UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 835-ii

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

CHILDREN, SCHOOLS AND FAMILIES COMMITTEE

 

PUBLIC EXPENDITURE: DEPARTMENT FOR CHILDREN, SCHOOLS AND FAMILIES

 

ED BALLS, DAVID BELL and JON THOMPSON

 

Evidence heard in Public

Questions 105 - 212

 

USE OF THE TRANSCRIPT

1.	This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
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4.	Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

 

 

Oral Evidence

Taken before the Children, Schools and Families Committee

on Wednesday 16 July 2008

Members present:

Mr. Barry Sheerman, in the Chair

Annette Brooke

Mr. Douglas Carswell

Mr. David Chaytor

Mr. John Heppell

Mrs. Sharon Hodgson

Paul Holmes

Mr. Andy Slaughter

 

Examination of Witnesses

Witnesses: Rt hon. Ed Balls MP, Secretary of State, David Bell, Permanent Secretary, and Jon Thompson, Director General, Corporate Services, Department for Children, Schools and Families, gave evidence.

 

Q105 Chairman: I welcome the Secretary of State, the Permanent Secretary and Jon Thompson to the Committee. It is a pleasure to have you here and I am sure that you feel the same way. This is the annual pilgrimage of the Secretary of State to the Committee. As you know, a few Secretaries of State have sat before us since I have chaired this Committee and its predecessor. The great thing about such meetings is that they usually indicate that the recess is imminent. We consider this to be an important sitting. We usually ask the Secretary of State if he would like to say a few words to open the sitting and then go straight into questions.

Ed Balls: Thank you for inviting me to the Committee for the third time in six months. It is good to be back. We are here to discuss the annual report. I am sure that you will want to talk about wider matters concerning the Department, and about your recent reports on the Children's Plan and testing and assessment. It is over a year since our new Department was created and six months since the Children's Plan, and I have given evidence as part of your inquiries into those matters. I hope that we have proved over the last 12 months that this is more than simply a different name on the same door to the same Department; I think that we have. The new Department for Children, Schools and Families has a real mission and purpose.

Over the six months since I was last before you, we have taken forward a number of commitments from the Children's Plan such as the establishment of Ofqual, the national challenge for school improvement, the alternative provision White Paper and reforms of pupil referral units. We have launched the myplace youth services programme and have started a consultation on measuring child well-being.

We have done a number of things that, I hope, have shown the Committee, since its report, that we are taking seriously our shared responsibilities with other Departments. We have seen, for example, work on child poverty. In fact, we appeared with the Secretary of State for Work and Pensions and the Chief Secretary to the Treasury before the Committee to discuss that a month or so ago. We have had the Bercow review into speech and language therapy, which reported directly to me and to Alan Johnson, the Health Secretary-we will be responding to it in detail when the first joint child health plan is produced by our two Departments in September-and, obviously, yesterday, the youth crime action plan, which was produced jointly by the Home Office, the Ministry of Justice and my Department.

I hope that we have also made progress in responding to some of the recommendations included in the Committee's report on our Department. We published our timeline for the implementation of our Children's Plan within hours of the publication of your report, which shows how keen we were to respond to that recommendation. We have directed more attention and resources into children with special educational needs, and we launched the Lamb inquiry to examine the way in which parents have engaged in the issue of special educational needs.

In addition, we have launched plans for consultation to legislate to strengthen children's trusts. I welcome the Committee's intention to hold an investigation and an inquiry into those in the autumn. The Department intends to bring forward legislation for children's trusts in the next Session. There is a real opportunity for you to help us to get that legislation right in advance of the Public Bill Committee proceedings on it. We have given the Committee our response on teaching and assessment, which I am sure you will want to discuss today.

I should also like to make a short comment on the delivery of the national curriculum and test results for this year. As I said in my letter of 4 July, the delay in the release of results to schools has caused great inconvenience and uncertainty, which in my view is unacceptable. As the Minister for Schools and Learners said when he gave evidence to your Committee 10 days ago, our first priority has been to ensure that schools receive results in an orderly way with the minimum of delay. Key Stage 2 results were released to schools by the Qualifications and Curriculum Authority yesterday, which, as we know, is a week later than originally planned. As the head of the QCA, Ken Boston, said to the Committee on Monday and confirmed last night in a statement, the volume of Key Stage 2 results available yesterday were 94% in English, 97% in Maths and 97% in science. Key Stage 2 results will be updated further this Friday, 18 July. At that time, all available Key Stage 3 results will also be published. As the Committee knows, and as I am sure Ken explained on Monday, Key Stage 3 marking in English is behind marking in maths and science, but I am advised by the QCA that as of yesterday, more than 80% of the Key Stage 3 results will be available and in the data feed to schools on Friday. However, a considerably higher percentage of the results will be for maths and science-fewer than 80% of English results will be available.

It is important that we learn lessons from the experience. When I first announced the need for a delay in my letter of 4 July, I said that I would ask for an independent inquiry into such matters, which, as my colleague the Minister for Schools and Learners confirmed to you last week, will be led by Lord Sutherland of Houndwood, the first chief inspector of schools. The inquiry will investigate what went wrong, the reasons for the problems that we experienced, and what should be done to avoid a recurrence. It will report to Ofqual, the regulator, on matters within its remit, but more widely to me on other relevant matters that are outside Ofqual's scope. This morning, I wrote to Lord Sutherland with the detailed terms of reference. I have provided the Committee with copies of that letter, and the corresponding letter and terms of reference from Kathleen Tattersall, the chair of Ofqual, to Lord Sutherland, on the parts of the inquiry that are relevant to her organisation. We expect that report to ready this autumn-it will be ready this autumn. The results of the inquiry will be published and I will keep the Committee informed of progress. As I said, what has happened in recent weeks is unacceptable, and we need to learn lessons from it through this inquiry.

 

Q106 Chairman: Thank you. I want to hold back on tests and testing for the moment. May I open up by saying that we, too, have tried to respond energetically to the fact that this is not the old Department and the old Select Committee but very new ones? You will know that the new Committee has held meetings on child poverty, and that our first inquiry-we are well into it-has been into looked-after children. So we, too, take that responsibility seriously.

One of the things that we are concerned about is how we are able to scrutinise the new Department. We have been going through the annual report with our special advisers, and it is very difficult, having moved from one Department to two new Departments, to discharge our responsibility with the mismatch of figures that we have. This is a challenging situation for us. Budgets have changed. It is much easier with schools, but as soon as we get into the children and families area all kinds of budgets from different Departments are involved. That is a serious concern for us as a Committee, and we would like a proper discussion with you and David Bell about how we get this right, because it is not right that we find it difficult to find out how the money is flowing. Traditionally, we could quite easily see that. If you change the figures, David-as you did, I think, the year before last-we ask you to change them back again so that we can have consistency over the years. It is important for us to discharge our responsibilities, so we would like-not today but as a matter of urgency-discussions about how we get this right.

Ed Balls: I understand that. To give you one indication, if you measure our Department by the size of our budget, our budget is smaller than the budget of the Department for Education and Skills was, but our range of responsibilities is considerably broader than the original range of responsibilities of that Department. To give one example, my Department has joint accountability with the Ministry of Justice for the operation of the Youth Justice Board, in all aspects of policy, strategy and implementation, but the departmental expenditure limit is held by the Ministry of Justice and so the budgeting and how the accounts are presented does not reflect the nature of that responsibility.

To give you another example, with the youth crime action plan, the majority of the additional money that was contributed to the £100 million yesterday was contributed by my Department, but I would not say that that means that the majority of the responsibility for delivering the plan comes to my Department. It is clearly shared across all three Departments involved, with the Home Office and the Ministry of Justice substantially in the lead on the enforcement side of the plan. My sense is that this is a wider question about how accountability for public spending agreements operates, because in many of these areas those are now joint responsibilities. Departmental budgets voted on in Parliament do not really capture those shared responsibilities.

 

Q107 Chairman: That is right, and I think that it is a challenge to us and to you to get this right.

Ed Balls: It is more complicated for us because we have such a wide range of shared responsibilities.

 

Q108 Chairman: Or more challenging to us because we are supposed to be checking it.

Ed Balls: From my point of view, and I said this to you when I came here last time-I was very pleased to come to the child poverty inquiry-the more scrutiny by this Committee of our joint responsibilities, the better. I have always felt that accountability and scrutiny strengthens the hand of those people who are trying to do the right things in co-operation with others.

 

Q109 Chairman: I agree with all that, but it is just that when our Committee is looking at it, we want to know when a flow of money comes in and whether it really is a flow of money, and we want to know how big a flow it is and where it flows to.

Ed Balls: Fair enough.

 

Q110 Chairman: The second point is that, although it is nice to get your response to our report on testing and assessment, it has come in late-quite late for us to digest it-so we have decided to publish your response and issue our response in due course. The one issue that I want to take up with you this morning and that comes clearly and strongly out of our report is one which, on a quick reading of your response, still does not seem to be accepted on your side-it certainly was not accepted by the Minister for Schools and Learners. The evidence that we got time and again in that report, and now from a recent Ofsted report that I received only this morning, shows a really worrying drift towards teaching to the test and squeezing the access to the full curriculum. It seems to us, in terms of your initial response and what we have heard from Jim Knight, that you do not really believe that that is the case out there, but that is certainly how we feel about it.

Ed Balls: Do you want me to respond to that point and to points more widely?

Chairman: No, not more widely. The real thrust, our central concern, was that you do not seem to think that the testing regime is pushing teachers, heads and other staff in a school to be too obsessive about teaching to the test.

Ed Balls: It is not our view that the common practice is to teach to the test, and it is not our view that that is the best way to prepare children and young people to do well in the tests. It is our view, and the view of heads and professional teachers who are doing a good job, that a well-rounded understanding of the subject is a better preparation to do well in the test. Of course, part of learning is learning to be able to reproduce information quickly in an exam. Every time I have been educated in my life, part of that was looking at the exam papers and doing a couple of test papers, but if that is what you did every day throughout the year, you would make no progress at all.

Of course there must be some understanding about how to operate in a testing regime, but it is not our view that teachers should be or are generally teaching to the test. I think we say in our response to the Committee that we want to gather more information on testing and assessment, and I am happy to come back and have further discussion with you on that. There is a range of wider issues that your report throws up, which I could say a couple of things about now, if you like. Are we going to have time to discuss this later in the morning?

Chairman: I think we will have another chance, but not this morning.

Ed Balls: In that case, may I say one thing? Many powerful points were made in your report. I also agree with your starting premise. You say clearly that the principle of externally assessed national tests in order to have proper accountability is accepted between us-that is our starting point. There is then a question about what the practice should be and how we can do that most effectively.

I am not saying that the current position is set in stone, but I do not think that anybody wants to go back to the old days, when schools were not accountable and parents did not have proper information about how their child or the school was doing. We have made a change already on key stage 1, to move to teacher assessment, and we have the making good progress pilot and single level testing, which is happening around the country and in many ways addresses your concerns. The advantage of single level testing is that the teacher is in charge of when to do the test and which test to do, not the Government or the assessor. The monitoring of progress, which is integral to good teaching, is in the hands of the teacher, because the teacher is deciding on the level. Teaching to the test is less meaningful when you are talking about a test that is being set at a level for the individual child.

We think that single level testing allows you to have both accountability and a more child-centred approach to testing, but we should not rush to any decision before we have proper evaluation. As you know, we have 450 to 500 schools that will be doing single level tests until next July. We have an evaluation that is being done by an external auditor-I think PricewaterhouseCoopers-for next July. I have asked for an interim report on the first year, after the summer. I am happy to give the Committee an interim report, probably in October, on the progress that we think we are making with single level testing and broader teacher assessment: assessment for learning and making good progress. That could form the basis of a discussion and you will have wider points to discuss.

I am anxious to say that we want to respond to the concerns expressed in your report. We do not agree with them all. I definitely do not agree with those who say that they would prefer to go back to the days when we did not have this degree of accountability and assessment-sometimes that is explicit and sometimes implicit. We are keen to respond but we have to do it properly and systematically. If I can provide you with an update on single level testing after the summer, that might allow us to keep pushing towards the right kind of reforms.

 

Q111 Chairman: Secretary of State, you know that we are trying to take on those shibboleths of 20 years ago. We started with testing and assessment, we are now at the national curriculum and we are going to be looking at inspection. They were fundamental in the Baker years. We all know why they were introduced. Our job, as a Committee, is to ask, "After 20 years, are they fit for purpose?"

In the first report we said that we thought that testing and assessment has gone too far and, however it is done, we have to shift the balance back. We hope that you hear that message. Sometimes, Secretaries of State hear the message but it takes a couple of years for them to come round to listening, as when you recently introduced a change in the law for school admissions three years after our Committee recommended it. We welcome all change, Secretary of State, even if it takes some time to come around.

Ed Balls: This Committee has a fine tradition of contributing constructively to policy development, and I am saying that this is a further opportunity to do that on teaching and assessment. The right thing for me to do is to keep providing you with our best information, which is why I will come back to you with an assessment of the first year of single level testing after the summer. I think that this is an important opportunity. The interesting thing is that the best schools are testing and assessing considerably more often than they are required to by any national testing regime, but they are doing it in a way that makes sense for the individual pupil and informs the teacher's judgment of the progress of the child. I am not sure whether too much or too little testing is what the debate is about; it is about whether that testing is informing the judgment of teachers.

Chairman: And whether it is done by an American bureaucracy hired by the Department or it is done more locally.

Ed Balls: I am happy to be lured into those discussions.

 

Q112 Paul Holmes: A lot of people believe that teaching to the test is narrowing the curriculum and worsening pupil experience. When the teachers' unions said it, you said, "That is the teachers' unions and we do not agree with them". When our report said it, you said that you do not agree with it. Now Ofsted has said it-it says it in this document. Are you saying that you do not believe Ofsted's report, the report of your inspectors who you appoint?

Ed Balls: I said that I do not believe that most teachers are teaching to the test. We have a very clear view, reflected in the new Key Stage 3 curriculum, that it should be broad and engaging. By embedding creativity in the curriculum we have been trying to ensure that teachers are taking the broadest view of what they need to be teaching.

 

Q113 Paul Holmes: That would seem to imply that you, as Secretary of State, are saying that you do not believe Ofsted's report. David Bell, you were head of Ofsted for four years and now you are now Permanent Secretary. Since you have ceased to be the chief inspector do you believe that the reports are no longer accurate?

David Bell: As the Secretary of State said, there is a lot of evidence to suggest that we are giving greater national curriculum freedom rather than less-Key Stage 3 reforms, the Rose review of primary education and a more flexible approach to 14-to-19 education. My experience of going round the country and seeing schools in action suggests that the vast majority of teachers are flexible and sensible about what they do. Ofsted has not said that there is a universal narrowing of the curriculum in every place. That is not the reality.

 

Q114 Paul Holmes: So the Permanent Secretary after four years at Ofsted and the Secretary of State do not agree with the Ofsted report. You think that Ofsted has got it wrong.

Ed Balls: What is Ofsted saying that you say we do not agree with?

 

Q115 Paul Holmes: That teaching to the test is narrowing the national curriculum and badly affecting students' experience in many schools across the country-not every school, but to a worrying extent. Ofsted has agreed with our report and with what the teachers' unions have been saying for a long time, but you are both saying that Ofsted, the Committee and the teachers' unions have got it wrong.

Ed Balls: I did not say that. I said that in our view the majority of teachers are not teaching to the test. That is not common or best practice, but where it is happening it is wrong. I think we say in our response to you that we want to collect more information to see how widespread the practice is. We do not think that it is the right thing to do. Does Ofsted say that I am wrong to say that it is not happening in the majority of schools?

 

Q116 Paul Holmes: Is Ofsted wrong to say that the trend is continuing, and that the teaching to the test effect can be observed also at GCSE and A-level?

Ed Balls: I did not say that teaching to the test never happened. I said that it did not happen in the majority of cases and that it was the wrong thing to do. I think that Ofsted would probably agree with me on that.

 

Q117 Chairman: I suppose that what we are saying, Secretary of State, is that if you are in Sanctuary Buildings, you have one view of what is happening in the world. Sometimes small experiences stay in your mind. Very recently, I went to a school a stone's throw away from here. The head very much respects you and thinks that you are a good Secretary of State. He said that it was very nice that you gave the school some extra money for expanding access to the curriculum. Then he smiled and said, "Do you know what we spent it on? More rehearsals for the tests." That is worrying, is it not?

Ed Balls: It is for that head and his governing body to decide what to do with those resources, not me. But that is not the judgment that I would have made.

 

Q118 Chairman: No, okay. Can we move on? The last thing that I want to ask you before we start on the more general questioning is this: where does the buck stop with the testing regime? There is a lot of media interest in our current problems with Key Stages 2 and 3. This Committee has been pretty consistent in its questioning. If you push me and most members of the Committee, you find that it is not the time or the delay that worries us, but the quality of the marking and whether parents and students can be assured that the tests are of a consistent standard and a true reflection of the effort that the children have put in over the year. That has been our concern throughout. It is what all of us have been saying.

There are worries about the quality of marking. That is not so much the computer glitches. We all know about that and we have all become pretty experienced in this field over a number of years. The concern is about the quality of the marking and the assessment of the qualifications. I met the head of Ofqual yesterday and pointed out that to my knowledge this American company was using not graduates to mark papers, but people who have recently passed their A-levels. It seemed quite disturbing that there was not that consistency of quality in the marking. We have Ofqual; we have the National Assessment Agency; we have the QCA, but we also have the Secretary of State. Where does the buck stop?

Ed Balls: It is Ministers who are accountable to Parliament, directly and through the Select Committee, for the operation of our schools system, including the testing regime, so in the end the accountability comes to Ministers. That is why when I realised there was a problem, I wrote to inform you at the first opportunity I had. That is why I am here to give evidence and that is why the Schools Minister came last week. In the end, we are the people who are accountable to Parliament.

But, in the case of the testing regime, we operate things in a particular way, as you know. I do not think that people would think it sensible or right for Ministers to make operational decisions about individual schools' tests. I think that people would be concerned that there was political interference, especially given that we are judged as a Government on what is happening in terms of school improvement. We are accountable for the funding of the regime and the way that it operates. We ask a non-departmental public body, the QCA, to deliver the tests on our behalf at arm's length from us. The QCA then contracts independently of Ministers with the people who do the practical delivery of the tests. So the accountability is as follows: ETS is accountable to the QCA for the delivery of its contract; the QCA is accountable to us and more widely for ensuring that that contract is effectively delivered; and I am accountable for ensuring that the QCA fulfils its responsibilities and for the overall operation of the regime. That is why the moment I saw that there was a problem I reported it to you.

 

Q119 Chairman: I hear that, but you can imagine the average parent looking at the QCA, Ofqual, the NAA and ETS and wondering if they are disturbed about what is going on. Who should be appearing to put people's minds at rest?

Ed Balls: But you called the QCA on Monday because it manages the delivery of the test regime on a daily and weekly basis. Therefore, you were right to ask it the questions. The QCA delivers the tests through its contractor, but we have made the important reform of having independent administrators reporting directly to Parliament. We now have a regulator of standards in Ofqual that reports independently of me. My information on test quality comes from Ofqual.

Ofqual wrote to me to say that, in its view, there has been no impairment in the quality of marking. The exact words in the letter I received from Kathleen Tattersall are: "While results will be delayed and I cannot predict the volume of reviews that schools will request this year, from the processes we have observed, the quality of marking is at least as good as previous years and justifies issuing the results." That is what Ofqual has said independently of me to me and to Parliament. If Ofqual takes a different view, I am sure that it will report that immediately.

I rely, as we all do, on Ofqual's independent judgment of the quality of marking being delivered to the QCA from ETS. Such judgments have much more power coming from Ofqual than from me. That is why I wanted to have an independent standards regulator.

 

Q120 Chairman: Secretary of State, I absolutely agree with you. I realise that these bodies have such responsibilities. However, when I met Ofqual yesterday, it was astonished when I produced a piece of evidence that I know to be true from Nottingham, a part of the country that you know well. An agency hired a young man who was freshly graduated in the sciences to mark science, maths and English papers. He was the most experienced member of his team, which included non-graduates. I could see the look on the face of the chair of Ofqual. She was astonished that that was the case.

When listening to Ken Boston, for whom I have great respect, I constantly feel that he is directing us to the lateness. That does not concern us so much. Our key concern is quality.

Ed Balls: Quality is absolutely paramount. I agree with you completely. It is not appropriate for me to comment on the facial reactions of the chair of Ofqual. However, an independent inquiry led by Lord Sutherland is reporting to Ofqual and to me. All these issues will be looked into, including some of the practices of marker hiring. I have been told by the QCA that the same markers are being used and that, if anything, there have been more quality checks. Lord Sutherland will look at that issue.

It is important that Ofqual, independently of me, does its job properly and effectively. I am sure that it is doing so. It has been monitoring this situation for months and its judgment to me is that there is no evidence that the quality is lower. It has said that it is at least as good.

Chairman: Okay. Andy Slaughter would like to continue on testing.

 

Q121 Mr. Slaughter: Secretary of State, Dr. Boston sat before us on Monday to discuss the delays in the national curriculum test results. We have seen that you have the transcript of that. Before you came in, we were discussing where the responsibility lies for this and how far it rests with ETS, the QCA or with you.

On Monday, the Chairman said: "So was the wrong decision made about the contractor-in retrospect? I know you have all sorts of difficulties. The word on the street is that you did have a UK-based supplier, which had much more grasp of the technology, but you went for a much cheaper option." Dr. Boston replied: "No, it was not a cheaper option-well, it was the lowest cost option, but it was not picked on those grounds. There were, finally, three bidders, from a field that started at six and went quickly back to five. On the key criteria of capacity to do the job, this company was clearly up there with any of them".

My understanding is that that is not the case, but that ETS was significantly cheaper than other bidders. I do not know whether we are entitled to know what the prices bid were. Clearly, there have been deficiencies in some parts of the delivery of the service. Will you be looking at whether mistakes were made in the letting of the contract, particularly in relation to the sheer logistics of it? What seems to have gone wrong here is not so much the technical side as the actual physical process of marking-delivering scripts to markers-which, clearly, this organisation did not have the capacity to do. Is that not the QCA's responsibility-or your responsibility-to see that it was let to a competent contractor?

Ed Balls: The answer is yes. We shall be looking at this. My remit letter to the QCA said this year, "You will need to ensure delivery of national curriculum tests and make sure that they are valid and reliable against the policy objectives established by Ministers." In the terms of reference for the Sutherland inquiry, which we have released this morning, we say that Lord Sutherland, reporting to me, will look at the "appropriateness of arrangements put in place by QCA to procure the contract for delivery of National Curriculum Tests and the subsequent management of that contract by the QCA, and, specifically: the procurement process from the development of the initial tender specification to the award of the contract; the suitability of the contract to allow delivery of QCA's remit; the arrangements for the contractor, ETS Europe, to report to QCA; the arrangements for ETS to report risks to QCA; the effectiveness of QCA's arrangements to manage the ETS contract and the delivery of National Curriculum Tests . . . and the functioning of IT systems . . . to manage and deliver the National Curriculum Tests and to ensure delivery of data".

So Lord Sutherland will look very widely at the procurement process and the subsequent follow-through from the QCA in monitoring that contract. I, like you, am looking forward to seeing the results of the Sutherland inquiry in the autumn. But it will look in detail at all the issues that you are raising.

 

Q122 Mr. Slaughter: Including the contract letting process, where the cheapest was the best?

Ed Balls: The "procurement process from the development of the initial tender specification to the award of the contract". My remit to the QCA is to deliver the national tests. It is the QCA that then runs the procurement process. It runs that independent of Ministers. There is no ministerial decision making at any point through the procurement process. There were actually more than one-I think two-Office of Government Commerce Gateway reviews, in which the procurement process was reviewed by OGC. On more than one occasion the procurement process for the ETS contract was given a green light by the Office of Government Commerce. So, from a ministerial point of view, the fact that this was been done at arm's length from us, but OGC gave it a green light, would be sufficient to give us confidence that it was being done properly. That is clearly not about the least cost. It is about value for money, but value for money means making sure that you get the job done. The unacceptability here is that the job has not been done satisfactorily. The contract has not been properly delivered, as I see things. But that is a matter for Lord Sutherland to look into.

 

Q123 Mr. Slaughter: Two brief questions concern us now. If it is right that ETS was the cheapest company, and if it is discovered that the company is not competent to continue carrying out the work, are you not then in a difficulty? You will be going back to other suppliers, which had higher prices and which, presumably, now, in the light of what has happened, will want to charge very high amounts in order to undertake the work. Therefore, have not ETS rather got you over a barrel in that sense?

Ed Balls: This is a very large contract-£165 million. It is a five-year contract, but it is a contract that is clearly based upon performance. There will be a number of provisions in that contract. The management of that contract is for QCA, not for myself. It would be quite wrong of me to start pre-empting decisions that the QCA may make in relation to their contractor. That would be the wrong thing to do legally as well, I think, but it is really important that any procurement processes at any time deliver proper value for money. That will always be a guiding principle for us, in any decisions that are made subsequent to today.

 

Q124 Mr. Slaughter: Finally, I understand that once the results are with schools there is an opportunity for schools to challenge, to question whether that is right. In the light of what has happened so far, do you anticipate a higher level of challenge than before? We know that many schools are sceptical about the tests anyway, and they might be even more sceptical after the debacle with ETS and QCA this year. Are provisions in place to deal with what might be an upsurge in queries and complaints this September?

Ed Balls: Whether it involves dealing with complaints or calls to the helpline, that is a matter for QCA and ETS. They must ensure that they have proper provisions in place. There are complaints from schools every year.

 

Q125 Mr. Slaughter: Have they done that? Are they anticipating it?

Ed Balls: It is for the QCA to ensure that such provisions are in place. Obviously, we have told the QCA that we must ensure at every stage that things are done in a proper and orderly fashion. We have allowed more time. Where possible, we have encouraged schools to make any complaints by 25 July, but we have also said that because of the delays, complaints to QCA can be made up to 10 September, or 10 working days after the beginning of the school term, whichever is longer. There is a clear window after the summer holidays if schools choose to complain, and it is important that ETS and QCA handle it properly. Ofqual will look very carefully to ensure that the processes are done properly from a quality and standards point of view, and I am sure that that is exercising the QCA at this minute.

 

Q126 Mr. Carswell: Clearly, there has been a bit of a cock-up, and there are many thousands of families and teachers who will be anxious. There are also concerns about the reliability of the final results. As Minister, do you take responsibility for that?

Ed Balls: I have already answered that question to the Chairman. I said that Ministers are accountable to Parliament for the overall delivery of our schools policy, including the national testing regime. It is my responsibility to ensure that that happens, and I do so in an arm's-length way through an independent body, the QCA, which contracts with ETS. It is the responsibility of ETS to deliver the contract and it is QCA's responsibility to ensure that the contract is delivered. I have asked Lord Sutherland to do a report for me, because I want to know whether QCA has managed this properly, so that I can report to Parliament. That is my responsibility.

 

Q127 Mr. Carswell: If Ken Boston is responsible in the way that you described, how will you ensure that he, as quango chief, takes responsibility?

Ed Balls: I am going to wait and see the results of Lord Sutherland's inquiry and it would be wrong to pre-empt that. I have set up an inquiry reporting to me which, as you have seen, covers a wide range of issues. How the QCA has discharged its remit from the Department to deliver national curriculum tests at Key Stage 2 and 3 makes up the core of the inquiry, and I will publish that as soon as I get it.

 

Q128 Mr. Carswell: Without wishing to wait all that time for the Sutherland report, do you have full confidence in Ken Boston as head of QCA?

Ed Balls: In my opening remarks I said that our first priority is to ensure that the tests are delivered in a timely and orderly fashion. That is QCA's focus this week. I have full confidence in Ken Boston and the QCA's ability to deliver that remit this week. Clearly, there are wider issues that we must look at, such as the procurement process and the subsequent management of the contract, and that is what the Sutherland inquiry will do. For me to go into that would be to pre-empt the inquiry.

 

Q129 Mr. Carswell: So you might not be fully confident of how the QCA handled the procurement process?

Ed Balls: That is why I have asked for an inquiry by Lord Sutherland. I want to know what has happened and it would be silly for me to say anything that pre-empts that independent inquiry. I want to know whether the QCA has discharged its remit effectively, and that is what I have asked Lord Sutherland to look into.

 

Q130 Mr. Carswell: So the Minister for Schools does not take responsibility. He blames others and gets someone called Sutherland to kick it into touch for the autumn. The quango chief will not accept that he is to blame and passes the buck to ETS. Things have been messed up and local parents and teachers take the rap. As Minister in Whitehall, are you sure that you are really in control of what is happening?

Ed Balls: I understand what you have just said, but I think that that is contradicted by what I said to you in answer to the previous question. I said that Ministers are accountable to Parliament and to the public for the delivery of schools policy, including the delivery of the national curriculum tests overall. But the way in which we do that, rather than direct ministerial control of the tests, which would be the wrong thing to do and would not command public confidence, is to ask the QCA to manage that process. It then contracts. ETS is accountable for the delivery of its contracts and the QCA is accountable for ensuring that the contract is properly given and delivered. The reason why I have asked for an independent inquiry is that if there have been mistakes at any point in that process, I need to know so that I can report to Parliament. That, in the end, is where accountability lies.

I have said-I said this to the Chairman when I wrote on 4 July-that I, like you and like many parents and teachers around the country, am upset by what has happened. It is unacceptable, and the distress and inconvenience that it has caused should not happen. That is why I am having this inquiry.

 

Q131 Mr. Carswell: When your predecessor, Estelle Morris, quit when she realised that the QCA had made a cock-up over testing, I seem to remember that she found the humility to say sorry. Will you be saying sorry?

Ed Balls: I do not actually think that that is a correct description of what happened with Estelle Morris. I have said that it is unacceptable. The QCA's Ken Boston said on the radio this morning that he apologised for what had happened and for the way in which ETS had let down schools and parents.

 

Q132 Mr. Carswell: But you will not apologise.

Ed Balls: I am really upset, like you are, about what has happened, and I want to know what has gone on. That is why I am having an inquiry.

 

Q133 Mr. Chaytor: The Sutherland inquiry has two strands. He will report privately to you but publicly to Ofqual.

Ed Balls: We will make both reports public, but there will not be a series of public evidence hearings. He will conduct his inquiries for Ofqual and the Department and make them public. I do not think that there is any difference in-

 

Q134 Mr. Chaytor: So as soon as you receive the Sutherland report, it will be published.

Ed Balls: Yes.

 

Q135 Mr. Chaytor: Should the contract with ETS also be published?

Ed Balls: That may be something that Lord Sutherland can look at. I cannot tell you today whether, legally, that is possible, but I am sure that Lord Sutherland will want to provide the fullest information in his inquiry. If it is possible for him to publish the contract, I am sure that he will. He has not been given any indication that we want him to keep anything private, but there will be commercial and legal issues for him to look at.

 

Q136 Mr. Chaytor: You told us earlier that the value of the contract was £165 million over five years, so the key commercial factor of the contract is already in the public domain.

Ed Balls: That would have been announced to Parliament.

 

Q137 Mr. Chaytor: But given that the terms of reference for Lord Sutherland's response to you focus largely on the nature of the contract, how can the contract remain secret if there is to be adequate public scrutiny of it?

Ed Balls: I gave you an open and candid answer, which was that I did not know whether there would be any legal or commercial reasons why it was not possible to publish the contract. I am sure that if it is legally possible, Lord Sutherland will want to do so. From my point of view, that would be highly desirable.

Jon Thompson: This was a European Union public procurement process that led to the announcement on 28 January 2007 about the award and its value. There are legal processes for the original advertisement and the whole process, including the selection and the criteria for that selection, and they are already publicly available. On the ultimate question of whether the contract could be published, I do not know the answer, but a significant amount of the information is already publicly available because it is an EU public procurement process.

 

Q138 Mr. Chaytor: But you are not aware of any further legal or commercial obstacles that would prevent the whole contract from being in the public domain.

Jon Thompson: I need to be very clear about this: that contract is between two bodies, neither of which is the Department, so I cannot actually answer that question for you. Sorry.

 

Q139 Paul Holmes: To return to the old-fashioned concept of ministerial responsibility, one frustration for MPs these days is that when we ask a Minister something, they will say, "Oh, you'll have to ask Railtrack, you'll have to ask the Learning and Skills Council, you'll have to ask the primary care trust-that's not our problem." You are effectively saying that whatever comes out of the Sutherland inquiry, it is the fault either of Ken Boston and the QCA, or ETS, or both, but it is certainly not yours. As you say, you have published this morning the terms of reference for the Sutherland inquiry, and the first point says that it should look at how the QCA has discharged its remit. Should not the first point be to look at the adequacy of the remit from you and your Department?

Ed Balls: I understand the point that you are trying to make, but I have said from the beginning that the reason why Jim Knight came last Monday, the reason why I am here today and the reason why I wrote to the Chair of the Select Committee on 4 July is that Ministers are accountable to Parliament for the delivery of schools policy, including the testing regime. I have no problem with that, and the Sutherland inquiry's terms of reference say that Lord Sutherland will look at the "appropriateness of the Department's arrangements to monitor QCA's delivery against its remit." So he has got to look at whether the Department, as well as the QCA, was doing its job. Nothing is out of bounds for Lord Sutherland. He can look at the whole process, and I am very happy for him to look at whether the original remit was properly specified.

 

Q140 Paul Holmes: But it does not say, "You will look at the remit and see whether it is appropriate". It says, "You will look at how the remit was delivered", which is a different thing.

Ed Balls: I read you the remit a moment ago. It says "You will need to ensure the delivery of national curriculum tests, make sure that they are valid and reliable against the policy objectives established by Ministers." We are asking Lord Sutherland to inquire whether there should be national curriculum tests and whether they should have been externally marked, or whether they should have been done at key stages 2 and 3. That is the policy of the Government for which we are clearly accountable. We are asking him to look at whether the delivery of that remit was properly done by the QCA, but that includes the Department's communications with the QCA. If Lord Sutherland feels that the remit was improperly specified, and that contributed to the problem, then he will say that, and I will report that to Parliament.

 

Q141 Paul Holmes: I have two specific examples of what you might have put in the remit. Ken Boston told us on Monday that in every year from 2003 onwards there have been problems with getting the tests in on time. Should that not have been part of the specific remit for employing a new contractor? Jim Knight said that a new contractor was having teething troubles, but it is a lot more than teething troubles; it is a shambles. As part of your remit for the QCA to appoint a new contractor, should you have been saying, "Why have we failed, and been on a knife edge every year since 2003? What do we do about it with the new contractor? What should be in that contract?"

Ed Balls: We said to the QCA that we wanted it to ensure that national curriculum tests were delivered successfully. In May 2008 we had an improvement in key metrics over 2007, such as quality of marking, reduction in the number of lost scripts and improved services to schools. So we were clear and more detailed than in the headline about what we would like to see the QCA deliver, and part of what Lord Sutherland will do is look at whether that was done. I am sure that he will also look at whether it was appropriate for us to suggest that we should have had improvements in the quality of marking. I am very happy for him to look at those issues. The problem, as I understand it, is that ETS made commitments to speed up delivery time and improve marker engagement, and it has been in some ways its inability to deliver on those improvements that has caused the problem. It promised that Key Stage 2 results would happen more quickly that in the past, and it is not managing to deliver on that commitment to improvement.

 

Q142 Paul Holmes: Should not you as the Minister, and the Permanent Secretary, have looked at past experience and said, "Shall we look again at the quality threshold that we want the QCA to apply?" We have a long history of companies such as Capita, EDS, and ETS promising the earth-ETS put in the cheapest bid in this case, as we heard on Monday-and not delivering. ETS was in the press yesterday because it has a record of never hitting a single target it has promised in any contract in America. I am sure that you have applied some sort of quality threshold, learning from the experience of this Government with big companies such as ETS.

Ed Balls: I have set out to you the fact that we wanted an improvement in quality, and it is true, as will be clear in Lord Sutherland's work, that our officials observed different stages of this process. It is all done according to procurement rules and with Office of Government Commerce oversight. It is all done with due diligence checks on past records of individual contractors. The decision was then made by the QCA, without reference to Ministers. Lord Sutherland will look at all the issues to which you referred, and at whether the QCA properly undertook its responsibilities to deliver the remit. It would not have been right or best practice for Ministers to have been second-guessing judgments made through the procurement process. That is not how things are done and it is not the proper way to do things.

 

Q143 Paul Holmes: But, again-this is my final question-based on years of experience, should not you and the Department, as responsible people, have said, "We have a long experience of these big private sector companies negotiating contracts with civil servants which they benefit from and the taxpayer loses out on"? Ken Boston emphasised on the radio this morning and to us on Monday that this is the start of a five-year contract, and there would be huge legal and cost implications to sacking the organisation. Surely, based on experiences such as those with Capita, individual learning accounts and other things, you should have given the QCA the remit to ensure that the contracts were a damn sight more watertight.

Ed Balls: And we did. We have had a great deal of experience in these matters, and after we arrived in government, in 1997 and 1998, we picked up the consequences of previous poor procurement processes, including those involving the Jubilee line and the Horizon project with the post offices. We have tried to put in place improved processes. PFI has dramatically improved things in terms of delivering on time and to budget. The OGC's job, with its expertise, is to ensure that procurement processes are properly followed.

As I have said on more than one occasion, in this case, the OGC gave a green light to the QCA procurement of the ETS contract. If I get a green light from the OGC, you would not expect me, as a Minister, to second-guess its judgment of QCA's judgment of the ETS contract. That is what the OGC procurement process gateway reviews are for. We have had substantially improved value for money in the management of these contracts because of the way the OGC manages procurement processes. Lord Sutherland must tell us whether in this case those checks and safeguards were effective.

Chairman: I do not want this to dominate our whole sitting. We shall have a quick question from Annette and then we are moving on.

 

Q144 Annette Brooke: I think one could interpret from Ken Boston's evidence that this was an accident waiting to happen. What consideration, especially in the remit, has been given to the possibility that the current assessment load is simply not sustainable?

Ed Balls: That was not my reading of Ken's evidence and I have not had that discussion with him. I exchanged letters with him back in March and April. I explicitly said that with new systems being put in place, it was important for us to monitor the situation. At a meeting with him on 2 June, I asked for reassurance that the ETS process was being properly managed. He explained that there had been some initial difficulties with marker recruitment and some of the original training processes, but that those were being sorted out and addressed. Both Jim Knight and I provided a number of answers to parliamentary questions, and letters from Ken, to Members of Parliament, to reassure them that the issues were being addressed. The first time that QCA told us that the test results were going to be delayed was 1 July. I want to know what happened in the weeks in between, which is why I am keen to see Lord Sutherland's findings.

There are 10 million scripts and more than 1 million pupils are doing national curriculum tests, so, of course, in weeks when the tests are done and marked, and the quality is being checked before the publication of the results-those things happen at the same time every year-the system is most under pressure to deliver. That is what Ken was saying on Monday. I do not think that he was saying-I do not think that he would be right to say it either-that the principle of externally assessed national tests is wrong. I did not get the impression that that was the Committee's view either, because your report on testing and assessment said the contrary.

 

Q145 Chairman: But, Secretary of State, when you look at this mess-up and at the fact that, as Ken said, there has not been a full delivery since 2003, do you not think that perhaps Lord Sutherland ought to contemplate not having some vast private sector organisation running the system nationally, but splitting it up regionally or sub-regionally, much closer to home? That might be a better alternative. You would still get the national testing, but the delivery would be different. It would be nice to see the £165 million going elsewhere-perhaps to local delivery agents.

Ed Balls: My concern was that contracting separately for different contracts to mark region by region would have been considerably more expensive. If Lord Sutherland advises us that the contracts and the contracting process should have been specified in a different way, that will be good.

The question whether there should be national tests is for Ministers and your Committee to scrutinise. An advantage of single level testing is that there would be testing more than once a year so there would not be one moment at which the tests occurred. A complication of single level testing is that a number of levels of tests would be set simultaneously with teachers and schools deciding which test each child should enter. A more personalised approach to testing is a more complicated approach. I think that it might be a better way of testing, but there can be no assurances that it would be less expensive.

 

Q146 Chairman: Do you think that you could be seduced into looking at national tests delivered locally and marked and assessed locally?

Ed Balls: Tests are marked by teachers locally all around the country. Are we saying that the bureaucratic burden of marking the tests should be transferred to schools? My judgment is that a lot of schools would find that difficult to accept. In the case of key stage 1, we have moved to teacher assessment.

 

Q147 Chairman: I am just trying to test you to see whether you are open-minded enough to say that you could look at these options.

Ed Balls: At the very beginning, I said that the Committee and I agree, although many others do not, that the principle of externally assessed national tests is right. The question is how best that can be delivered. I said that I did not think that the current system was set in stone. I am keen to discuss with you ways that we can make progress. We have already made progress at Key Stage 1 and I am keen to do so at Key Stages 2 and 3. I do not want to go backwards on the principle, but I am happy to look at these issues in detail. I think that single level tests are an important opportunity, if properly evaluated, to make progress in a way that delivers more discretion for local teachers.

Chairman: As I said, we must move on. David is going to start on school and college funding.

 

Q148 Mr. Chaytor: Is there any argument against moving to a system of direct funding of schools from the centre?

Ed Balls: The argument is that that would take away local authority discretion, exercised through school forums. That is valued around the country by local authorities and they would feel it to be a further step towards centralism and ring-fencing that would not be appreciated.

 

Q149 Mr. Chaytor: But you are pressing ahead with the academies programme, which extends direct central funding to more schools.

Ed Balls: Yes, but the large majority of school funding is happening through the dual formula. I am not seeking to centralise education funding or accountability.

 

Q150 Mr. Chaytor: In respect of the discretion exercised by local authorities over deprivation funding, the recent study by the Institute for Fiscal Studies suggested that only 70% of the funding that the Government allocate for deprivation ends up in the individual schools. That means that 30% is creamed off by local authorities. Is that not a powerful argument for extending to all schools your favoured option, which has been seen in respect of academies?

Ed Balls: We obviously want the deprivation funding to translate through to the schools for which it is intended. That is an important part of our narrowing the gap agenda. There is £3 billion of deprivation funding in the dedicated schools grant. We want that to go to these schools. At the moment there is discretion at the local area level. Our analysis is that on average 66% of funding in the DSG goes to the pupils for whom it is intended. We are monitoring what is happening this year, area by area. We are actively encouraging local authorities to raise that percentage. That is one of the things that we will need to look at in the review of schools funding that we are now starting. But we are not seeking to centralise education funding and to take away that discretion.

 

Q151 Mr. Chaytor: Your own figures show that 66% of the funding you allocate goes to the individual pupil.

Ed Balls: Yes, and we would like to see that number increased. That is the nature of the dual funding formula. That is the nature of allowing discretion for local authorities in the allocation of these funds. I would rather that the percentage was increased. We know that schools with more free school meal pupils receive substantially higher funding. So there is a strong deprivation focus in the way we fund. Incidentally, our academies programme contributes to that because given that academies are disproportionately schools that take a higher percentage of free school meal pupils, they contribute to our focus on deprivation funding. I would definitely like to see that percentage rise.

 

Q152 Mr. Chaytor: The consultation on the review of schools funding has just finished. When do you expect to be in a position to announce your response to that consultation?

Ed Balls: The review is under way. We have had three meetings of the formula review group. All the papers and minutes from those meetings are publicly available. We intend over the next year to work on development and then to go out to public consultation in early 2010 in order to have a formula ready for operation from 2011-12.

 

Q153 Mr. Chaytor: So there will be a further round of consultation.

Ed Balls: There will be a further round of consultation once we come forward with the proposals. We have said from the beginning that this is a review of funding for the period after the spending review which is from 2011-12 onwards. For that to be effective, we need to consult in 2010. So we can take some views and then do the work over the next year.

 

Q154 Mr. Chaytor: Would you accept that when the funding formula was changed previously, I think when Charles Clarke was Secretary of State, and when certain schools in certain local authorities resisted those changes and the Government were forced to halt the improvement to fairer funding, it set in stone for about six years any move to get a more accurate reflection of deprivation across local authorities?

Ed Balls: As I said, one of the advantages of the academies programme is that it enables us to increase our focus on deprivation in some of those local authority areas. The pockets of deprivation money over and above DSG contribute to that, particularly in rural areas. We are actively each year-particularly this year-working with local authorities to try to encourage them to increase the percentage. I do not think that it is set in stone. I am not satisfied with 66%, but that is the reality of a partly devolved funding system for schools.

Jon Thompson: There is a range of other factors, one of which is about the stability and the certainty for schools over a medium period. The other is about transition from one system to another and how, if you want to increase deprivation funding to a range of schools, you take it away from another. You need to consider both the stability and the transitional issues. Making a change in the system, even one as big as this, involves a range of other factors that need to be considered at some length.

 

Q155 Mr. Chaytor: But this is a process that started in 1998?

Jon Thompson: Yes.

 

Q156 Mr. Chaytor: May I ask about 14-to-19 funding? The document "Raising Expectations" discusses comparable funding allocated for comparable activity in respect of 14-to-19 funding. Does that mean that the Government will finally establish absolutely equitable funding between sixth forms and colleges for the same courses and activities?

Ed Balls: That is the direction that we have been seeking to-

 

Q157 Mr. Chaytor: Will the process of convergence continue?

Ed Balls: The process of convergence will continue. I cannot-

 

Q158 Mr. Chaytor: And does comparable funding mean equal funding?

Ed Balls: Because we are still looking at the results of that consultation, we are not in a position to make detailed announcements at this stage, but we are seeking convergence and a level playing field, and that is the direction in which we intend to move.

 

Q159 Mr. Chaytor: One other thing on "Raising Expectations". The 2006 Act contained a presumption for sixth forms to expand or schools to introduce new sixth forms. It also had a presumption for colleges to expand. "Raising Expectations" introduces new powers for local authorities to reorganise 16-to-19 provision in their areas. How do you reconcile the apparent contradiction created by the presumption for individual schools to expand, the encouragement for schools to become academies and trusts, and the reintroduction of powers for local authorities to reorganise the whole structure?

Ed Balls: The 14-to-19 reforms that we are putting place depend on effective collaboration. The new responsibilities for local authorities to fund and deliver 14-to-19 provision require them to ensure that arrangements for effective collaboration are in place. That does not mean that schools that want sixth forms should be prevented from having them. I am sure that all of us, where it makes sense, would like schools to be able to make their own decisions, but if those decisions are clearly contrary to the collaborative plans for 14-to-19 education, there needs to be a check. That is what we are consulting on in "Raising Expectations", with a right to appeal. It is just not possible for schools to go it alone on 14-to-19 provision and make the system work, so it is a new arrangement.

 

Q160 Mr. Chaytor: Do you expect that the presumption to open a new sixth form will depend absolutely on the approval of the local authority?

Ed Balls: As I said, there is an appeal.

 

Q161 Mr. Chaytor: To whom?

Ed Balls: To Ministers.

 

Q162 Mr. Chaytor: And would a school's desire to convert to an academy be subject to the approval of the local authority?

Ed Balls: "Raising Expectations" makes it clear that the collaborative arrangements for 14-to-19 education are for all state-funded schools in the area. In terms of a school converting to an academy, that already requires a local authority sign-off.

 

Q163 Chairman: You must have been pleased this morning, Secretary of State, by the leader in The Times stating clearly that it believes that academies are a success story.

Ed Balls: I am.

 

Q164 Chairman: What did you think about the rider?

Ed Balls: I was a leader writer for four years at the Financial Times, and was taught that the headline of a leader and the first paragraph are by far the most important, because most people do not get halfway through, let alone to the end.

 

Q165 Chairman: Even Financial Times readers?

Ed Balls: The key to a good leader was therefore to say why it was important, why it mattered and what should be done in the first paragraph. I thought the headline and first paragraph of the leader in The Times were excellent. Like most other people, I guess, I did not get to the end. Actually, that is not true-I did read the whole thing.

 

Q166 Chairman: But what did you think of the end? It said that how you were rolling it out was not as good as it could be.

Ed Balls: As I said, I thought that it was a fine first paragraph. There were aspects of the leader in The Times that I did not agree with. I think that it is really good that we have so many more universities coming forward as a result of the reforms that we introduced. It is right that academies are co-operating with other schools on exclusions policy-they all are-and that they are teaching the core national curriculum, as they already were.

When I started this job last June, local authorities were already signing off academy plans and many were coming forward with academy plans. Therefore, I do not think that the idea that involving the local authority in academies is a new fettering of discretion is right at all. The great thing that academies do-this is why I like the first paragraph-is to deliver rising results, disproportionately in disadvantaged communities. So for me this is a progressive education policy, and that is why I have been keen to strengthen that progressive dimension of academies in the last year. That is what we are doing through the national challenge, and that is why I thought that the leader became less focused as it went on.

 

Q167 Chairman: None of our four Conservative members are still present, but if they had been here they would, of course, have asked, "But what about this dead hand of local government?" Do you not regard it as a dead hand?

Ed Balls: A couple of weeks ago I was at a meeting organised by the LGA, at which the local authority role in education, school improvement, national challenge and wider children's policy was discussed. Around the table were local government leaders-Labour, Conservative and even Liberal Democrat-who were all enthusiastic about their role in school improvement and in co-ordinating children's policy through the Children's Plan. They find the anti-local government, centralist rhetoric of the Conservative party very odd indeed. I think that that view is shared in local government-Labour, Conservative and Liberal Democrat. I do not think the Conservative party is in the real world when it comes to children's policy. It does not understand it.

Chairman: Let us switch to a Liberal Democrat.

 

Q168 Paul Holmes: I was not going to ask about academies, but you have provoked me.

Ed Balls: I was trying to provoke you to talk about Conservative education policy.

 

Q169 Paul Holmes: Academies have reduced numbers of children on free school meals and reduced numbers of children with special educational needs, and they expel four times as many children as other schools. Do you recommend this improvement programme to all schools, or just to academies?

Ed Balls: Academies disproportionately are being set up in disadvantaged communities. They take more free school meal pupils than their catchment area would require-I know that you do not like this-and are delivering faster rising results. That is great. Of course you want academies to become popular and to bring in children from across the area, because that is what makes them comprehensive schools. In my view, academies are closer to that excellent comprehensive ideal than the schools that they replaced, in many cases.

When it comes to exclusions policy, these are often schools that previously had been expelling or excluding a much smaller number of pupils and have become the schools where pupils who have been excluded end up. That is why we have seen that establishing effective discipline means a rise in exclusions in the beginning, although there has been some misreporting in recent weeks. There are more exclusions from academies because there are more academies, not because each academy is excluding more pupils.

The important thing is that academies co-operate with other schools. Following Alan Steer's recommendation, all new academies in the funding agreements, and all existing ones, are working in behaviour partnerships with other schools, because when it comes to exclusion, truancy and the provision of pupil referral units, you cannot have individual schools going it alone. My experience is that academies do not want to do that.

 

Q170 Paul Holmes: My experience is that they do. Again, per head of school population, academies expel four times as many pupils as other schools. Do you recommend to all schools that they should quadruple their expulsions?

Ed Balls: Academies are turning around what is often a difficult situation. The difficulty has often been ineffective discipline and exclusion in the past. We give them more flexibility in the first couple of years precisely because that is an important part of the start, and I think that most other schools and heads in the area appreciate that. What they cannot do, however, is persistently over a number of years carry on doing that in a way which undermines other schools. It is important that academies co-operate in exclusion partnerships and behaviour partnerships, and that is what is happening. The other thing is, looking at the figures, the average for free school meal pupils at maintained secondary schools is 13.1 % and at academies it is 33.8 %-three times as likely.

 

Q171 Paul Holmes: At the risk of prolonging this issue-I was not going to ask you about it, but you have provoked me-you know that it is misleading to compare with national averages, because academies are being set up deliberately in inner-city areas. The point is that they massively reduce the proportion that they take and the experience of the longer established academies, although there are not that many longer established ones, is that they do not just go to the average for the area, they go below the average for the area.

Ed Balls: These are the latest figures. Academies have, on average, 29.5 % of pupils with special educational needs, compared to an average of 19.2 %.

 

Q172 Paul Holmes: But you are comparing the average for inner-city areas with the national average, which is an utterly different figure.

Ed Balls: You have to be careful. Without wanting to return to a technical analysis of today's editorial in The Times, I was really annoyed to see it refer to 638 failing schools, because that is not language that I recognise and I disagree with it. Many of those 638 schools are high achieving schools and I have said that consistently. Secondly, equating disadvantage, lower performance or academies with inner-city areas is not right. The striking thing about national challenge is how many schools in shire counties are in that category. You have to be careful when saying that they are happening only in inner-city areas.

I made two points. First of all, academies are disproportionately establishing in areas of greater deprivation. Secondly, they take a greater degree of free school meal pupils than their catchment area would suggest, so they are actually taking more disadvantaged pupils, given their area. It is quite hard to say that they are, by the back door, selecting affluence.

Paul Holmes: No, it is not.

Chairman: I am intervening between you two.

Paul Holmes: We will agree to totally disagree on the semantics of the answer, and perhaps we will come back to it at another time.

Ed Balls: I want to persuade you that this is a progressive policy. I have a quite different vision from the Conservatives, but I hope the Liberal Democrats and the Labour party, on some of these issues, can agree that, given that we share a progressive aim for education, we ought to be able to discuss how we can ensure that the means deliver those ends. I think that in academies policy, that is what we are delivering.

Chairman: Paul, I am bringing you back to funding.

 

Q173 Paul Holmes: I have two questions on funding. First of all, the current review on funding is the second one running back to back. When do you actually expect to implement any changes as a result of it, or is this just a way of putting everything off until after the next election?

Jon Thompson: We expect that if we implement anything, it will be in 2011-12, which is the answer that we gave to the Chairman.

 

Q174 Paul Holmes: But would you then just make recommendations to consult on further, so that in effect it would not be until 2013-14?

Ed Balls: No-I apologise. What I said earlier, which I think is right, is that we are taking evidence now, there will be a further development phase and we will go out for consultation in 2010 for proposals to be implemented from the 2011-12 financial year. That is the intention: after the spending review, we then implement.

 

Q175 Paul Holmes: A different question on funding: 11 years ago, new Labour came to power and a whole wave of children aged five were starting infant school. They are now 16, they have just taken their GCSEs and are awaiting their results-they are a product of new Labour education policies. Over those 11 years, you have quite rightly put more money into schools and exhorted schools, parents, teachers, pupils to do better, to get better exam results, to stay on, and for half of them to go to university. Would you expect that of those 16-year-olds who have just sat their GCSEs, more of them will want to stay on to do A-levels in September?

Ed Balls: The good thing is that 68,000 more of them will be getting five GCSEs including English and maths, than in 1997, so many more of them will have the qualifications to do well and carry on in education. The reason why we are raising the participation age to 18, and why every 11-year-old arriving in year 7 this September will stay on in education, training or an apprenticeship until 18 is that, despite the improvements in school results over the past 10 years and the fact that schools are doing better, it has been stubbornly difficult to raise participation after 16. There has been a rise, but from my point of view, it has not been big enough.

 

Q176 Paul Holmes: I am not asking specifically about the NEET group and those whom it is hard to get to stay on, but about those who are doing very well, partly as a result of you putting more money into schools in the past seven years, and all the rest of it. Yes or no: do you expect more of these 16-year-olds, who will get their results in the next few weeks, to want to stay on to do A-levels?

Ed Balls: Compared with 1997?

Paul Holmes: Yes.

Ed Balls: Yes.

 

Q177 Paul Holmes: And compared with last year?

Ed Balls: I don't know what the figures are going to be for this year, compared with last year.

 

Q178 Paul Holmes: Would you hope that more would want to stay on to do A-levels and go to university?

Ed Balls: I would expect them to want to stay on to do A-levels or to take some other form of work with education. I think that there are 100,000 to 150,000 more apprentices now than in 1997.

 

Q179 Paul Holmes: Let's stick to A-levels.

Ed Balls: I do not think that we should be too prescriptive.

 

Q180 Paul Holmes: I have a specific reason for asking about A-levels.

Ed Balls: I understand. However, it is important that we are not prescriptive at 16 about what is the right path for a high achiever. An apprenticeship to level 4 or university level can be a really good thing to do, as well. However, I hope that more young people will stay on to take A-levels or other qualifications with the intention of going to university.

 

Q181 Paul Holmes: Good-so that was a yes, and Jon was nodding, too. This year, however, the presupposition from the Government to the learning and skills councils in making funding available for 16-to-19 education was that there would not be an increase in the number of pupils staying on in sixth form colleges to do A-levels. It was thought that there might be an increase in vocational training and the rest of it, but not in A-levels, and therefore funding for sixth forms and A-levels will not effectively go up this year.

I shall give you a specific example, but this applies to a number of schools in Yorkshire, the east midlands and, presumably, nationally. Brookfield community school in my constituency is, and always has been, a very good school-it was very good when I went there as a brand new teacher in 1979 and is very good now. It is always bursting at the seams in year 7 and always has a very large, thriving and academically successful sixth form. This year it had a significant and sudden increase in the number of people applying to stay on to do A-levels, but the Learning and Skills Council said, "Tough, because we ain't got any money to give to you." Other schools are in that situation-I know of at least one more in Derbyshire and a number in Yorkshire that I have read about in the local press-of having to say to all these kids who are doing well at school and who want to stay on partly because you have exhorted them to, "We are not going to take you, because we are not being funded for you" or, "We'll have to subsidise you from year 7 upwards at the expense of the rest of the school." Why?

Ed Balls: I am obviously not going to doubt the details of those cases, and it is something that we should really take up with the individual schools and the Learning and Skills Council.

 

Q182 Paul Holmes: I have done that, and the LSC says that there is no money for growing A-level numbers, but there is for FE numbers. Why not for growing A-level numbers when your policy is to encourage more kids to do well and stay on?

Ed Balls: The funding for 16 to 18-year-olds went up from £5.9 billion-it is going up year by year, and will rise next year by 5.2 per cent. There is considerably more funding year on year. We have been moving to a new funding system that is prediction led. The interesting thing around the country was that the LSC found that the predictions from schools and colleges substantially exceeded-if my memory serves me right-the number of pupils in the country. So there were some issues about how the planning system worked. Some schools and colleges were knocked back relative to their plans, but the LSC should be ensuring that the provision is in place for the actual numbers.

 

Q183 Paul Holmes: But the east midlands learning and skills council told me explicitly-I have read the same thing in the Yorkshire Press about the Yorkshire region-that the Government instructions to, requirements on and expectations of the LSCs was that they would not increase funding for A-level pupils because it would all go into apprenticeships, FE and all the rest of it. But your policy for 11 years has been to encourage children to do well, stay on and do A-levels, after which half of them will go to university.

Ed Balls: I will ask David and Jon to comment, but I do not recognise that instruction. Conversations that I have had with the LSC in Yorkshire suggested that although a degree of iteration had to be gone through to get the new system to work, and while some requests for funding were out of line with pupil numbers, it would be possible to meet expectations with its budgets.

 

Q184 Chairman: Could you look into that issue and write to the Committee?

Ed Balls: I would be very happy to do that.

Jon Thompson: I agree with the Secretary of State and I am happy to write to the Committee. On my understanding, the overall LSC budget assumed a 3.2% rise in funded learner numbers. We can look at exactly how that breaks down.

 

Q185 Paul Holmes: The East Midlands LSC and the heads involved say specifically that Government thinking from the centre said that there would be no increase in A-levels.

Ed Balls: The 5.2% was for school sixth forms, and the funded learner numbers in 2008-09 were 384,000-an increase of 3.2% compared with 2007-08. Two thirds of schools will have an increase in their LSC funding-some will be substantially more than the average increase of 5.2%. Those schools with reduced LSC funding are invariably linked to reduced learner numbers. Some schools have had reduced learner numbers but overall, the number is going up substantially. We will set out more details. Perhaps you could give us details of different cases.

 

Q186 Chairman: We are going to move on. We have had a session about what has happened with the break-up and this two-year transition period of the Learning and Skills Council. After hearing from experts in the area, we were a little disturbed about how much instability there seems to be in the system. Are you worried about that?

Ed Balls: It is something that I am concerned about; "worried" would suggest that we thought that it was off-track. I am concerned about it because it is a big change. On the one hand we have been moving progressively-and I think rightly-to a more demand-driven approach to adult skills training. The new adult skills agency will ensure that that demand-led approach continues. On the other hand, for 16-to-19 funding, we are transferring responsibility to local authorities so that they have the funding to deliver the collaboration we need for these substantial reforms. We are taking part of the LSC to a new adult agency, while part of it transfers to local authorities. We will legislate for that next year in the Bill, we have consulted on it and now the LSC must get on and do its job, as well as planning for the transition. It is a big change.

I am concerned because we do not want to lose the short-term focus on NEETs and learner numbers on apprenticeships, but we must ensure that the reforms are done well. The long-term prize of more effective funding provision for 14 to 19-year-olds is a big one. To do this properly, we needed to make that change.

 

Q187 Chairman: The Association of Colleges is worried that independent colleges will lose their independence as they will come under the yoke of the local authorities again.

Ed Balls: We are not moving to a bureaucratic and onerous funding regime. Further education colleges often take learners from a number of different local authority areas and there must be stability and predictability in the system. As with academies, sixth forms and colleges, if we want to deliver 14-to-19 collaboration, colleges that provide that education need to be part of those collaborative arrangements. There need to be partnerships.

 

Q188 Chairman: Would it worry you that there was evidence given to the Committee that morale in the LSC was low and that people's priority was trying to make sure that they got a job after the transitional two years? That is not very good, you know-when we shake up the system as regularly as we have done.

Ed Balls: It would concern me; David has regular discussions with the LSC and change is happening. There is no doubt about that. In the case of health, I was concerned, as many of us were, by the reorganisation of primary care trusts and the potential that that had to undermine delivery of some of our health objectives. But at the same time, the fact that we now have in my constituency-in our area-one primary care trust for the whole area is much more effective than the old, more fragmented way.

 

Q189 Chairman: Is it not the opposite? Now you have various levels. You had one LSC; you knew what you were dealing with in a region. Now you have got these various bodies that you are dealing with.

Ed Balls: I do not think so.

Chairman: Well, this is what the colleges are talking about.

Ed Balls: From the colleges' point of view-

Chairman: It is the reverse of the health example.

Ed Balls: The point I was making in the health example was that good reforms must be well managed, and you must keep your eyes on the long-term goal. If the long-term goal was the wrong one-if we were wrong to be running local authority commissioning of 14 to 19, and wrong therefore to be reorganising, as we have done nationally with our two Departments, the funding of education at a local level into 14 to 19 on the one hand and adult skills on the other-then of course we should not be splitting the LSC. But personally I think that it is the right long-term goal and therefore our challenge and our concern are to manage that transition. We are doing so with the full co-operation of LSC staff around the country, many of whom are great enthusiasts for train to gain-type, demand-driven provision for adult skills and great enthusiasts for the way diplomas and 14 to 19 collaboration can transform that transition to adult life through education.

I think people believe in the vision, but we have to make sure that we get there in a careful and staged way.

David Bell: I was just going to add that, in a recent discussion that I had with the chairman and chief executive of the LSC, they were at pains to stress that they are still focused on all the current priorities, as the Secretary of State said, about reducing NEETs and so on, because they feel that it is really important to do that. At the same time, they are, I think, really constructively involved in the planning of the new agencies and working with us to do so. I should also say, because you mentioned the Association of Colleges, that the Association of Colleges, the Association of Directors of Children's Services, the main head teachers' unions and so on are really actively involved with us as a Department as we are planning these arrangements. There is no sense in which people are being kept on the outside as we take these reforms forward.

Chairman: We have quite a bit of territory to cover. Do you want to come in on this, David?

 

Q190 Mr. Chaytor: Pursuing the argument about the need for 14 to 19 coherence and simplification, what is the purpose of the young people's learning agency? Why not just cut out the intermediary and direct the funding straight to local authorities?

Ed Balls: We are, but different areas will have different ways of doing things, and you cannot run 14 to 19 provision in many parts of the country-not every part of the country-simply by focusing on one individual local authority.

 

Q191 Mr. Chaytor: The document "Raising Expectations" provides for the establishment of sub-regional groups of local authorities.

Ed Balls: But what it says is that there are two different ways in which you can do that. You can either do that through a group of local authorities coming together and as individual entities trying to reach an agreement, or you can do so by a group of local authorities coming together and establishing joint, shared and pooled commissioning arrangements. In the case of the latter, we will expect the young people's learning agency to essentially stand right back and only be there as a sort of adviser and collector of information, but many areas will find it quite hard, in my view, to get-at least quickly-to that degree of sub-regional integration.

The moment you have individual authorities making case-by-case agreements, there is a role for ensuring that those agreements are effective, and for stepping in when there are disagreements and things break down. Then I think that the young people's learning agency will need to be more active. So there is a responsibility on value for money and there is a responsibility on monitoring and ensuring that objectives are being delivered. We would expect there to be a very light touch if there is an integrated approach sub-regionally, but if that is not possible, the young people's learning agency will have to hold the ring to a greater extent. That will depend very much on the nature of sub-regional relationships.

Chairman: The Committee is concerned about efficiency savings and productivity. John, over to you.

 

Q192 Mr. Heppell: It looks like the Department is quite happy that it will reach its Gershon targets, although I think that there is still some confusion about how those savings are quantified. The figure of £2.9 billion was in chapter 10 of the Department's annual report. How has that figure been derived?

Jon Thompson: How is it derived?

Mr. Heppell: Yes. I can see how some parts, such as job losses of civil servants, can easily be quantified, but some of the other stuff I find difficult to understand.

Jon Thompson: A whole series of programmes combined to give the targets that we were striving for, which were £4.3 billion in the previous comprehensive spending review round and £4.5 billion in the next CSR. We have discussed before in the Committee the fact that savings break down into two parts. First, there are cashable things such as improving procurement by structuring contracts so that schools can procure cheaper. A good example of that is the implementation of the open programme, which has gone into about 10% of schools so far and enables them to access national procurement deals and therefore get a cheaper price. That is a cashable saving.

Then there are a range of savings-again, we have debated them before-that are called non-cashable savings. For instance, introducing a technology can save people time, and then we can estimate how much time is saved and attribute a financial number to that. It is not actually saving money off the budget, but it allows time to be re-prioritised into other areas.

There is a programme that breaks it all down, which we could give you. There are at least 50 lines on the matter. The most significant things in the 2004 spending review were improvements in the application of technology in schools. You will be familiar with the huge range of IT programmes that have gone into schools, which have saved preparation and assessment time. The biggest cashable gains were in relation to procurement. As I said, the programme has at least 50 areas in it, and I am happy to provide that detail. It will be publicly reported in the autumn performance report this year, and again in next year's departmental annual report.

 

Q193 Mr. Heppell: So in that report, we will be able to see what is actually real cash savings that are there for reinvestment.

Jon Thompson: Sure.

Ed Balls: Something that I am very conscious of at the moment, especially given the wider economic climate, is that we need to show not only that we have delivered our Gershon savings but that we are actively doing everything that we can, nationally and locally, to use our budgets effectively. We have been doing a lot of thinking about how we can do even more, nationally and locally, to support efficiency.

One thing that I discussed at the National College for School Leadership recently was how primary schools can work together to reduce collective administration costs and free up resources in school budgets. It does not really make sense for every individual primary school to be running its whole IT procurement and staffing budget separately. That is obviously a matter for primary schools, but it is the kind of thing that we are looking at to try to be innovative.

 

Q194 Mr. Heppell: Okay. For the first time, primary schools are now going to be asked to make a 1% saving, I think over a three-year period-1% annually. Why 1%, when local authorities are asked to make savings of 3% every year? Is the intention to increase it from 1% when schools get used to the idea of making the efficiency savings? Will it rise then to 3%, the same as for local authorities?

Ed Balls: I am slightly thrown by that question, because I thought that you were about to say, "1% seems much too high, isn't that going to be very tough for primary schools to deliver?" This is the first time that we have done this for schools. It is different for a local authority, with maybe 19,000, 20,000 or 25,000 staff and quite complex delivery processes, and for an individual school, which probably has less scope for that kind of savings through IT procurement. We looked at this and judged that 1% was a demanding objective for schools, but deliverable. That is 1% within the calculation of the minimum funding guarantee. The actual amount that schools on average will be getting will be considerably higher than the minimum funding guarantee.

Jon Thompson: The additional element is that we considered the balance between staff funding in the dedicated schools grant and non-staff funding, which is roughly split 80:20. We thought that 1% was a reasonable reduction to be made across the board. We thought about the disproportionate impact on the non-staff-in other words, if you took it all out of that, it would require a 5% annual saving, if you did not adjust the staffing budget. We thought that, on balance, 1% was reasonable if you took that 80:20 split into account.

 

Q195 Mr. Heppell: Under the public value programme-the new efficiency programme-the importance of the process is to find smarter ways of doing business and saving money. What about the things that you have just said about staffing costs? I can see how Building Schools for the Future, with a great big budget, could fit quite easily into that category. How can teaching assistants fit into that category? I am not quite sure what a smarter way is for providing teaching assistants.

David Bell: The public value programme is intended to ensure that we are getting the best value out of the additional investment that we have put into teaching assistants. That seems to me to be an entirely reasonable thing to do. That has been one of the revolutions in the school work force over the past 10 years: we now have around 300,000 people who are doing those sorts of teaching assistant jobs. What we have been asked to do is to ensure that we are getting absolutely the best value out of that. That is one of the four programmes that you cited that we have to carry out. It seems to me to be an entirely reasonable thing to ask us to do. As the Secretary of State has said, we have been having discussions within the Department, not just to look at the public value programmes as established by the Treasury, but to ensure that we are looking right across our responsibilities, to ensure that we are getting best value.

 

Q196 Mr. Heppell: The Department annual report included an analysis of productivity this time. In the past, the Department has always said that it could not really work on any sort of productivity. Why has that changed now? Why are you doing it now?

Ed Balls: Following the Atkinson review, the Office for National Statistics published some work last autumn on educational productivity, which has informed the analysis in the departmental report. It is something that is interesting to people-whether we are using public money to best effect. I think that the discussion around productivity in education is an important one. It brings out some of the real challenges in making effective schools policy.

One of the things that is very striking to me is that we, as a new Department focusing on children's policy, talk a lot about special educational needs and tackling those extra barriers to learning inside and outside of school. We do that not only because we care about children being well, healthy and happy, but because addressing those special educational needs is key to raising standards. As we raise standards on average-we are now up to 80% of children getting to level 4, Key Stage 2-increasingly that last 20% involves more children with learning difficulties who need extra support.

Therefore, if we are going to keep raising standards, that means more teaching assistants, more personalised learning and one-to-one education, and more educational investment to go to the next stage. If you measure that by productivity, you would say that that means that it has taken you more teaching input to raise standards to the next level-which means your productivity is falling-whereas I would say that we are investing more in the personal learning of children who, without that extra personal attention, would not succeed. Therefore, we need that extra investment to keep making progress, and accrued or misleading descriptions of those productivity statistics entirely miss the point. You have to keep making the case for more investment in education if you are going to deliver on the objectives for every child. We judged that the productivity debate was a good debate to have so that we can bring out some of the challenges and perhaps undermine some of the glib assertions that a fall in productivity in education is bad.

 

Q197 Mr. Heppell: You have effectively said in the past that cost-benefit analysis is the best way to judge effectiveness in educational spending. What is the latest cost-benefit analysis and does that show that we are being effective with our spending?

Ed Balls: That is a good question. We produced a cost-benefit analysis on education to 18 and we judged that the impact upon the economy and wider society of universal education to 18 would be positive. I am not sure whether we have done a particular retrospective cost-benefit analysis of school reform in general. It has been more on discrete issues.

Jon Thompson: That is exactly our situation-we have done it on discrete issues rather than the system as a whole. As we debated last time, the Institute for Fiscal Studies report, I think, supports what the Secretary of State said. Between 1996 and 2000-01 there were significant increases in both input and output as judged by the Institute for Fiscal Studies, so productivity rose, but it has slightly fallen back between that period and now. My understanding of the IFS report is that if you take the 10 years as a whole, there is a 27% increase in outputs for a 25% increase in inputs, therefore there is a 2% productivity gain.

Ed Balls: My point is that you would expect productivity to fall in education because the challenge gets greater the more that you raise standards as the children who you want to get to that level need extra and more intensive help. It is almost like the opposite of manufacturing. In manufacturing or a service economy technological change normally drives a rise in productivity as you invent new things and find new methods. In education, the more you develop as a society and the more you are demanding that every child should do well, the more intensive in the way that you support children you have to become. Developed economies tend to find it more expensive to keep driving up standards but it is the right thing to do.

 

Q198 Chairman: Secretary of State, I think that the Committee would agree absolutely on that. Having recently been to Denmark to look at issues with children in care, there is no doubt when you come back to this country that the real challenge for us is going to be putting even more investment into early years, special attention for particular children and training and rewarding the work force better than we do at the moment.

 

Q199 Mr. Heppell: I was slightly surprised by that earlier answer. Do you not do regular cost-benefit analyses all the time? You seem to be saying that you have not done it for a while, and that surprises me.

David Bell: One of the frustrations that we have had in looking more generally at the question of productivity is that some of the work done across Government appears to move at a rather stately pace. That is not through lack of will, it is because it is very difficult. All of our discussions with the Office for National Statistics, which heads this, suggest that it is difficult for the reasons that the Secretary of State has highlighted. As he said, on a number of policies we will do that cost-benefit analysis that you have mentioned. We have to examine the big-picture questions around effectiveness, productivity and so on across Government with the Office for National Statistics and it is complicated stuff. The Office for National Statistics has been on this. The Atkinson review first reported in 2003 or 2004, so we are five years on and people are still wrestling with what is a really complicated business.

 

Q200 Paul Holmes: On the productivity issue, you make the case strongly enough. Would the Treasury be willing to argue the case that falls in productivity in health or education are good? When you publish figures such as those in the report, the CBI jump in and say, "All this money that has gone into education and health is a waste of money because productivity is falling". Should you, as a Minister, or the Treasury be arguing more forcefully that falls in productivity are good because they mean increased quality?

Ed Balls: Clearly, in the case of health, there have been huge increases in productivity and cost. You have much more potential for technological change through new drugs and new treatments to allow you to cure many more people. Statins are an example of a new discovery that allows you to be much more cost-effective in your GP hour, because you prescribe them. That has a big impact on health.

Paul Holmes: For the first time today, I am asking a friendly question.

Ed Balls: I took them all as being friendly.

 

Q201 Paul Holmes: It is not just those issues. If you have more nurses on a geriatric ward, productivity falls, but the quality goes up. I taught top sets of 36, and they did very well, but if they had been of 26, they would have done even better. It is not just about special-needs kids or statins; it is about the overall quality of what you are providing. Will the Treasury argue more forcefully that falling productivity in education and health is a good thing if it means better quality?

Ed Balls: I have always been inclined to believe in the Treasury's rationality, so I am sure that it will take a rational view of these matters.

Chairman: You were brainwashed from a very early age, Minister.

Ed Balls: At all stages, we should be demanding in our desire for more productivity and for using inputs more effectively. One example that I have given is that we are encouraging primary schools to pool resources and to have one person providing a range of support services for a group of primary schools because that is much more cost-effective. We should always be thinking about how we can be more productive. At the same time, however, in education, there is not the same degree of potential for transformatory technological advances and change, because pedagogy is, on the one hand, about the teacher and the child learning. On the other hand, personalisation and one-to-one teaching is more expensive, as is having smaller class sizes, but it is what works for children who otherwise would not do well. In a sense, cost-benefit analysis captures those benefits through time-having fewer children coming out without qualifications-better than a simple measure of productivity that says, "My qualification today, per number of teachers or inputs in the classroom." If you take a proper, long-term approach to cost-benefit analysis, it probably suggests that, as a society, we become much more productive by having more teaching assistants and smaller class sizes.

Chairman: Secretary of State, we are in the home straight. Two colleagues have been extremely patient, and they are going to lead-first Annette and then Sharon-on Building Schools for the Future and the national challenge.

 

Q202 Annette Brooke: I shall be rather brief. I should like to ask you about the national challenge, in which I have an interest, as part of my constituency has a grammar school system. First, on the secondary modern schools that appear on the list, you have said that they can expect to receive more financial support than other schools. I hope that that is a positive side of the list. Why have those schools been neglected for so long?

Ed Balls: It is true that in the 638 schools, secondary moderns are disproportionately represented. Of the top five local authorities, judged by number of national challenge schools, they would be disproportionately in areas that have grammar schools and selection. On the other hand, 60% of secondary moderns are above the 30% threshold of five grades A to C, including English and maths. Most secondary moderns are not national challenge schools.

From my point of view, the national challenge is a positive for all the schools in the list, because they, the pupils and the parents are going to get the extra support that they need-£400 million. However, that must be tailored, school by school, to the particular needs of the school. If you are a high value-added school with great leadership and are on track, we will let you get on with it, but if you need more intensive support in English and maths, we shall be supporting that. That is what we are looking to do with the money.

Some schools will need transformation, though. We discussed the academies programme earlier. Recognising the particular characteristics of individual schools means taking it into account that, for some schools, selection makes the challenge greater. What we have said in the national challenge-I made a commitment to provide more detail about our toolkit in the coming weeks-is what more help and support we should give to secondary moderns, recognising the extra challenges that they face.

One way in which we have said we will give extra funding is through a new concept of a trust-a national challenge trust-where you have a national challenge school that will link up with another school in that area that is higher performing, so that the two schools can work together to raise standards overall. We have said that, in general across the country, we would put £700,000 into a national challenge trust but we would go up to £1 million for a secondary modern. As I have said before, in the main that scheme will have secondary moderns partnering up with other higher performing secondary moderns where the leadership team already has experience of the extra challenge of raising standards in a non-selective school in a selective area.

What will that money be for? It could be used for more intensive one-to-one personalised support in years 7 and 8; it could be used to help attract more teachers for smaller class sizes; or, if it is difficult to attract English and maths specialists, it could be used to encourage some of the wider aspiration programmes, which we know from experience work. It is all about understanding that these are schools that can raise results but the pupils may need more personalised support, and there is a challenge of aspiration that needs to be addressed.

Chairman: Can we make the questions and answers quite quick now, because we are running out of time?

Ed Balls: Sorry. Does that answer your question?

 

Q203 Annette Brooke: Yes, it does. I hope that the local authority will be aspirational enough when it agrees the plan. Also, as an aside, I would just like to say that the members of staff were very demoralised and I think that the Department needs to take that on board. As it is making the positive investment, it must lift the morale of staff, because the way that this came out it was very demotivating.

Ed Balls: May I say just one thing on that, Mr. Chairman? I have said this in Parliament too. Many of these schools are high-performing schools with great leadership and are on track, and they should be celebrated and supported. Many of them will go through the threshold this August. This is not a group of 638 failing schools.

What I am saying is that there is £400 million and we are systematically-school by school-going to do what it takes. For some schools, it will mean big change. I am advised by officials that when London challenge, which is now pretty much universally popular among schools in London because it has raised standards for all and been very supportive, was launched back in 2002-03, the local newspaper headline on launch day was "50 failing London schools set to close". The reality is that that is the starting point of these debates, and you need to get over that difficult and, from my point of view, unhelpful first focus on the idea that these schools must all be failures, and focus on the positives and start giving these schools support.

I hope that, over time, people will see that national challenge is about support, but it is also about setting a challenge for schools that have not been doing well enough and where there has been a culture of low expectations, or setting a challenge for local authorities that have not been taking school improvement seriously for all schools and for all pupils, and that will include your local authority.

 

Q204 Annette Brooke: I am outside my geographical area on this. I do not criticise the provision, but I would like to talk about provision for children who are aged 16 to 18. When we had evidence from the FE sector, the witnesses suggested that national challenge should be extended to 16-to-18 provision. Hopefully, if you are going to raise standards in secondary modern schools, more children will stay on at school, but some schools are unlikely to have a full sixth form so those children will need to move on to quality provision. Why, therefore, are you not including provision for those aged 16 to 18 in FE colleges and sixth form colleges in national challenge, to ensure that the next step is guaranteed to be of good quality?

Ed Balls: I guess that the moment you move from people feeling demoralised to people asking, "Can't more of us be involved?", that is a sign that you are starting to win the argument that this is an opportunity and a positive, rather than a negative, move.

National challenge is a challenge to local authorities to focus on school improvements, school by school. We are also challenging local authorities to deliver effective collaboration for 14 to 19-year-olds. I very much hope that local authorities, with their schools community, will see this as being all of a piece and that part of supporting secondary moderns is ensuring that they are part of collaborative arrangements that go from 14 to 18 or 19. It may be that the combination of national challenge, what we are doing on 14 to 19 and Building Schools for the Future will lead to more sixth-form collaboration between secondary moderns or between secondary moderns and grammar schools.

 

Q205 Annette Brooke: Thank you. Collaboration is important. May I as an aside-

Chairman: Asides are still questions, Annette.

Annette Brooke: Yes, well ever so quickly, may I put Parkstone Grammar School into the same pot? It has also had a challenge on numbers from our local learning and skills council. It seems to be exactly the same situation. I am quite concerned that, as we are raising standards and most secondary modern schools are sending more pupils on to sixth form, those numbers are not taken on board by learning and skills councils.

Chairman: You can add that to your letter.

Ed Balls: I will do a proper response.

 

Q206 Annette Brooke: I am trying to be quick because I have to go to Questions in the House, apart from anything else. We have had criticisms in our evidence that the national challenge funding is targeted too much at school structures. You gave me some good examples where it was not targeted at school structures. But because there is pressure to take the academy route or a trust school route, that is an argument that can be made. What would you say to that?

Ed Balls: I would say that even when you are going down the structural route, we are talking about revenue funding that is essentially about teachers teaching and learning. Of the £400 million, the structural solutions are all about what happens in the classroom. As well as the money for extra academies and national challenge trusts, which is slightly over half of the funding, there is also £100 million for targeted personalised learning teaching and support for heads in classroom practice and pupil tracking. There is also money for more national challenge and more school improvement partner support, school by school. I would expect all of that money to go on teaching and learning, even in structural solutions, but where you are talking about academies and trusts, it is about half of it.

Chairman: Thank you Annette. Sharon, you deserve some sort of medal today. Building Schools for the Future-it is only £45 billion, and we have five minutes for it.

Mrs. Hodgson: You probably noticed, Secretary of State, that I have been uncharacteristically quiet this morning. I was saving myself for my session. There have been some strange efficiency savings going on in respect of my contribution. It will have to be fairly short. Perhaps if we had made efficiency savings earlier, I might have had a longer contribution.

Chairman: That was a test.

Mrs. Hodgson: All right.

Ed Balls: It sounds like the Chairman is in special measures.

Chairman: Thank you, Secretary of State.

Mrs. Hodgson: No. The Chairman might think that I talk too much. It might be a deliberate ploy. I would hate to think that that was the case.

Chairman: Not at all.

 

Q207 Mrs. Hodgson: I should like to play devil's advocate and follow on from Annette's national challenge questions. I was tasked by one of my councillors and you have already answered this question, so a one-line response will suffice. He said, "Is this not kicking schools when they are down, instead of giving them a helping hand?"

Ed Balls: No, I do not think it is. It is about challenge. We want every local school to be a good school. Schools where there are low expectations and low performance, and the culture is about excusing poor performance, need to change. It is not good enough. But that is not what is happening in most schools in my experience, including most of the national challenge schools. I have spoken to a number of heads with high added value and strong leadership, and close to 30% are on track. I have also spoken to a number of heads who are at an earlier stage, who know what is needed, but know that they cannot do it on their own. They can only do it with extra support. For those heads, national challenge is an opportunity. It is important to present it that way.

 

Q208 Mrs. Hodgson: Wonderful. BSF now. I can be smug about this because Sunderland was one of the first to go through the BSF programme. I think Oxclose Community School in Washington was one of the first secondary schools, if not the first, that was fully renovated under BSF. Jim Knight came to open it. From that position of smugness, I know that in April the Government announced that authorities with four or five schools that are ready can join in a rolling programme instead of waves. Is that because you want the BSF process speeded up, or are you satisfied with the rate of progress? Have you set any targets for the number of additional authorities entering the programme over the next year?

Ed Balls: We announced a couple of weeks ago a group of authorities that will come in more quickly. We now have half the local authorities-72-in the process, about 1,000 schools in planning or in construction and 13 already opened. There will be considerably more BSF schools. Is it well over 30?

Jon Thompson: Thirty-five.

Ed Balls: Thirty-five in September, so the process is definitely accelerating. My judgment, from talking to advisers and to the Schools Minister, was that we were right, at the beginning, not to go more quickly than authorities could deliver the programme, because school-wide system reform is big, challenging and often locally difficult, so we decided to go first to areas where there were some real challenges and more deprivation. It was right to take time, so the process has been slower than we would have liked, but it was right to go more slowly. We have a lot of experience now, and BSF is picking up the pace, things are accelerating and we do not feel as if we are off track. But if, within the programme, it is possible to create some space to bring some authorities or individual schools forward, of course we should, and that is what we have been doing.

 

Q209 Mrs. Hodgson: In the Children's Plan, you talk about a vision for 21st century schools, and I know that you are doing a review of what they should look like, but what impact do the forthcoming views have on BSF schools that are already in the process or that have already gone through?

Ed Balls: In the Children's Plan, we said that we were in discussion with Building Schools for the Future to ensure that idea of co-location of services was at the centre of our BSF planning. We have a process in Whitehall involving other Departments and BSF to look at how the procurement process, not just of schools but of other public services locally, can be brought together more effectively. If you like, I will send a note to the Committee in the next few days about how we are using BSF to drive that co-location of services in the 21st century school. That will encourage us to ensure that we can give you a good report.

 

Q210 Mrs. Hodgson: We must recognise that BSF was launched in March 2004 and you became Secretary of State only in July 2007, so it was well under way before you headed up the Department and were able to impact your vision on what was happening. It would be unfair to level any criticism at your door for what went before, and I am not trying to do that, but can you add catering facilities to the vision of what a 21st century school should look like?

I am sure you are, as I was, thrilled when Kevin Brennan came out and supported the stay on site policies, but the reason I ask-you will know straight away-is that secondary schools often do not have the right facilities, the schools were not designed for 1,000-plus children on site at any one time, and the catering facilities are not designed to feed that number of children. So, if you are looking at 21st century schools and the BSF programme is still ongoing, should we not design those schools bearing in mind, perhaps, my vision for 21st century schools, where there are universal free school meals and all children are kept on site and given a healthy, hot meal?

Ed Balls: I know that you are a very good campaigner on these matters, and Alan Johnson and I had a meeting recently with researchers from Hull University to look at what has happened with the Hull experiment. Was it Hull University?

Mrs. Hodgson: Yes, that's right.

Ed Balls: We looked at what has happened with the experiment on the free school meals project and at what the evidence shows.

Two days ago I visited Sir Alan Steer's school, Seven Kings, in east London, where he has chosen to use his devolved capital-about one third of a million pounds-to completely rebuild the dining room facilities, because that for him was necessary to deliver healthy eating and to have an on-site schools policy. It is possible for schools, if they choose, to do that, if they have devolved capital that they can use. He did that. Over the last year we have also allocated well over £100 million for the next couple of years, which is not just for kitchens, but dining facilities. That is crucial to the effective take-up of school meals. In our note to you, on BSF, the co-location of services and the 21st century school, we will include the way in which BSF will make dining provision central to its thinking.

Mrs. Hodgson: That is just about it from me.

 

Q211 Chairman: One last thing on BSF. We can see why you want to get on with it, and why you might want three, four or five schools to be allowed to be part of BSF innovation. One of the most interesting and stimulating bits of BSF has been that, for the first time in anyone's memory, local authorities have been told to look at their vision for education over the next 20 to 50 years. Are you going to lose that with a more pragmatic, bitty way of delivering BSF?

Ed Balls: That is not our intention, and I very much hope not. Where authorities are on the case on school improvement and thinking hard about 14-to-19 collaboration, and are ready to go, if we can make it possible for them to move more quickly, we should do so, but only if they pass that vision test. We will ensure that we do not lose the huge gains that we can get out of BSF by allowing it to become piecemeal and short-termist. That will not happen.

 

Q212 Chairman: What about incentivising? You spoke about productivity earlier. All of the research outside and inside education suggests that what people do in buildings is as important as their design. Sometimes when I visit a school, I feel that it is about the way that children learn how to behave. I am thinking of the Blue school in Wells. It has halved its energy bill because it has taught children about the importance of minimising energy usage. It is about how teachers, staff, heads and students operate within a building. Is there a way of incentivising staff and children to be more productive, particularly in that BSF-related way?

Ed Balls: Having a great building helps, but as you say, it is what happens inside that that really matters. The advantage of new school building-there has not been the kind of school building programme that we now have for decades.

Chairman: I think that the word is a "magnificent" scale. Even I would say that.

Ed Balls: It is huge. The scale of new schools opening in September is unprecedented for decades. However, it only works if heads and leadership teams take the opportunity of the new schools to do what really matters, which, as you said, is to use technology, have great teachers and focus on what actually happens in the classroom. A great building with poor teaching is of no use to anyone.

Chairman: Secretary of State, because of the Committee's desire to ask questions about the testing system at the moment, we have overrun a little. Thank you for you patience. We have had a good session, and look forward to our next encounter.

Ed Balls: I do not know about your scheduling and timetabling, but if you are to carry out an inquiry into children's trusts, it would be very welcome indeed. It would provide an opportunity to look not only at schools policy, but at how it links to the child and adolescent mental health services, youth offending teams, social services and housing-many of the things in the Children's Plan, which are very important in raising standards and promoting children's well-being, would be addressed in such an inquiry. However, obviously, that is a matter for you.

Chairman: Secretary of State, that is unusual. We tend to design inquiries into areas where the Secretary of State does not want us to go, but we will keep that in mind. Thank you.

Ed Balls: Thank you.