance on and that schools have an incentive to take extremely seriously. I think the last time that you considered this in committee with the Permanent Secretary and others he mentioned the example of school insurance, where I understand that, within a number of years, schools could save between two and three thousand pounds each if they followed the new guidelines. The reason they will go down this route, I am confident, is that they can then reinvest that money in hiring more teaching or in improving the quality of the school in some other way, but they can reinvest the money into delivering better front-line services. Q180 Mr Wilson: Can I be clear about what is going to happen with this is 4.3 billion? Will you be funding increased activity from the same budget or will the Treasury give you 4.3 billion less to perform the same tasks? Ruth Kelly: Increased activity. Q181 Mr Wilson: It will be increased activity. In 2007/8, if you are still Secretary of State for Education at that point, you can give us a guarantee that there will be 4.3 billion of savings? Ruth Kelly: As far as it is possible to give a guarantee in these issues, that is what we are working towards and I am absolutely confident we will achieve it. Q182 Chairman: Have members of your staff sent out any memoranda on the implications of Gershon to schools yet? Have you communicated to them the level of savings that they have to make? Ruth Kelly: We are communicating through the procurement issues very intensively with schools, trying to identify what can be provided where support is needed and where they would welcome extra support. We tend to look at these on an individual basis. What can be done with the school workforce to make it more productive? What can be done with the ICT budget to make teachers use their time more effectively? What can be done with procurement, and so forth. Q183 Chairman: You have not got to the stage where every school has one of those thermometers with savings that they must make with a price tag on it? Ruth Kelly: I think they would rather see it as improvements and effectiveness of the delivery of teaching in the classroom and meeting the needs of children more effectively, and that is what this is all about. Q184 Chairman: Secretary of State, if you want an individual school responsibility for the management of their organisation, should you not be fair and say: "This is the sum. This is the target for you to save. This is what you must meet"? It is rather inchoate if they do not know what the bid is? Ruth Kelly: They do know what value for money savings they are supposed to produce, and that is part of the conversation which they have with the school improvement partner in their annual accountability. Q185 Chairman: If I went to a school in my constituency, walked through the door and said to the head, "How much have you got saved under Gershon?" they will be able to tell me? Ruth Kelly: I think it is the sort of thing that school improvement partnerships in their training learn about and then can question the head teacher about how they are procuring efficiency savings at the level of the individual school. Q186 Dr Blackman-Woods: Secretary of State, the DfES and LSC have recently announced the funding priorities for further education for the next two years. Can you tell us how the new funding priorities address the perennial problem of the gap in funding for 16-19 courses between sixth-forms and FE colleges? Is the aim still to close that gap? Ruth Kelly: I know how emotive this issue is; it is something that is brought to my attention incessantly. Indeed, I have sympathy with the FE sector when it points out the funding rates, for example, are lower in the 16-19 FE sector than in schools, and one of the things that I was determined to do in the LSC funding package was to make clear that the MFG (minimum funding guarantee) rates applied to 16-19 across the board rather than just schools. Clearly that stabilises the situation rather than improves it. I think there is some way still to go, and I understand that the funding gap has been identified as even larger than the gap in the funding rates, and I am very aware of that as well. I am also aware of the commitment that has been made in the past, which I am personally committed to as well, to try to narrow that gap as resources permit, and, for that reason, we are very closely looking at the difference in funding and how we might make more progress towards that in the future. Q187 Dr Blackman-Woods: Do you have a timetable in mind, because "when resources permit" could be any time. Is there a timescale there to address this? Ruth Kelly: I would like to make significant progress on this. We are currently looking in detail at the issue. I shall have more to say on this in the coming weeks. Q188 Dr Blackman-Woods: I had a meeting with the LSC earlier this week. They are clearly happier that they have got a clearer set of priorities now, and they are wondering, as we all are, are the priorities too narrow now? Do they enable us to retrain people who are already in work? Can you tell us whether you think the priorities are too narrow? What scope is there for extending those priorities in the future? Ruth Kelly: This is the first time that the Government has been absolutely clear about its priorities for skills, and I think it is hugely important for the Government to make its priorities clear, particularly since there has been a 45 per cent real terms increase in funding into the FE sector since 1997; so there are very significant resources being put in. What we have to ask ourselves all the time is where should that money be spent most effectively? There are some cases, like 16-19 education, where students have an entitlement to receive training, skills acquisitions and education, so we have a responsibility to make sure that is a government priority. There are other areas where we know that skills acquisition is hugely important to an individual's life chances, particularly their chances and prospects of future employability. We know, for example, that all the skills acquisition up to level two is really important in terms of employability. However, there are no clear individual returns in terms of financial returns from investment from the individual's point of view in the acquisition of those skills, nor, indeed, in terms of the employer interest in funding skills acquisition up to level two. From a social point of view, therefore, I think we have a very clear rationale for directing government funding in terms of basic skills acquisition and level two acquisition. We know that above level two there is a direct financial return, both to the individual and to the employer, for investment in the acquisition of those skills. It strikes me that it is only sensible, therefore, to think about the relative contribution between government, the employer and the individual in post level two skills acquisition for adults, and that is what the LSC has set out in its funding priorities. I am absolutely clear, they are absolutely clear, that it is right to ask for an individual contribution and the employer contribution where appropriate to post level two training. This does not mean to say that somehow one has committed to Level three training and above; in fact the opposite. It means that we are determined to invest the money most effectively and to get best value from it. For instance, at level three we would expect, through the national employer training pilots, the employer to fund level three training on the condition that they also provide level two basic skills training paid for by the Government, but we are also piloting in two regions match-funding for level three acquisition to see how that works in practice. Q189 Dr Blackman-Woods: I am not sure that we have dealt with the group of people who do not have level two qualifications, do not need basic skills qualifications but do either need a way into re-skilling or to up-skilling, and it is that group that the LSC seem to be quite concerned about, indeed we are all concerned about. Perhaps you could elaborate a bit on how that group can be dealt with? Ruth Kelly: I think it is a very important group. Students and potential students, who might need to acquire entry level qualifications before acquiring the full level two qualification, still need to be drawn into the sector, they need attention, they need the support and nurture to gain those entry level qualifications of one, two or three before going on to acquiring more advanced qualifications. It is clear to me that colleges and other training providers ought to be able to find a way within the priorities that have been set to draw those people in and to provide free training where necessary. That could be done within the Skills for Life budget, where only about four fifths of it, I think, is allocated for qualifications. It could actually be done through other routes as well. It could be done, for example, through the local authority controlled funding of personal community development - some of that could be secured there - but it is absolutely right to try to draw those people into learning, and the intention is in no way to sacrifice those people; indeed the reverse. Q190 Tim Farron: Following up on that point, Sir David Normington said when we quizzed him on this that the Department had not anticipated the damaging impact of the LSC funding priority changes on adult education centres, particularly in smaller rural areas. I wonder, after the fact you have become concerned about the impact on courses and the potential closure of some of the smaller centres, what you might do about it? Ruth Kelly: I think this was a point that was raised at the last committee that the Department is now looking at, but the intention by being clear about priorities is not to have an impact on any particular pattern or provision. Indeed, what we have done through the National Employer Training Programme, by working directly with employers, is saying to employers that we would fund the provision which best meets their training needs, and for some that would be in FE colleges but much of it would also be outside FE colleges, adult training centres and private training providers as well. It is not clear to me which direction the impact would be, but I am happy to look at his particular circumstances. Q191 Tim Farron: I have forwarded some information from my constituency to your colleague, the Minister for Lifelong Learning. The concern is really that we are not just talking about drawing people into life-long learning perhaps in the early part of their lives; we are talking about the entire.... This is a valuable part of community provision that is being hit. A large FE college can probably absorb the changes; a small adult education centre, the evidence seems to be, cannot? Ruth Kelly: The question really is whether they are able to charge fees for the provision that we are putting on, and we are sending a very clear message. We know what our priorities are; we are very clear about them. The sector will have to adapt to those priorities. It does not in any way mean that other courses should be withdrawn. What it does mean is that colleges and other providers might have to think harder about whether they charge fees at all or the level of fees they charge. We also know that when you ask learners who learn for leisure purposes whether they would be prepared to invest some their own money in going to those courses, the overwhelming opinion is, "Yes." Q192 Tim Farron: The marginal impact has been significant, I would say. I can think of examples like lip-reading courses, for instance, that are being withdrawn because of the additional cost, but we will not get into the nitty gritty. Your colleagues will see the correspondence and I hope we will see some action. Let us move on to the issue of part-time students and to say that this Committee welcomed, at least, in a lukewarm way, the additional money provided towards education fees for part-time students, and lukewarm because we are concerned that part-time students are still not treated in a comparable way to full-time students. I wonder whether you would tell us whether you would consider giving that parity with regard to allowing part-time students to defer their fees in the same way that full-time students are able to? Ruth Kelly: I think we have come up with a very creative solution to the issue of part-time students actually. I think it is important to recognise that this Government was the first government to provide any support to part-time students at all to meet their fees, and there was no fee support before 1998 whatsoever. The Higher Education Act, which deregulated fees up to point, up to a cap, did not include part-time students, and institutions came to us and argued that we should look at them separately from other students and we should think more carefully about what support should be provided to them, and we have done that. We have come to a solution which proposes a very large increase in fee-support for low income students with significant rises in the means-tested fee grant for low income part-time students, which I am happy to take the Committee through, but you probably have that information already. Q193 Tim Farron: Staying with higher education, the concern expressed when Sir David Normington was here with regard to variable bursaries, I would like to raise with you now. Obviously the Government is reacting with concern, and I am glad it is, to the declining proportion of entries into higher education from state schools and from poorer backgrounds. The provision of bursaries obviously is tied up with the wherewithal of institutions to top up those bursaries. The example we have used already is that Cambridge University has a turnover of 650 million, Middlesex a turnover of 120 million, despite the fact that Middlesex has something like four or five thousand more students. Clearly the wealthier universities with the wealthier student profiles will have more bursaries, and those universities with the better track-record of recruiting people from difficult to reach backgrounds and poorer backgrounds will have the least money available to attract those students? Ruth Kelly: There are a number of points there. First of all on the facts about the number of students from state schools going to university, after three consecutive annual rises and a proportion of students from state schools going to university, there was a tiny blip in the proportion, but that was accompanied by a rise in the absolute number. Clearly that set lots of people off saying there was some crisis in applications from state school pupils. In fact their numbers have gone up in recent years. That is a tribute, I think, to the work that universities have been going out to do on widening participation. I am very committed to this widening participation agenda. Indeed, we have seen, as a result of the new bursary system, that a very significant proportion of the extra fee income raised has been allocated towards bursaries from universities and was significantly higher than we as a department were expecting them to contribute. The result is that it is now quite possible for someone from a low income background to get into university with very significant financial support both through the national system but also through individual bursaries from universities. Are some universities going to find it easier to offer bursaries than others? Perhaps that is true, but the fact of the matter is that we have seen a very substantial rise in the size of the financial support package being offered to students, and I think that has enhanced the opportunities and choices that they are able to make as a result and has particularly helped those from low income backgrounds. Q194 Tim Farron: But those universities that are good at attracting students from widening participation backgrounds are the ones that have the least wherewithal to do more of that? Ruth Kelly: Some of this actually ties into the question that was asked about part-time students, because some of those institutions that are very good at working in participation have a disproportionately large number of part-time students; so the additional help for part-time students will help. The HEFCE board are considering additional measures on part-time students as well. Q195 Mr Marsden: Secretary of State, as a former Open University student myself until 1997, I welcome very much the additional support you have given to part-time students, and I think no-one in the room would be in any doubt that the Government has made enormous strides in terms of the funding of FE over recent years, but the issue of adult learners will not go away, and I think the critique is that, although the decisions that have been made by the LSC may have been tactically smart, they are not very right strategically. The Associate Parliamentary Skills Group last week produced a report in which they indicated, not just that the majority of members of Parliament believed that we had to invest equally in the skills and training of adult learners, but also that the demographics over the next ten to 15 years are going to invert the pyramid, or the trapezium, if you like, of learning, and you really are going to have a massive new cohort of people who are going to need to be re-skilled and retrained in their forties and fifties. Have you taken that on board, has the LSC taken it on board and what are you going to do beyond the immediate funding issues to address that problem? Ruth Kelly: It is a very important point. Part of the rationale behind the current funding priorities is that there is a clear social as well as an economic rationale for investing in those adults who have poor literacy and numeracy skills but also who have not had the opportunity at school or while they were young to acquire a first floor level two qualification. I think it is right that we make that available in government because, to be frank, we are the only people that are able to invest in those areas and we have a responsibility to do that. There are other economic priorities and it is right too to consider those, particularly, if somebody has gained a full level two in one area should they be able to retrain free of charge in another area, for example? Should they be able to have some government funding to help them get to level three? Those are slightly different arguments, and I think the balance of responsibility shifts between the government, the individual and the employer. However, it is important to have a degree of flexibility, and, indeed, that is what is happening, I think, in cases like the Northern Way, where regional development associations authorities are working with learning and skills councils and others to have a specific approach to regeneration in their area where they can add additional funds of their own to support regional economic priorities, and that model, I think, is a very interesting one. It is not necessarily one that has completely wide-ranging applicability throughout the country. Q196 Mr Marsden: I welcome very much what is being done by the Northern Way and indeed the level three pilots to which you referred which both your constituency and mine will benefit from. The issue that I also want to raise with you is about the relationship between the government and the LSC. The LSC seems to be falling between two stools at the moment. It is regarded as very centralist in its funding procedures but not regarded as being entirely autonomous and there is not local control or input, or hardly any, into the LSC. Will you be able to ask your officials to look more centrally at this whole strategic issue so that in future conversations with the LSC the whole issue of the demographics will be addressed more thoroughly than it has been so far? Ruth Kelly: The department is responsible for setting the strategy of the LSC and the LSC is responsible for the operation of that strategy. As for local input, that is one of the things that Andrew Foster in his report on FE will be looking at. We are expecting his report to be published later this month but in the Schools White Paper one of the points I made was that in the 14-19 area there should be a much closer link-up between local authorities and the local LSC in determining local priorities, with clear accountability in some areas with huge budgets for 14-19 across the piece. It will be a very interesting experiment to see how it works on the ground. Q197 Mr Marsden: I am going to persist slightly with the implications of the cuts in funding because you spoke earlier about having clarity of the position and clarity of priorities and that is entirely welcome, but there is also the law of unintended consequences. In yesterday's education Guardian there was a very disturbing feature which talked about the way in which money that has been taken out of the learner support fund for 2005/6 by the LSC has directly affected the amount available for child care support nationally for learners. Stephen Doyle, the LSC child care funding manager says it is down by 25 per cent. This is hitting the very people that you referred to as needing level two skills. The article quotes students at Manchester College of Arts and Technology, which is about 20 odd miles from your constituency and about 20 odd miles from mine. This is a classic example, is it not, of where the micro results of a particular policy are having a detrimental effect on the very people you are trying to help? Ruth Kelly: I am not going to pretend that there are not funding pressures on the LSC because it is clear that there are and sometimes difficult decisions have to be made. However, within the funding priorities that I have set, they are clear that a certain amount of that is reserved for learner support and that colleges and others can make the local decisions necessary to help overcome the barriers of individual learners. There are also other funds that it is possible to draw down, to help overcome particular barriers, particularly in child care. Q198 Mr Marsden: This is the LSC saying themselves that this is causing them problems. They are saying that, because there has been a 25 per cent reduction in the amount of child care nationally, they are simply not able to deliver this to local colleges. That is clearly an issue, is it not? Ruth Kelly: These are issues that local colleges have to try to resolve. They have to use the money they have to best effect, but this is in the context of significant extra sums being put in the centre. Q199 Mr Marsden: You referred to the issues of fees for part-time students and that is very welcome. There is still an issue though, is there not, in terms of central funding and central support for those new universities like the OU and Birkbeck who are very significantly affected by virtue of the proportion. We have talked to HEFCE already about this, as you probably know. Will you and your officials look sympathetically on the needs and concerns of those universities if the HEFCE settlement, which I gather is about to be announced, does not prove to do all the things it needs to? Ruth Kelly: You will hear news on this shortly. Q200 Jeff Ennis: I would like to take you back to the issue of the funding gap. I am sure you have had the opportunity to see my excellent EDM 85361 on this very issue. Charles Clarke 18 months ago said to this Committee that he was concerned about the funding gap and that it would be closed in five years. The clock has been running 18 months and we are now down to three and a half years. I am wondering whether you can commit yourself to closing the funding gap in those three and a half years. After all, we are a government that sets targets to other public bodies and I would like to set a target for you to come up with a defined timetable and tell us when you are going to close that funding gap. Ruth Kelly: It is always very tempting to set targets. I have huge sympathy for this argument. We have to take it very seriously. I know my predecessor did. It is something that I am looking at very carefully. Even within the LSC priorities it has been made clear that the 16-19 funding rates will increase in line with the minimum funding guarantee in schools. That is a clear statement of the priority that I attach to this issue. We will also be considering other issues to do with the lack of equivalence in the way that students in the FE sector are treated compared with those in schools. I will have more to say on this later. Q201 Jeff Ennis: When I questioned Sir David Normington when he came to give evidence to this Committee recently, I quoted one of the consequences of the funding gap in Barnsley as being the fact that earlier this year, in terms of over-achievement of student numbers, the principal at Barnsley College recruited an extra 106 students into the college and was told by the Learning and Skills Council in south Yorkshire that, because he had already given the target of the numbers that were going, that funding was not available to recruit those students. We are talking about an authority here that has some of the lowest staying on rates in the country. Eventually, the Learning and Skills Council agreed to meet half the cost of the additional students. If those students had been going to a sixth form school in Barnsley, it would not have been an issue. It is issues like this that we need to direct our attention to, because we are working against what we are trying to achieve nationally in getting kids to stay at school from 16 onwards. Ruth Kelly: You are absolutely right. The issue is not just about the funding gap, although that is an issue; it is about the operation and flow of funding between schools and sixth form colleges in the FE sector more generally as well and how that works. Later in the autumn I will be publishing a delivery plan for the 14-19 agenda which will look at some of these issues to make sure that funding flows in an equivalent manner throughout the system and that some of the barriers are broken down. The particular issue that you raise is very important. Q202 Chairman: Why do we need an expensive bureaucracy like the Learning and Skills Council? Ruth Kelly: The Learning and Skills Council as you know is the major funding channel for schools development. I hope it will become much more efficient and effective at its job once it has gone through its agenda for change programme. It operates with a strong regional tier which will be significantly upgraded and its capacity enhanced. Q203 Chairman: If you do not need a family agency for schools and you say, "No. Whatever happens we are not going to have an intermediary between the department and schools", why do you need it here? Why do you not go the whole hog? Your instincts are to have this direct relationship in education. Go for it post-16. Ruth Kelly: The Learning and Skills Council has a significant degree of expertise, particularly in working with businesses and employers and drawing them into the provision of skills and so forth. It would be a huge loss to the system if we were to lose that expertise. I also think that the agenda for change programme will significantly upgrade their capacity to respond on a more strategic level to some of the challenges they are facing and as a result the service will improve. Q204 Dr Blackman-Woods: Strong leverage used in favour of the introduction of variable fees was that this would be additional income into the higher education sector. As we move into the next round of spending review, are you confident that the funding for HE will be maintained so that the income from fees will be additional income and not replacement income? Ruth Kelly: I do not think government ministers are at liberty to say what is going to happen in the next spending review but I can assure you of my total commitment to ensure stability in the sector. Q205 Dr Blackman-Woods: It is a question of principle though rather than numbers. Are you confident that the principle of maintaining that? Ruth Kelly: Everyone in government understands the desirability of maintaining that. Chairman: A lot of us put ourselves out on this question and we were assured that that was continuing so I would like to reinforce that question. Q206 Stephen Williams: "Choice" is a word you often use, Secretary of State. It relates back to FE. As I understand it, a choice of a person at 16 increasingly is to take A levels and other courses at college rather than in a sixth form; yet we have a funding situation adversely affects the FE sector. Your expansion programme post-16 for 300 new academies is that every new academy must have a sixth form. Are you not skewing the choices on the ground? Ruth Kelly: That is not what is happening. The FE sector has benefited enormously from significant investment over the last eight years. Its real funding is up by 45 per cent. We are committed to investing in the capital stock. An extra £1 billion over the next five years is being applied to a long term programme of building colleges for the future. In terms of the funding priorities, even though we are redirecting money towards basic skills and a level two formation for 16-19 skills acquisition, broadly, levels of funding in those courses have been maintained public funding. We hope to secure private funding as investment as well so you would expect to see the overall level continue to go up there. We have a commitment to try and narrow the funding gap which I am taking seriously and determined to make progress on over the coming years. We could do more for the FE sector. Sir Andrew Foster is currently reviewing the nature of what the FE sector is for but I do not think you could put it in the terms that you did. It is also important to broaden student choices. Some students will want to study at 16 in an FE college. Others will want to go to sixth form college. Others will want to stay in a school sixth form. What we need is good quality provision that meets the needs of students and enables them to have access to as broad a curriculum as possible. I am committed to trying to make sure that happens. |