Examination of Witnesses (Questions 1-36)
Q1 Chair: Good morning. Thank
you all for joining us this morning to discuss the spending review
settlement for the Department for Education. You bring different
local authority experience and insight to the situation. Given
the need to tackle the largest deficit in the G20, do you think
that the way the spending reductions are being allocated makes
sense, from your point of view, given the Government's stated
priorities? It's an easy question to start with.
Matt Dunkley: I'll have a go at
a starting response to that. I think we all understand the imperative
of the deficit reduction. I think our fears are, managerially,
how it is being handled by the Department and how the settlement
is being broken down, in terms of the different funding streams
that affect us. We are fearful that a combination of front-loading
of the reductions into year 1, and the way in which the different
funding streams on which we are reliant are being cut at different
rates over the four years, with different amounts of front-loading
and the way in which that funding is being distributed, and is
being changed in some circumstances, could lead to some local
authorities having to make very large reductions in the first
year of the four years of the settlement. That could have a knock-on
effect in terms of the amount of redundancies they'd have to fund,
which might produce some unintended consequences that we don't
think flow from political decisions but from about how it is being
handled, managerially.
Q2 Chair: Anyone else like to
pick up on that?
Debbie Jones: What I want to emphasise,
as Matt said, is the front-loading issue. I think all of us have
recognised the need to make significant reductions, but the important
thing is that we essentially transform the way in which services
are commissioned and delivered so you have a reasonable lead-in
time. The impact of the front-loading, not just on our overall
settlement but also on the grants that we have yet to know the
detail of, means that we will have a very short time in which
to make major decisions. That kind of immediate knee-jerk—obviously
we'll do our best to avoid it—could result in those unintended
consequences, which could undermine the work that we're doing
in the future.
Q3 Nic Dakin: On the impact of
these changes, both of you have talked about unintended consequences.
What sort of unintended consequences might we see?
Matt Dunkley: It is partly to
do with the gearing effects and the way in which the different
funding streams work together. Broadly speaking, we're funded
for three main sources. There is the Direct Schools Grant, which
funds individual school budget shares. A centrally held portion
of that is held by the local authority. It looks as though a significant
amount of that centrally held funding may change through the way
the DSG is allocated. We then have the children's services budget,
which is funded by council tax and the formula grant for the DCLG.
The DCLG bit is subject to an 11% reduction in year one, and different
authorities have a different balance between their revenue base
being council tax funded and formula grant funded. For a London
borough like Newham, it is about 80% formula grant and 20% council
tax. In my county, it is 30% formula grant and 70% council tax.
The impact of the cuts on the DCLG happens differentially across
the piece.
About half of our children's services grant
comes from specific grants that are paid mainly by the DfE, but
also by the DoH and the MoJ. With the large numbers of those,
we have no idea what the rate of reduction is. There are grants
that we term "missing in action"—we have no idea
whether they are going to turn up at all. Those that are going
to be put into the Early Intervention Grant will be subject to
a front-loaded cut in year one and a kind of moral ring fence
about how that is spent, which could be interpreted as an attempt
to reduce our flexibility.
The interaction of those three streams of funding
and the fact that how the funding between authorities is distributed
through the Early Intervention Grant and the Rate Support Grant
could change—the formulas could change—will mean big
winners and losers between local authorities. That may mean some
areas of very high need have to have a very big hit in year one.
Therefore, instead of having the time to transform a service to
a different mode of delivery over a year or two years, authorities
would just be straight into cutting it, with big redundancy costs
in year one. It is that lack of flexibility about the time to
transform the service into something different or to commission
it differently from the third sector that is the unintended consequence
that may hit us very hard.
Q4 Nic Dakin: So are you saying
that you are not clear on how many separate education grants there
will be next year?
Matt Dunkley: Not clear at all,
no.
Debbie Jones: Nor are we clear
at this stage precisely what will be in the Early Intervention
Grant—in other words, what the balance will be in terms
of grants. We know what grants are stopping, but what we don't
know is either the proportion of reduction or the balance in terms
of priorities. For example, the Sure Start Grant, which we anticipate
will be part of the Early Intervention Grant takes up a significant
proportion of what would be that grant. Early intervention in
its broadest sense needs to cross the entire age range, so there
are a complex series of interdependencies that we don't know at
the moment. That is greatly impacting on the way in which we are
modelling the likely impact over the next four months for next
year.
To add to what Matt said, over the last decade,
essentially there hasn't been a clear demarcation between the
funding that goes into the different pots for children's services.
We have, of course, used the grants as flexibly as we can to make
the most use of the buck that we've got. Clearly, as you stop
one activity and go into another, one of the unintended consequences
can be that you end up stopping precisely the thing that has the
greatest impact. The interdependencies of the grants and that
of the likely reductions—plus the front-loading—will
make the whole mix complex and turbulent.
Q5 Nic Dakin: The Government are
releasing you from ring fencing. Will that not help in this circumstance
or is that a red herring?
Matt Dunkley: I would observe
that Governments of all hues tend to be very keen on ring fencing
in times of budget growth and a lot less keen on ring fencing
at times of reduction. But, of course, if we are set a financial
challenge, it makes sense for it to be un-ring-fenced, so long
as it is not a ring fence that is off but not really off, which
is what we are slightly worried about, in terms of some of the
restrictions the Government might try to put in place. If the
ring-fencing is off Sure Start, for example, we don't really want
the Department to be finger wagging and telling us how to spend
that money when we are having to make very difficult local decisions
across the piece. Our view is that if the ring fence is generally
off, leave it off and let us get on with it.
Q6 Nic Dakin: When the settlement
talks about the five to 16 schools budget, are you clear what
will and will not be in that going forward?
Debbie Jones: We are clear about
the elements, as was announced at the comprehensive spending review,
of what is currently going in to it. The bits that we are not
clear about are the grant picture, what is in the Early Intervention
Grant and, indeed, how and from where the Pupil Premium, for example,
will be funded. These are major issues for us. The other issue
that it is important for us to emphasise in terms of interdependencies
is that the overall reduction in benefit changes, welfare changes
overall and changes in housing will also have an impact on both
demand and, to pick up your earlier point, the way in which decisions
are made in relation to all that non-ring-fenced money.
Q7 Ian Mearns: We've heard the
Minister tell us both here and in the Chamber that things such
as the Standards Fund will be withdrawn but then added back into
the general pot. Matt, you said earlier that the way the review
goes could have a differentiated impact in different places. If
the Standards Fund and the additional educational needs money
go back into the general pot and are then redistributed by formula,
would that have a similar effect?
Matt Dunkley: It could do, but
it depends on how the formula is constructed. We understand from
comments that the Minister made over the weekend that the idea
of a national funding formula that was floated now seems to be
off the agenda in the White Paper. The issue with the Standards
Fund is that if the money that was formerly given to schools and
local authorities through the Standards Fund is now all to be
given to schools, that increases the pressure on local authorities
with regard to the services they can offer free of charge. It
almost completely removes our ability to offer services free of
charge to schools.
We understand that the quantum figure for the
DSG includes the Standards Grant funding, so that is important
to bear in mind. As a result, schools will be faced with local
authorities asking them to pay for services that they currently
get for free, out of what is in effect a reduced quantum. That
will cause all sorts of kinks in the system. That relates not
only to school improvement; it is about some of the services relating
to behaviour, reintegration, special educational needs and specialist
teaching services for children with particular difficulties. We
are having to look across the whole piece at charging for a whole
range of things that we currently don't charge for because of
the way the settlement breaks down.
Q8 Pat Glass: Do you know how
many pupils you will have in your area in January, for the census?
Will that number rise, and what impact will that have on your
budgets? Will a 0.1% spending increase in real terms take account
of those pupil numbers?
Hazel Cunningham: As you say,
the actual figures will come through in the January census, but
we have early indications of what they might be. The impact will
really be across the four years. We are already seeing some increases
coming through in the nought to five age range, so there is pressure
in the Sure Start budget at the moment, and that will feed through
into the primary sector. Having talked to colleagues in shire
counties, I think that we are all finding pressures coming through
at around the primary age range. We have particular hot spots
within counties, and they are not necessarily in the same areas
where we have surplus places, so we will need to look across the
county to divest, if you like, in some areas and reinvest in others.
We are not clear at the moment about any investment that will
be available for basic need.
What we understand from the Department for Education
at the moment is that there will be funding for additional pupil
numbers in the revenue grants and in the Dedicated Schools Grant,
but we are not clear whether there is any additional capital funding.
We know from the headlines that there is going to be a 60% cut
in capital funding within the education budget.
I think the issue relates to two areas. We know
that on a per pupil basis, the amount of money that schools will
get will be a flat cash figure, so there is no growth. The only
growth will be in the actual increases in pupil numbers, and the
DFE says that there is funding for that in revenue terms.
Farrukh Akbar: In Lambeth I would
say that we have similar problems, localised in the south of the
borough. We are having to make provision for bulge classes and
permanent provision for classes. We are struggling to ensure that
we have enough funding for our schools to accommodate the increased
volume.
Q9 Pat Glass: Will a 0.1% real-term
increase result in increased funding or cuts in your authority?
Per pupil.
Debbie Jones: I'll speak in general
terms, because I think that would probably be helpful at this
point. The 0.1% real term increase is, as Hazel has said, a flat
cash position. Basically, it will include the £2.5 billion
Pupil Premium. What we are not clear about is what the expectation
will be in terms of schools being expected to have the cash to
purchase services currently provided for within children's services.
That needs to be taken into account.
We know that year on year, overall, there is
an increase in under-fives. As Farrukh has said, we are not clear,
in terms of the 60% reduction in capital funding, how that would
impact on the basic needs formula, which will give us the money
for primary school places. Obviously we hope that any increase
at that level will be reflected in funding. In places such as
London, our borough has seen something like a 24% increase in
primary admissions over the last four years. Clearly we are experiencing
significant pressure, and we have no guarantee, for the reasons
that we have outlined, that the money will be there to fund the
services. The important thing to compute is what that 0.1% increase
will be expected to provide.
Damian Hinds: Just to be clear, and to
make sure that we are on the same page, it is a flat cash amount
on average per pupil, albeit that the average breaks down into
a different amount of money that follows Pupil Premium children
and money that follows others, and that translates into a 0.1%
per annum compound growth rate after allowing for inflation, which
is presumably defined as price inflation. Is that correct?
Hazel Cunningham: I think the
Government are using the CPI figure rather than RPI figure.
Q10 Damian Hinds: They both relate to
price inflation of one sort or another. When we talk about capital
funding, although you refer to it being cut by 60%, it is still
at historically quite high levels if you take the average over
the last 10 years. As you rightly identified, there are potentially
significant new requirements for primary places, but they must
also be considered in the context of different policies on net
migration.
How do your costs break down? I know that you
can never have a total, perfect split, but how do costs break
down in your authorities between fixed, semi-fixed and purely
variable costs?
Farrukh Akbar: In terms of variable
costs, they are mostly relating to staff, as you can imagine.
They are approximately 70 to 80% of the overall budget. Having
said that, our department has a budget of about £77 million,
which is the cash limit, and a large proportion of it—about
£50 million—is for the provision of children's social
care. You have something like £20 million of that £50
million to provide placements for children. The rest of the budget
relates predominantly to staffing.
Q11 Damian Hinds: Although I understand
why you described those as variable costs, within certain limits
within each school, if the pupil roll went up or down by three,
that would not change your staff bill at all, presumably. So,
I would describe that as a semi-fixed cost, if that makes sense.
Matt Dunkley: Things like the
class size guarantee at Key Stage 1 do affect that, particularly
in primary schools. If you have a class of more than 30, you must
open a new class. For primary schools in particular, that can
be very challenging when you have lots of net migration, lots
of fluidity in the pupil population and strange patterns of growth
in different parts of authorities. So, that part of the fixed
cost could be tricky. Hazel, do you want to expand on that?
Hazel Cunningham: Our proportions
are very similar to those that Farrukh set out. It would depend,
actually, on whether you were looking at schools or at certain
services within the children's services department. For example,
with SEN provision, the proportion is very much the other way—it
is a small proportion. So, for us, it would be about 15 to 18%
on staffing, and the remainder would be on the cost of places,
for example, or on special needs education. But looking generally,
staff costs range from about 75 to about 90%, so on average they
are probably similar ranges. Again, for schools each situation
is going to be very different, depending on the staffing structure
that they have established and the leadership team that they have
put in place. Some might have a very heavy staffing structure
and others a much lighter one.
Q12 Damian Hinds: What sort of
wage inflation are you expecting per head on the staff bill over
the next two years?
Hazel Cunningham: Again, that
varies. Within the local authority there is a pay freeze, across
the piece, and in schools it will depend very much on whether
the Government hold fast on the public sector pay freeze. But
schools are obviously very nervous about that because, given that
staffing is a very high proportion of their budgets, if there
isn't a freeze on teachers' pay that will have a big implication
for them in terms of the flat cash figure that they will be seeing
in their budgets.
Q13 Chair: Is there an effective
pay freeze, or are there some elements of entitlement to rises,
increments or anything else? Are there some hidden rises going
on that will affect budgets?
Hazel Cunningham: Within the local
authority?
Chair: Or within schools.
Hazel Cunningham: Within schools,
I think that it clearly depends on whether there is local discretion
on pay policies. If there is, I think that most local authorities
will be looking to freeze any kind of growth in salaries, but
that would be in consultation with unions and trade union associations.
Q14 Chair: So it is effectively
a true freeze. There aren't any increments kicking in.
Hazel Cunningham: No.
Matt Dunkley: In answer to your
question about schools, where you have incremental drift, that
will still occur. That cost will be absorbed in the flat cash
figure, and so it is a net pressure for schools.
Q15 Damian Hinds: What I was trying
to get to was if the CPI figure is being used as the overall inflator
to calculate a 0.1% real-terms increase, in the scenario of a
freeze—just to make it mathematically simple, let's assume
it's a perfect freeze—the 0.1% is actually higher. Presumably.
Farrukh Akbar: I have also read
that there are estimates of pupil number rises of 0.7%. That is
unconfirmed, but I have read it.
Matt Dunkley: If the DSG figure
has been calculated to include a CPI-related inflator on staff
salaries—if that is in the DSG figure, which at the moment
I don't think we have the detail to know—then if that pay
increase doesn't occur, that is a real-terms increase over and
above 0.1%. You're correct.
Q16 Chair: So, there could be
some headroom in this. If there is a true and effective freeze
for two years on the pay, and that's 70 or 80% of a school's bill,
and you're getting an inflation increase but that's not passed
on to staff, it would actually give both local authorities and
schools some headroom. Is that fair?
Hazel Cunningham: I think that
that's difficult to confirm at this stage without knowing the
assumptions that have been worked into, or will be worked into,
the DSG settlement, but there are implications as well in terms
of the announcements that have been made about the £1 billion
that will be saved, or will need to be saved, nationally by schools
in procurement and back-office savings. So again, that assumption
has, I presume, been built into the DSG figures overall. That
is 3.3% on national DSG currently.
Q17 Damian Hinds: I just wanted
to finish by speaking about this capacity issue. I do not know
if it is possible to give a percentage of capacity average figure
per school, and obviously there will be some that are above average
and some that are below. So, to make it simpler—again, I
am not recommending this, but I just want to illustrate a point—what
would be the impact of increasing the maximum class size by one
pupil in every class in your authority, in terms of the overall
cash impact?
Farrukh Akbar: The average in
London authorities is £5,200 approximately. So that is the
cost of funding per pupil. That does not necessarily mean that
that figure covers all the costs around a pupil.
Matt Dunkley: The point to make
there is that, outside of the Key Stage 1 class size limit of
30, schools are always entirely free to organise their classes
to be as large or as small as they wish, and they can rotate their
staffing structure to service that. So the schools formula itself
is not predicated on any particular assumption about class size,
other than at Key Stage 1.
Q18 Damian Hinds: But the use
of the metric of funding per pupil is, because it implicitly assumes
that everything else stays the same. Is that correct?
Matt Dunkley: That's correct.
Debbie Jones: Just to give you
a flavour, for each additional form of entry that we are currently
calculating in Lambeth, we estimate that we will need an additional
£130,000 per year, in terms of revenue funding. That is the
estimated pressure.
Q19 Ian Mearns: What's coming
out from this is that if local authorities themselves aren't clear
exactly how this is going to pan out in terms of the services
that they provide, the schools themselves will not be clear about
what will be available to buy back, or what they will have to
buy back and pay for out of this new arrangement. Am I right in
thinking that?
Matt Dunkley: Absolutely.
Q20 Pat Glass: Can I just clarify
something? Looking at an authority like Lambeth, you will get—setting
aside the schools funding for the moment—a flat amount per
pupil. In an authority like yours, there has been an increase
in the last few years of 24% of pupils and that is likely to increase.
They are all in the wrong part of the borough, so you have to
create classes and you don't have the capital funding for that.
If these children were all coming from stable backgrounds, with
English as a first language and with no special needs, you could
cover the cost of it, but what happens if they don't? What happens
if those children come in with additional needs?
Debbie Jones: I'll speak in general
terms, then I'll ask Farrukh to give you some of the detail.
As you have just said, in Lambeth we know that
there will be a continued pressure for primary places. The cumulative
impact of the inter-relationship between capital and revenue means
that that pressure is likely to be compounded. By that, I mean
that because there is likely to be less money available for capital
and because, for a number of reasons, obviously what we have been
planning for—particularly on the secondary phase—is
increased renovation or new schools, effectively you've got schools
that are badly in need of repair. There may not be enough money.
That creates its own pressures. So the interface between capital
and revenue is important.
As you also said, there are differentials across
the borough. We know in terms of need that a proportion of children
coming in will have a high level of additional needs and that
a high proportion will qualify for the pupil premium. However,
how the pupil premium is calibrated—although there has been
consultation on that, we don't have the detail yet—will
also depend on the amount of money that is in schools.
Equally, regarding the Early Intervention Grant
that is available to Lambeth, much will depend on, first, how
much it is reduced by and whether it is front-loaded, which we
expect it to be, and, secondly, there is the issue of how much
of the grant is predicated on assumptions around protecting or
not protecting Sure Start children's centres, and so on.
So, because all our schools now work in federations
and clusters, all these variables will knock on together. We have
done a very significant amount of profiling obviously, in terms
of our pupil needs numbers, but we need to look at the complex
inter-relationship between those variables, which we expect to
increase the pressure.
Do you want us to add to that?
Chair: We probably
need to move on.
Q21 Pat Glass: Very quickly, can
I stick with local authority funding? We know, or we expect, that
there will be a 12% cut in the non-school budget. How will that
affect the children's services budget? Which of the services are
likely to be affected most? Can you keep the youth service in
mind when you answer that because it tends to get forgotten?
Debbie Jones: We've no intention
of forgetting the youth service. As Farrukh was saying, if you
take the overall budget available, we don't know precisely how
much we'll actually be left with in the complex interplay between
the schools budget, our budget and the grant settlement. If I
am talking proportionately, there is £50 million for social
care, which covers not just child protection but services to children
in the looked-after system. The remainder covers a whole range
of services, including youth services and those we currently have
in relation to Connexions, and all the services provided by grant.
We are modelling out a whole range of scenarios that take account
of the front-loading and the in-year reduction in area-based grant,
which has been 24%. We anticipate—we are modelling—something
between 14% and 30% overall, because that is what we need to do.
Obviously, we are doing that against the council priorities, taking
account of the fact that all this is now non-ring-fenced. That
gives councillors choices.
We must also take account of the services that
we have to provide by law and the point I wish to make is that
although funding is reducing, a number of the expectations and
the law are not changing at this stage. Expectations within communities,
and indeed legal requirements, remain the same. All that is balancing
the impact.
Q22 Chair: So you are saying that
because statutory services are being given a reducing budget,
they will take more than their fair share and that anything that
is non-statutory is likely to be cut. Can you bring that alive
for us? What does that look like on the ground? What is it like
in terms of youth services and in your estates and areas? What
will the changes feel like to young people in your areas?
Debbie Jones: For young people
it means that we will have to look at those services that are
targeted on the more vulnerable children. By their very nature,
those services will have to be protected.
Q23 Chair: So the universal will
lose at the expense of the targeted?
Debbie Jones: That will depend
on the way that the priorities in the grants are sorted, and indeed
what services can be built round and within schools—the
way that the pupil premium works and so on.
Matt Dunkley: I would say that
in a shire county such as East Sussex, which is a mixture of deprived
urban, well-off urban, deprived rural and well-off rural communities,
the main change that young people will see is the effective ending
of some universal access to services. It will certainly be extremely
difficult for us to have a universal offer on things such as youth
services. Some of the services around Connexions and careers are
also going to be under threat. Some of the services offered out
of children's centres that are currently universal and free at
the point of delivery to everyone will either have to be more
targeted or, in some cases, charged for. Those are the kinds of
change that people are most likely to feel on the ground.
Q24 Tessa Munt: I want to look
at community budgets. The Government said that around £8
billion a year is spent on 120,000 families with multiple problems.
Funding gets into local areas only via hundreds of separate schemes
and agencies, but the problems continue for those families for
whom that money is supposed to change everything. I wonder whether
anything would be achieved by abolishing the local public service
partnerships and bringing in the community budget.
Debbie Jones: On community budgets,
most of us would generally welcome the opportunity to pool resources,
but it is probably true to say that we are already doing that.
There are going to be 16 community areas piloting community budgets,
covering about 28 councils. In any event, a lot of work in those
boroughs and local authorities has already been done with the
developments around place-based budgets. So I think we all see
it as a clear opportunity.
Some of the risks around community budgets will
relate to the extent to which there is interplay involving the
separate funding streams and the separate statutory requirements.
The opportunity is there because the whole can be greater than
the sum of its parts, but much will depend on how, and how much,
those budgets can fund, and for whom. For example, the work that
will be done to identify the high-risk families—again, there
are a number of precursors around high-risk families and work
that has been done with them—will need to be agreed and
recognised across the piece. It's not rocket science to look at
the kind of families who can benefit from those community budgets.
I'm thinking of histories of domestic violence, parental drug
and alcohol misuse, poor family relationships—a whole range
of criteria can be used. What we need to be sure about is that
those community budgets will target those families who are particularly
vulnerable—those families who hit the radar, whose children
are at risk of coming into the care system.
Q25 Chair: That's the point of
them, isn't it?
Debbie Jones: Yes, that is the
point, but in—
Q26 Chair: You've pooled the budgets.
The money is handed to you and you're told to target the most
vulnerable. You just have to get on with it, don't you?
Debbie Jones: But the choices
that we will have to make are between working with families whose
children are at the top of the graph—in the system already—and
working with families who are significantly at risk.
Q27 Tessa Munt: May I follow that
up? If the Government accept already that the situations of those
families don't change from what has been happening up until now,
what is going to change?
Debbie Jones: The opportunity
of taking away the barriers and the silos will and should make
a difference. It has in certain areas.
Chair: Thank you. May I bring in Matt?
Matt Dunkley: The problems come
once you get outside sectors in terms of pooling budgets. All
the Total Place pilots and the authorities that have looked at
the same principles around place-based budgeting have found this.
There are ring fences within local government. Once you get outside
those and get into Benefits Agency or Home Office funding, the
police or other agencies—health and so on—it can get
more difficult because of governance and because of restrictions,
but it has to be right that pooling resources to target families
in a way that changes their behaviour so that it reduces their
dependency on services represents sensible long-term planning.
That has to be right.
I think the point that Debbie is trying to make
is that underneath those families where those multiple problems
are known are a whole raft of families who are on their way up
to that point and for whom large chunks of funding are being withdrawn,
and in various forms.
Q28 Tessa Munt: I want to ask
about the advantages of introducing budgets for children with
special educational needs and those with disabilities. What are
the pitfalls of funding in that way?
Matt Dunkley: Could I respond
to that, because my council—
Chair: There are a few more areas that
I want to get through, so although I hate to push you, it would
be great if we could keep this short and sharp.
Matt Dunkley: Okay. I'll be very
quick. We have a project involving seven councils in the south-east.
We've put forward a proposal to pool all the funding that youngsters
with disabilities receive in a single personal budget. That will
require legislative change, but we think if you have the funding
associated with statements, with respite care and with health
provision in a single budget that is managed either by the family
or by a service on their behalf if they can't do it themselves,
that will change the way in which the market works for disability.
It will aid long-term commissioning—whole-life commissioning—for
families. It will increase choice and flexibility for families.
We'll end up with a better result and a less adversarial result
for families with children who have special educational needs
in a local authority. In a nutshell, that's it, but it's very,
very complex.
Q29 Ian Mearns: When the Pupil
Premium comes in, it will be targeted at schools for particular
children. What's to say that the school will spend it on the particular
child? Could it be spent on general management of the school?
Matt Dunkley: In terms of a personal
budget instead of a statement, if you're taking about children
currently in segregated, specialist provision, there would be
a fairly obvious relationship between the school's spend, the
benefit that the child was getting and the budget.
With the Pupil Premium, the proof of the pudding
will be in the outcomes, won't it? In return for the Pupil Premium
funding, schools will be expected to demonstrate a narrowing of
gaps in achievement between pupils subject to the Pupil Premium
and those who are not.
Q30 Ian Mearns: Should it be ring-fenced?
Matt Dunkley: I don't believe
that that would help schools, no.
Q31 Chair: Can I ask about the
voluntary sector? How open do you think it is? I am interested
to hear from you. Would you like to do this, Neil?
Q32 Neil Carmichael: I beg your
pardon, I thought I was coming in later.
I want to talk about the voluntary sector and
how it can fit in to local authority work. In particular, I would
like to know whether local authorities are receptive to the ideas
of the voluntary sector and whether you have the capacity to procure
the voluntary sector, because procurement is obviously a key issue
here, including specifying what you want and then making the decisions
about delivery?
Debbie Jones: I'll be as brief
as I can be.
Q33 Chair: So, can you say how
open you are to procuring from the third sector and whether you
have a bias towards the large as opposed to the small and the
local?
Debbie Jones: Local authorities
have been procuring with the voluntary sector for some considerable
time and have been open to developing capacity and ensuring that
what services can be run through the voluntary sector are run
through it. I think that the position varies depending on where
you are—whether you are in an urban area, because urban
areas tend to have the large voluntary sector providers, or in
a rural area, where you are talking about a complex mix. The issues
will be different. In both cases, I think that there are possibilities,
but the differential issues need to be tackled.
The main point that I wish to make is that,
certainly for services such as youth services, which we were talking
about earlier, there are real opportunities in relation to seeing
a lot of service being delivered through the third sector. However,
one of the risks of the front-loading that we were talking about
earlier is that you don't give the third sector enough time and
capacity, particularly in areas where the big organisations are
not represented, to do what is necessary to make the most. Also,
it is not necessarily cheaper, and I think that is one of the
issues that we need to think about.
Q34 Neil Carmichael: For the third
sector—the Big Society bit, which is really what we are
coming on to—there is a need for some security, isn't there?
I say that because, in the past, the voluntary sector has received
grants or subsidies and that grant or subsidy mechanism has changed,
or it has effectively allowed the service to be questioned. How
do we get that security in place to give the voluntary sector
confidence that it can be there for the long term, subject of
course to the normal provisos?
Debbie Jones: An effective procurement
process and a stable settlement are obviously key to that. However,
one of the issues that we have had to face—I will speak
locally—is the fact that, because a lot of our services
are already provided through the voluntary sector and because
the Area-Based Grant took a 24% hit in-year, capacity has clearly
been undermined. I can't speak for the third sector, but I imagine
that what you may well be hearing next is that there is a level
of certainty that is needed and that there is an issue about capacity-building
that needs to be built in.
Building the necessary skills within local authorities—in
other words, so that we become more about commissioning—is
not something that is problematic, per se. If the systems are
right, and if they are efficient and effective, it can be done.
There are two issues: the first is the front-loading; the second
is the variation in maturity, strength and capacity across the
piece.
Q35 Tessa Munt: I want to ask
you about Sure Start and early intervention programmes. Apparently,
the Sure Start funding will remain at about £2 billion a
year by 2014-15 and the early intervention grant will also be
£2 billion a year by then. As I understand it, the early
intervention grant will include Sure Start funding. What's left?
Matt Dunkley: Not very much. In
gross terms there are about 11 grant streams that we know of that
are being amalgamated into the early intervention grant, including
Sure Start. So, at the end of the four years you are basically
seeing a flat-lining of Sure Start funding and, in effect, some
of those other things are being removed altogether. That is going
to mean that local authorities will look very hard at what some
of the Sure Start funding is currently spent on to see whether
the pattern established under the old regime of funding is sustainable
in the context of the removed ring fence. I would argue that it
is not.
So, for example, lots of authorities will look
to areas such as regulatory activity around early years settings
to strip that back to statutory minimums. They will be looking
at some of the activities that we are able to offer free at the
moment, which we might have to begin to charge for, and we will
look at targeting services paid for by that grant more specifically
on the vulnerable families, rather than necessarily a completely
universal offer.
Q36 Chair: It's a relatively new
programme, so is there quite a big opportunity to charge for services
that have been developed? The thing has been set up; it needed
to be put into place, but now can it be tightened up and improved
at the same time as requiring less money to be spent on it?
Matt Dunkley: There are big opportunities
to charge for some parts of it, but they are not so substantial
that they will make a massive difference. The much vaunted baby
massage for middle-class families is one area where we might be
able to charge, but it will not produce enough revenue to close
the gap we are talking about in the overall funding streams.
Chair: Thank you all very much for giving
evidence to us this morning. If we can move swiftly to the next
set of witnesses, that will be fantastic.
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