Examination of Witnesses (Questions 80-99)
DAVID BELL
AND JON
THOMPSON
25 JUNE 2008
Q80 Mr Stuart: Following Gershon
and the target of £4 billion savings, your Department is
claiming that it made £2.8 billion by last year and is claiming
to be on track for the £4 billion savings. Those are significant
savings and therefore there should be a large freeing up of resources
for other frontline activity. Where is the money? We cannot see
it. We cannot see it in your report, we do not see where all the
new activity and investment is going as a result of those efficiency
savings, if they are more than just some manipulative exercise.
Chairman: Jon Thompson, where are you
hiding the money?
Jon Thompson: We all need to be
careful there. The report fairly explicitly says this: you cannot
equate £4 billion-worth of efficiencies as £4 billion-worth
of cash that you can re-allocate back into the system. Indeed,
the Committee has debated this in the past several times—what
is an efficiency gain and what is not? In the spending review
2004 there were £1 billion-worth of cashable savings that
you could put back into the system and they were used. Other efficiency
savings are largely made up of savings of pieces of time, which
are then used, but you cannot cash that in the sense that you
can take the money out of the budget and put it somewhere else.
The methodology has changed significantly in the comprehensive
spending review 2007, where the majority of the savings now have
to be cash. The most significant of those was the 1% efficiency
assumption that was built into the minimum funding guarantee for
schools. That is cash that you would otherwise have spent and
that you now do not need to, and it amounts to over £1 billion.
Q81 Paul Holmes: Can you clarify
exactly how you measure productivity? I will explain what I am
driving at. In the health service, if you spend more money on
more staff in a geriatric ward, productivity would go down because
the same number of patients would be dealt with by more staff,
but the quality of the care would increase enormously. How are
you measuring productivity when those figures suggest that it
has decreased despite more money being spent?
Jon Thompson: The Office for National
Statistics methodology, as I understand it, takes the number of
young people in school and their GCSE achievements as an indicator
of outcome and compares that with the money on the side of the
input. You have a significant increase in the input into schools
and a significant increase in the GCSE results, and the two are
fairly closely related. Over the past 10 years both numbers have
increased substantially, by around 70%. When you put the two together,
however, overall productivity falls slightly, by 0.7%, as is contained
in the report.
David Bell: You might say that
this is quite an interesting issue, Mr Holmes, with regard to
the quality of what is provided, and that has been one of the
really tricky features. None of us are running away or hiding
from that productivity question, but we are trying to capture
all of its complexity. To continue the analogy of the geriatric
ward that you described, that might be like adding substantial
numbers of non-teaching staff and thereby increasing the input.
The outcome might have marginally declined because of the productivity
measure, but you might say that the quality of experience for
youngsters has improved, through one to one support, for example.
It is a really tricky measure to get.
Q82 Paul Holmes: I have two other
questions. For the financial year from April 2007 to April 2008,
you committed to make £4 billion of efficiency savings. In
December you said that you had reached £2.9 billion, but
when will the final figures be available?
Jon Thompson: Sorry, to be clear,
that covers the entire three year period from 2005 to 2008, not
just the one year. We had saved £3.3 billion at the end of
the last quarter, and the final figures will be available in the
run up to Christmas, as some of the measures relate to the capture
of information about how teachers are being used in schools and
such things as diary surveys. There is a time lag until the end
of the current academic year, so the results will be published
in the autumn.
David Bell: I should say that
the other aspects of that are more modest in size and scale, but
the Department has met the target of reducing staff numbers by
1,400, which we were asked to achieve. We are well on track to
achieve the relocation of services outside London, so it is important
to see that as part of a whole programme, although obviously the
big numbers are in the examples that Jon cited.
Q83 Paul Holmes: My last question
relates to staffing. You set yourself a target of reducing the
number of staff places by 1,960 and say that you have achieved
2,058, so what were those 2,058 doing? Were they doing nothing
and you got rid of them with no effect, or have you transferred
what they were doing to consultancies and quangos and is some
of the money being spent somewhere else anyway? Are people double-jobbing
like Jon is? How exactly have you got rid of over 2,000 staff
with no effect on what you do?
David Bell: I see Jon's eyebrows
raising a little. I think that there has been an effect, because
obviously as our demands have increased there has been more pressure.
About 500 of those members of staff, which is slightly more than
the 2,000 that we cited, were Ofsted staff, because that was the
contribution that Ofsted made. We have done a number of things.
A large number of those people were in our Government office network,
which has been scaled back substantially. Across the board in
the Department we have simply cut back. Although it is sometimes
easy to assume that there are thousands upon thousands of staff
working on particular projects in the Department, people from
outside are often quite surprised when they find that there are
only two or three people working on a project.
Jon Thompson: The only other thing
that I would say is that we have now got down to 2,606 staff,
which in comparison to a £154 billion budget seems very efficient.
Q84 Paul Holmes: One criticism that
is often made is that Government Departments, when reducing staff
places, increase the consultancy work and pass things on to quangos.
Is there any truth in that for what you are doing?
Jon Thompson: Consultancy spend
has been pretty flat over the past three or four years, to be
fair. I think that we have some particular circumstances at the
moment, such as the development of the ContactPoint project, which
is soaking up a fair amount of the consultancy budget. If that
was not there, consultancy spend would have gone down, but at
the moment it is pretty flat.
David Bell: I think the consultancy
question is always an important and good question to ask. We have
to make hard-headed business choices about when it is better to
employ somebody and have them on the books than to pay them slightly
more but have them there only part of the time. Although I understand
that the issue is always subject to a bit of political knockabout,
we just take hard-headed business decisions about where it is
best to employ staff permanently, as opposed to temporarily.
Q85 Chairman: You are saving money
and staff through the changes at your Department and the Learning
and Skills Council (LSC)?
David Bell: Yes.
Q86 Chairman: Many people are very
worried about the transition. People are talking about the patient
being dead but still on life support and asking when you are going
to pull the plug. What are the implications? There is a lot of
uncertainty about the next two years of this transition.
David Bell: Absolutely. I understand
that.
Q87 Chairman: Is this saving money?
What is this turmoil in the LSC?
David Bell: That goes back to
the machinery of government changes, with the split of responsibility
pre and post-19, and Ministers' decision to have two bodies to
do the funding, instead of having the LSC trying to straddle pre
and post-19. At this stage, it is not possible to say what the
details of the staffing consequences will be in the LSC. There
are expected to be transfers of people into the local authority
arena and into the national agencies. In terms of actual detail,
however, we are not able to say what will happen case by case.
Q88 Mr Chaytor: Back to the National
Challenge. Is each of the 638 schools under the threshold in the
National Challenge?
David Bell: Yes.
Q89 Mr Chaytor: And eligible for
additional funding?
David Bell: To go back to an answer
that I gave earlier, it might be quite modest in some cases, because
some schools will be on the margins.
Q90 Mr Chaytor: Funding is differentiated?
David Bell: We are going to make
the decisions about funding when schools and local authorities
submit their plans, which we hope to have by the end of July.
We will assess them over the summer.
Q91 Mr Chaytor: But the Secretary
of State has already said that secondary modern schools will attract
upwards of £1 million of funding as a special category.
David Bell: Yes. We have been
very fortunate in this programme to have secured about £400
million within our budgets, some of which was allocated under
the Budget and some of which we re-allocated from within. The
Secretary of State announced that we would want to allocate a
particular priority within that total on the secondary modern
side. We will have to look at that in the round against all the
other demands, but he has made a real commitment to the secondary
modern side.
Q92 Mr Chaytor: But the Department's
method of categorising schools is fairly arbitrary, is it not?
Not all schools in wholly selective areas are defined on your
list as secondary modern, and many schools in partially selective
areas are secondary modern to all intents and purposes, but define
themselves as comprehensive.
David Bell: Not surprisingly,
we have had these nuances pointed out by a number of players.
We have to look at all that. What we do not want to do is to get
into a position where particular schools feel that they are somehow
being disadvantaged. We are putting quite a lot of additional
money into this. Obviously, the categorisation will work through,
and we will listen to what local authorities and schools tell
us when they submit their action plans by the end of July.
Q93 Mr Chaytor: I understand that
40% of the 638 schools have CVA scores above the average.
David Bell: Yes.
Q94 Mr Chaytor: Presumably, it is
inevitable that some schools will have A to C scores, including
English and maths, of 29%.
David Bell: Correct.
Q95 Mr Chaytor: That is with an above-average
CVA score. However, other schools, which are not in the national
challenge, will have a GSCE score of 31% and a below-average CVA
score. Why is the cut-off so arbitrary? Why was CVA not taken
into account equally with the raw score at GCSE?
David Bell: To reinforce the point,
we know that there are many improving schools, as measured by
a number of factors in the national challenge list, such as the
Ofsted report or the CVA score, but we felt that a minimum had
to be established—some people might say that it should have
been higher—in relation to maths and English. That was not
an arbitrary choice; it is an important choice, given the centrality
of English and maths. If a school was in the category just above
the national challenge, as you described, it would presumably
be looking very carefully at how to drive further improvement.
We know that in some schools it might be hovering around the border,
and there will be the impact of whatever happens in this year's
GCSE results published in the autumn. We think it is really important
that CVA is a good basis on which to build progress and success
in English and maths, but there will be no apologies at all for
saying that there has to be an English and maths benchmark. Ofsted,
in its consultation on the new inspection arrangements, is suggesting
something similar when it makes judgments that there has to be
a minimum threshold in terms of the objective results.
Q96 Chairman: Before we leave that
point, should there not be an apology to some of the 600-plus
schools which, as a result of the clumsy way the strategy was
announced, felt pretty bruised? The way your Department launched
that strategy hurt a lot of feelings and dispirited a lot of schools
in the areas that some of us on this Committee represent—schools
that were working hard, with good leadership. Surely that could
not have been your intention.
David Bell: It was certainly not
our intention to cause great offence and upset. Equally, the Department
and the Secretary of State would make no apologies for saying
that this is a really important national programme, and that if
you are going to set a benchmark of 30%, clearly those below it
will be affected by the announcement. That is a matter of fact.
But we did not set out to cause offence. In fact, the Secretary
of State has been very clear from the beginning that this is about
helping schools to improve through the threshold and go on to
further success. I hope that in the aftermath of what some people
might have felt about the launch, people are now really focused
on how they can get their plans together to get the support we
think we, with their local partners, can offer to improve performance.
Q97 Mr Chaytor: The Department is
going to spend upwards of £400 million over the next three
years on this. To a large extent, though not entirely, the issue
that is being tackled is one of large concentrations of hard-to-teach
children in specific schools. Has a cost-benefit analysis been
done to discover whether it would be cheaper to tackle the root
cause of the problem, rather than spending £400 million to
deal with the consequences?
David Bell: I would argue that
our policies and programmes are designed to tackle the root causes.
It depends how you define root causes.
Q98 Mr Chaytor: I would define the
root cause here as the admissions policy that leads to certain
schools having disproportionate numbers of hard-to-teach children.
David Bell: We are back to matters
of local determination. I actually thought you were going to talk
about the sort of support that youngsters and families might need,
quality of primary education, focus on learning so that youngsters
get to age 11 better placed. We see all of those as root causes.
The admissions arrangements are set locally, and we have to say,
"What are the consequences in the 600-plus schools, and how
can we help those schools to improve?" That is why we would
keep emphasising that this is an improving schools policy.
Q99 Mr Chaytor: You are just about
to consult on the new admissions policy.
David Bell: We are doing that,
yes.
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