COMMITTEE FOR EDUCATION

OFFICIAL REPORT

(Hansard)

Education Bill

28 January 2009

Members present for all or part of the proceedings:
Mr Mervyn Storey (Chairperson)
Mr Dominic Bradley (Deputy Chairperson)
Mrs Mary Bradley
Mr Tom Elliott
Mr Trevor Lunn
Mr Nelson McCausland
Mr Basil McCrea
Miss Michelle McIlveen
Mr John O’Dowd
Mrs Michelle O’Neill
Mr Edwin Poots

Witnesses:
Mr Gavin Boyd (chief executive officer designate of the education and skills authority)
Dr Mark Browne (education and skills authority implementation team)
Ms Catherine Daly (Department of Education)
Mr John McGrath (Department of Education)

The Chairperson (Mr Storey):

I welcome the chief executive officer designate of the education and skills authority (ESA), Gavin Boyd; John McGrath from the Department of Education; and Mark Browne, who is the programme director of the education and skills authority implementation team (ESAIT). The two issues for discussion today are designing modern education services; and the outline business case.

Mr Gavin Boyd (chief executive officer designate of the education and skills authority):

Good morning, and thank you for the opportunity to speak to the Committee. The first part of the presentation is to update you on what we have been doing on the design of the education and skills authority.

Members will be aware that this is the first major reorganisation of the administration of education in 35 years. Over that period, significant change has taken place. For example, political change has taken place, so the new structures of corporate governance need to reflect the political reality of devolution, as opposed to that which was set up, to some extent, to offset the perceived democratic deficit of the 1970s. On the other hand, local understanding and insight are important in informing decisions; that was one of the great strengths of the system.

There has been huge technological change, and there is an opportunity to reflect the impact of technology in the design of the new organisation and in designing services. The existing system is over-engineered; there is significant duplication of effort, particularly in management. As we create the new organisation, we will move quickly to deal with that. As I will touch on later, the outline business case indicates that initial savings of £20 million a year will be generated. We are happy to work through the latest thinking on those savings.

However, apart from the issue of modernisation — and the review of public administration (RPA) was a primary plank in modernisation, simplification and generating savings — it has become clear that the performance of the system from an educational perspective is very variable. I do not have to rehearse the issues. Quite simply, too many young people do not achieve the educational outcomes or have the personal development opportunities that they should. That is a personal tragedy for the individual, but it is also a disaster for our economy and our society.

This is a huge change programme. To be successful, we must have a thorough process that takes into account international best practice and the detailed knowledge of those involved in the system. We have designed a process that is inclusive, involving hundreds of staff and trades union representatives. It is open and methodical, and we report regularly to the widest possible group through the use of our website, which gets a great many hits.

We hold ourselves open to account and to good ideas; this side of the table does not have a monopoly on good ideas. We are wary of jumping to quick solutions that have not been fully thought through. We make no apology for taking a methodical approach as we work our way through such a huge change process.

I will hand over to Mark Browne, who will take you through the detail of what we have been doing for the past six months or so.

Dr Mark Browne (education and skills authority implementation team):

As Gavin said, this is a massive change programme. In working with the Department, the implementation team has been keen to set out for the staff in the organisations, and others with an interest in the change, how it can be managed successfully. To assist with that, we have developed a model of change, which we have called transfer, transform and innovate. For all the various services that will be coming into the new authority, that model of change sets out the risks associated with change, the benefits associated with the change and the pace at which change might be delivered.

We have identified 20 key services that will be delivered by the ESA and classified them into those three areas. The first area involves those services that have direct contact with users and are vital in ensuring that there is continuity from day one; for example, transport and school meals. In the early stages, the bulk of those services will transfer largely as they stand, with delivery at local level remaining much the same. However, there will be change to ensure that we bring the five or six different management structures into one regional structure.

The second category involves those services that need to transform. Those are typically back-office services, which are critical to the success of the organisation but which are largely unseen by those who use them. In those areas, there is real opportunity to eliminate the duplication that Gavin referred to. For example, the six financial systems will be brought into one system, and, in doing so, we will improve the quality and the timeliness of information and we will release resources to be used in other parts of the education system closer to the front line.

The third area involves those services where innovation is required, which include the parts of the education service that parents and children, and others involved in the education system, look at to see improvement: educational quality; school improvement; services to help children and young people to overcome barriers to learning; and the education estate, which includes the quality of the schools, their size and location.

Those are the key areas in which educational benefits will flow in the chain from the ESA and key areas in which innovation is needed. That is the broad model that we have set out for staff so that they can see how we will manage the change and the risk at the same time.

To drill down into a little more detail, we must look at each of the 20 service areas to decide what we want to achieve and how best we can design the organisation to accomplish that. We set out a four-stage process, beginning with a clarification of what we are trying to achieve, and the vision aims and objectives of the area, and we moved into the service-delivery model required to deliver that. We then moved into the number of people and the skills and resources that they require, the organisational structure and location. That is based on the form-follows-function approach.

We have done that through an extensive programme of engagement with staff in the sector. It began with a launch in April 2008, where we had several hundred managers together in one room. We were told that that was the first time that managers from all organisations had come together to discuss such educational issues.

We took that forward through a series of workshops last May and June, when we looked at stage 1 — the visions, aims and objectives for each area. We have moved into stage 2, where we have drawn out the detail of how services are operated, and we made proposals on how we think they should operate under the ESA. We finished that process just before Christmas, when we engaged with 450 senior- and middle-management staff and trades unions — which were represented at all the workshops — to look at all those service areas and to consider and test our proposals.

We want to refine those proposals and move into stages 3 and 4: sizing the functions, identifying the skills, and moving into the organisational design and location aspect. The key to those service-delivery models is looking at a regional/local approach. We need to look at what services are best delivered regionally to bring consistency to ensure that standards are met, to ensure that there are efficiencies and to release resources; and what is best delivered locally.

In each of the service-delivery models we have set out regional and local functions and have tested that with the staff who are delivering the services. What came out of the workshops, along with a great deal of detailed comment, was a strong endorsement that a regional/local approach made sense and could work. That is what we are working on to develop in more detail.

A key feature is the local area teams. We want to have multi-disciplinary, integrated teams that will be delivering key services close to schools and providing the support that schools need. That would include school-improvement practitioners, behavioural support, educational psychologists, youth co-ordinators and early-years co-ordinators; all will be in local teams close to the schools, youth-work settings and early-years settings, providing the support that they need. They would be headed up by a local team leader, who would represent them and be the point of contact for those who have questions or queries about the service delivery and the services available in an area. We are working through a bit more of the detail on that.

We are finishing the second stage of a four-stage process. We are moving from the future service-delivery models into sizing the functions and looking at the skills and resources. We will then move into the detailed organisational structure below the top level to consider where those functions should best be located and organised. That is the process to date.

It has been an extensive process of engagement, which has been welcomed by the staff who have been engaged in it. One interesting point was that the first round of workshops attracted some 350 staff; in the second, that increased to 450. We had to work hard to contain the numbers so that we could manage. There is interest in the organisations and a willingness to engage, and we have been heartened by the expertise that we have been able to draw on. We will continue to draw on that throughout the process.

Mr Boyd:

We will stop at this stage and let members take over.

The Chairperson:

Thank you. Do we now have any sense of the draft cost of the organisational structure showing the local and regional staff allocations?

Mr Boyd:

I will answer that from a slightly different angle. As we have worked through the exercise to date, we have affirmed the work that was done in the outline business case. We will talk more about that later on. It has made us very confident in the figures that were originally generated by the business case, which is, by definition, an outline.

Now that we have entered into more detailed work, we are more confident. We have not yet sought to cost — in detail — the split between local and regional services; we simply have not got to that part of the exercise.

Take, for example, the payroll function. There is no argument against changing the 30-odd payrolls to two payrolls; that is a sensible approach. The most important payroll issue for staff is that they are paid the correct amount of money on time. That process can be completed quickly. Some 240 people are involved in paying staff; it is a large and complex exercise that is spread across many areas. We have made some modest assumptions about how moving to a single function will affect those numbers. That exercise has yet to be completely scythed and, as Mark said, it is the next stage of our work. That is one example of a regional service that will, in time, operate from a single location.

As Mark said, on the other side of the coin, we have been considering which services should be delivered locally. We have been discussing our views on school support, educational psychologists, behavioural welfare and the Youth Service with the Department; the music service alone involves 450 staff. We need to plan carefully. We have not yet completed the detail exercise, but we will work through it during the next few months.

The Chairperson:

You tested approximately 20 draft future service-delivery models through 11 workshops in November and December. Have you agreed the regional/local functional split in services? What feedback have you received?

Mr Boyd:

For each of the workshops we produced our view of what the regional/local split should be, and in every case it was affirmed. During the past year, we learned that although it is clear that everyone accepts the logic behind a single finance department, a strong case was made that local support must be immediately available to schools to allow them to manage their own budgets. That work is being carried out by the local management of schools (LMS) officers in the boards. The model that we have developed allows for a single finance function and allows finance personnel to be dispersed to ensure that they are immediately and readily available to schools. They will be included in local teams.

During the past year, we have received feedback from governors’ conferences and school principals to the effect that they need locally and immediately available human resources advice. Schools that were experiencing problems wanted to talk to an expert rather than a faceless person whom they did not know; they wanted somebody to come to the school and discuss the matter. That finding is built into our plans for local areas.

We have built and tested a model from talking to people. In fact, some groups have been ahead of us. Those involved in the cleaning service presented a plan of how to organise a regional cleaning service. That is an example of people who are responsible for existing services grabbing the bouncing ball and solving that problem on our behalf. Several other services have replicated that approach.

The Chairperson:

It is one thing for such groups to present ideas on how to progress, and I appreciate that you cannot give a blank cheque on those issues. However, one concern and criticism of the process has been that you could outline a proposed model, but because there is a predetermined plan for the regional or subregional functions, proposals will not receive the courtesy and consideration that they ought.

Mr Boyd:

From our perspective, that is not the case. In my opening remarks, I said that people on this side of the table do not have a monopoly on good ideas. However, we measure all proposals against examples of best practice. For example, between 50 and 60 staff are involved in the procurement of goods and services.

We measured the procurement budget of £130 million and the size of our staff against the number typically involved in the procurement of goods and services according to international best practice. We found that the number is considerably less than 60. We must therefore match our best thoughts with what we can aspire to on the basis of international best practice.

Mr D Bradley:

The Chairperson asked one of my questions, but sure.

The Chairperson:

How sad. I apologise.

Mr D Bradley:

How local is local? How many local area teams will there be?

Mr Boyd:

There is still discussion about that. From our perspective, the principle is that services should be delivered at the closest possible point to schools and pupils.

Even in our existing services we have some sub-regional teams. We want educational psychologists located and working with small clusters of schools so that they are immediately available. We foresee circumstances in which educational psychologists are based in local communities of high need. That does not mean that that local team will operate on its own: it might be a subgroup of a slightly bigger team, but it should be determined by need and the importance of providing immediate access to services to make a difference to children.

Mr D Bradley:

That does not really answer my question.

How can you produce a credible business plan if you do not know how many local area teams there will be?

Mr Boyd:

There are two aspects to that. First, how we group services for management purposes is different from how we plan to deliver them.

Mr D Bradley:

Generally, management will be grouped, as far as possible, regionally. Is that what you are saying?

Mr Boyd:

No. The strategy should be regional and should be followed consistently across the region.

We have some 150 educational psychologists in the service, and we must ensure that they are as close as they can be to the need of the community. Over the next few months, we will decide how to cluster those psychologists for management purposes, taking into account not just the management of the organisation, but the need to interface with communities. That is something that the Department will want to examine. I am sure that it will be the subject of further discussions.

Mr D Bradley:

When will we know the extent of the local area teams?

Mr Boyd:

We will work hard on that over the next few months. We will pass it to the Department, which will want to consider and discuss it with various parties.

Mr D Bradley:

Surely, that is one of the most pressing matters for schools. Schools will ask whether the ESA is like an elephant somewhere in the distance or will it be near hand and accessible when schools need it?

Mr Boyd:

The model is designed to ensure that services that need to be close to the school and the pupil will be accessible. We are absolutely committed to that.

Mr John McGrath (Department of Education):

We touched on that several weeks ago when we discussed the new organisation’s structure. We made it clear, in line with what Gavin said, that the Minister’s view is that services should be available as locally as possible. The Department’s view is that the number of local area teams should be grouped, perhaps, in six areas; however the service — human resources, finance, educational welfare officers or educational psychologists — should be as close to the school as is managerially possible. We have rehearsed this issue before. It will depend on circumstances, but the general theme of our work is subsidiarity. As much as possible will be available locally, and if back-office services can be centralised, they will be.

The Chairperson:

Can I tease that out a little? What consideration has been given by the implementation team and the Department to the pressures that schools are experiencing with regard to educational psychologists?

As Gavin said, there are some 150 educational psychologists in the system. However, demand and need are huge, with many people on waiting lists. Will those 150 educational psychologists merely be spread out and instructed to work with the schools to which they are closest?

In your workshops you are bound to have been told about the structures and the associated problems. What cognisance is being taken of the problems involved in developing the delivery of the system? We could end up with a far worse situation than the present one.

Mr Boyd:

I will comment from the point of view of the implementation team, and John will give the Department’s perspective. Some months ago, I spent several hours talking to the east Belfast primary principals’ group; our conversation was dominated almost entirely by access to special support for children. Those principals asked me: what is the point of providing psychology services three years after a need has been identified? The child will have left the school and there is nothing more that the school can do.

The principals became quite emotional; they are doing their best for their kids, but the services are not available. From a planning perspective, my first question is whether we have the right number of educational psychologists. How do we know whether 150 is the right number? The answer is not available to me in the system.

Mr D Bradley:

If they cannot deliver the service needed, surely that is a good indication that there are not enough educational psychologists.

Mr Boyd:

That is one possibility. Another possibility, however, is that we have not organised services or allocated priorities correctly. Most of us around the table went through the education system at a time when there were very few educational psychologists. Some people in the system argue that we now ask someone to come in to help with issues that used to be dealt with by primary school teachers in class. That is the sort of issue that the Department is considering from a policy perspective.

We are setting out to check various issues. Is the number of educational psychologists right? Is the organisation of the service right, or do educational psychologists spend too much time writing reports and having meetings rather than dealing with children? That issue has had a huge impact on me personally, and it is something that we have to consider. If more educational psychologists were required, funding would have to come from savings made elsewhere in the system. I could talk about this for the rest of the morning, Chairperson, but you would not want me to do that. I will hand over to John to provide the Department’s perspective.

Mr McGrath

I will make the same points in reverse. There are two strands to the issue. The first is: how many educational psychologists are needed? Perhaps more are needed, but the resources need to be found, and that is a priority issue. The second strand is developing the best managerial and professional way of deploying skilled and specialised staff such as educational psychologists; Gavin has rehearsed that point.

There is a coincidence of two issues. Gavin’s job is to create an organisation that makes the best use of the available resources and, as far as possible, frees up resources from support services that can be directed to front-line services such as educational psychologists. Ultimately, it will be up to the Department and the Minister, through the budgetary process, to maximise the amount of resources going to education. Gavin cannot come up with an optimum level of staffing that exceeds the amount of resources that are available to him, but he will seek to come up with the most effective deployment of those resources.

Mr Lunn:

You will deserve an award if you successfully convert 30 IT systems into one or two. It seems that every other Department or organisation that has attempted to make such a change has either experienced major teething problems or made a complete Horlicks of it. Will that be in the Hansard report? [Laughter.] Millions of pounds have been spent, but systems have not been in place.

The Child Support Agency comes to mind, but there are many others. In the Public Accounts Committee, we have heard about so many disasters. How confident are you that, from day one, your systems will be robust enough to do the job?

Mr Boyd:

I thought that that was an IT term.

Let me make an observation, since I have had the opportunity to examine existing systems in some detail. I used to work for a private-sector company that invested heavily in IT systems to do the drudgery of everyday work, which I call the “heavy lifting”. The organisation also invested heavily in IT because it allowed the company to operate at — what I considered — a reasonable level.

My observation is that, educational technologies aside, investment in ordinary IT services to support human resources and finance has simply not been adequate. As a result, we have found that people are working incredibly hard under very stressful conditions to do jobs that in many other organisations are done by technology.

There is a huge frustration that human-resources systems cannot provide sufficient details about staff — such as where they live — to plan for the future. Therefore, we simply must invest significantly in IT to develop a modern organisation. That will drive some of the savings. I am aware of the track record in public investment in the technology to which you referred, and I am also aware that Hansard is recording this session. There are ways in which those issues can be delivered on.

I am conscious of the fact that there are people in this room who know more about technology than I do, but it is not difficult, in the twenty-first century, to have a single payroll system. It is not difficult to have a human-resources record system. Those are the challenges that we must face.

Mr Lunn:

As regards other organisations, the problem seems to have been that the specification was not set out properly at the start. No matter whose fault it is, it is the commissioning body, which you represent, that must pay for and mop up the extra costs, even though, in some cases, an outside agency provided the systems that spelt out the specifications. Are you totally confident about this system?

Mr Boyd:

You identified the vital importance of being what we call “the intelligent customer”. A company cannot subcontract to another company the job of telling the first company what it needs. A company must be able to define its needs and to hold the supplier to account if it fails to make payments.

Mr Lunn:

If people do not get paid in a year’s time, we will talk again. I am glad that you are confident.

Mr Elliott:

Thank you for your presentation. I know that the issue of educational psychologists was used by way of example only, but surely that is, or should be, part of an ongoing review by the Department. I am surprised that there may be such a discrepancy now.

You spoke about wanting to reduce duplication, and I do not think that anyone would disagree with that. My concern is that when issues such as this have arisen before they have been addressed the wrong way round — front-line services, which are desperately needed, have not been retained and improved. Front-line services such as teachers, teachers’ support services and transport have been reduced at a local level, whereas administration has been built up, despite there being no cost savings in it. Therefore I remain to be convinced on that matter.

Being from the west of the Province, when I hear that something is being centralised I assume that it will be based in Belfast, while the rest of us lose out. I am keen to hear your comments on that.

Mr Boyd:

The goal has been set: a greater proportion of the budget must be allocated to the classroom and to those who support children and young people directly. I cannot tell the Department how to do its job, but I expect it to make clear what percentage has been allocated to the classroom this year, next year, and the year after — as crudely as that. I expect such measures to be put in place.

Part of that has already happened. You have heard this before, but the savings projected for the first three years of the ESA have already been built into the Department’s financial plans for the future. That money has already been taken out of administration and is planned for allocation to the front line. Missing the targets is not an option; we simply must meet them to balance the books.

I will deal with the point about psychologists quickly. Such issues should be kept under constant review. I do not know — and no one has been able to tell me — what the appropriate caseload is for a psychologist. I do not know whether 150 psychologists is enough, too many, or too few, and I have no way of measuring it. It is not an insurmountable challenge, because it is done elsewhere in the world. That is the sort of thing that we will have to deal with.

It has been made clear in papers that we have submitted to the Department, on our website and in a presentation to the Committee that the centralisation model that we have been working towards and which we have presented to the Department respects the footprint of existing jobs. In other words, there are jobs in the west, and we anticipate that under the new model there will continue to be jobs in the west; not the same jobs, but there will be jobs. The different functions, such as finance and human resources, will be centralised, but not all in the one place. Those, of course, are ultimately decisions for the Department, but that is the model that we have been developing.

Mr McGrath:

The Minister’s view is that as many resources as possible should be reallocated from back office to front office — into the classroom; that should be the objective. Equally, it is clear that in this budgetary period the Department is facing 3% per annum cuts or efficiency savings. Judging by the tenor of the Finance Minister’s statement on the strategic stocktake, it is clear that the Department will face at least that level of cuts during the next budgetary period. We must therefore consider the support services as they quarry to achieve those savings so that we do not have to take money out of front-line services. That will be our direction. I suspect that the Department will be looking keenly at Gavin to identify how he can sweat savings out of back-office services through rationalisation and centralisation to allow us to invest in front-line services and, equally, not to disinvest in those services.

The education and skills authority implementation team has outlined its thinking on how it would centralise functions and where it would do so. The Minister will wish to look sensitively at the location of public-sector jobs, but I think that I can speak for her when I say that she is sensitive of the need to avoid being Belfast-centric. The education service is a local service insofar as schools are concerned. The administrative arrangements involving five local boards and the other bodies are not Belfast-centric, and it is the Minister’s ambition to make those less Belfast-centric, not more. That will be a ministerial judgement rather than an administrative judgement by ESAIT.

Mr D Bradley:

We examined the strategic stocktake with John and his colleagues last week. The Department is bidding for £60 million in 2009-2010 and £140 million plus in the following year. Will those savings not be consumed by deficiencies in the Department’s budget and never see front-line services?

Mr McGrath:

As I said last week, the Department drew attention to pressures in the strategic stocktake. That is important. Now that we know that resources are not available to meet those pressures, the Minister will have to make a judgement about which of those pressures can be met from the outset next year, which can be deferred until next year’s end-year monitoring rounds, and whether some will have to be accommodated at the expense of other areas. That is still in flux.

All the arrangements for the administration of the ESA are designed to provide a tighter ship that will manage what will be a very constrained resource position. We can control the supply of resources. In many cases, particularly in the past year, we have no levers on the demand of those resources in the shape of inflation and other pressures. The administrative arrangements will undoubtedly be very constrained over the next two or three years; that much is clear from the Minister of Finance and Personnel’s statement.

There will be efficiency savings in the future; perhaps many of the savings that we will be looking for, above and beyond those cited in the outline business case, will be what we will have to lever out in order to meet efficiency savings targets, as opposed to being channelled into front-line services. We may not have the luxury of huge further investments unless the Budget decrees that. Things will be very difficult in the time ahead; if we did not have the Education Bill or a change in administrative arrangements, things would be even tighter.

The Chairperson:

We will return to that matter, but I want to move on. I do not want to be sidetracked on the Budget; we will try to stay on issues concerning the education and skills authority.

Mr McCausland:

I wish to make a couple of points, followed by one or two questions. No one questions for a moment the need for modernisation and simplification as an argument for change. However, Mr Boyd over-egged the pudding when he talked about educational performance; I thought that the real cause of educational underachievement was selection. That was the reason given for going against selection; now the blame is being directed at educational organisation. That cannot be used as the argument for everything; it does not stack up. Mr Boyd should refine that argument if he is to have any credibility.

How many workshops have been held, what was the participants’ level of satisfaction, and how much information from those workshops is available? I have to admit that I only found the website recently, but having found it, I will pursue it relentlessly.

Mr Elliott:

Were you responsible for all those hits? [Laughter.]

Mr McCausland:

Unless someone was very sad like me, they would not have bothered; there is nothing much on it.

Mr Boyd:

In the most recent series of engagements, we held 11 workshops, three of which were what we called quality-assurance workshops. The first three workshops involved the most senior managers in each of the organisations that were responsible for a cluster of services. We called them quality-assurance workshops because we trialled all our thoughts and our presentations in front of the most senior managers to see if we had missed something obvious. The other eight workshops dealt with the 20 broad service areas that we had identified; they are set out in the members’ information pack.

We gathered a huge amount of information; we could have filled a couple of lever-arch files with the feedback from the workshops. We decided not to bring that information to the Committee on this occasion, but we are happy to make it available.

Mr McCausland:

What was the level of satisfaction?

Mr Boyd:

Judging by the feedback, it was very high.

Dr M Browne:

The feedback from the workshops about the model was very positive. We have since received e-mails from the various organisations; I have one here that emphasises how valuable the staff found the workshops. We have had feedback meetings at which the organisations told us that staff had responded positively to the engagement.

Mr McCausland:

I spoke to someone who attended a workshop — someone in whose assessment I have confidence — and who has experience of one of the sectors. That person was surprised that the workshop did not present a more developed and well-thought out view of the way forward. I know that the aim of consultation is to obtain feedback.

Mr Boyd:

There is always a tension, Nelson, between providing a fait accompli and encouraging people to express their thoughts.

Mr McCausland:

I understand that. However, I am talking more about people’s assessment of the quality of what was presented to them. People are always reluctant to say anything nasty or difficult because, ultimately, the Department is their paymaster. I will leave that aside for a moment.

How will the procurement of services such as transport and services to schools — who cuts the grass and paints the school — be managed?

Mr Boyd:

There is a great deal of detail in that question. Many services are made available by the boards to schools, which have the right to opt in or out of those services, and there is no plan to change those rights. In fact, one principle that underpins the ESA is the desire to increase the autonomy of schools and to increase the budget that they have to exercise that autonomy.

The intention is to set up a centralised contract-procurement unit for the general procurement of services. That will mean that high-level draw-down contracts and procurement contracts are organised centrally.

Mr McCausland:

I am concerned that you do not end up with a system that discriminates against small businesses. Belfast City Council ran into that difficulty over minibus provision, and I have other examples.

Mr Boyd:

Are you talking about the purchase of minibuses or the buying-in of transport?

Mr McCausland:

I was using that as an example. Belfast City Council had difficulty with that; I was not referring to schools.

If contracts are awarded — and we are in uncharted waters — will there be an assurance that it will not be one big contract on the grounds of efficiency, which means that only big service providers can apply and that small, local businesses will lose out?

Mr Boyd:

We touched on that issue before. I may appear to be arguing against myself, but I have seen enough examples of centralised procurement not working to be fully aware of the potential pitfalls. On the other hand, the only sensible way of managing large procurement contracts is centrally.

For example, there is no intention to have a centralised contract for paper clips or pencils. However, there is a clear requirement for a centralised negotiation with Translink on the £37 million per year that it is paid for school transport. In honesty, the full detail of that has not yet been worked out.

Mr McCausland:

My final point relates to local delivery. I understand that what is delivered locally will be influenced by an advisory committee at local level. I am concerned about the decisions or recommendations of such a local committee being ignored. For instance, if it were planned to open a music school in the north-east, will the decision on whether it is placed in Aghadowey or Dervock be made by the ESA board — and most people will not have a clue where Dervock is in relation to Aghadowey — or will more authority be granted to the local advisory committee to make that decision? The same question might be posed in relation to Belfast — do you put the school in south Belfast or in north Belfast, for example?

Mr McGrath:

We talked about that several weeks ago.

Mr McCausland:

The problem is that I cannot get an answer.

Mr McGrath:

We are talking about a reasonable organisation with clear policies that govern all its units and local teams that will have the flexibility to respond to local service needs and circumstances. Decisions and investments will be determined through the use of agreed delegations between the centre and the local teams.

If the case in point involves the provision of a music school, there may be issues concerning the scale of capital investment that is required for a particular location. That, and the running costs, may have to be considered by the central ESA board or, indeed, by the Department.

The decision about whether it should built be in Aghadowey may be taken locally, but the sign-off on the investment package must go —

Mr McCausland:

Excuse me, but I must stop you there. You said that the final decision would be taken locally, but would that decision be taken by a local official or by a local advisory committee?

Mr McGrath:

As we discussed several weeks ago, we have not worked out the detail of the role of local committees. They will be ESA committees, and their primary role will be advisory rather than to take executive decisions; otherwise we would create mini boards, and that would dilute the central body’s authority. Therefore we must give — and we are giving — further consideration to that matter.

Mr McCausland:

I am concerned that decisions will be taken by people who know nothing about local geography.

Mr McGrath:

Several regional organisations here — such as the Housing Executive and Invest NI — could act as models that balance locally sensitive units with centralised polices issued by a centralised board. It is not beyond the wit of man to square that circle. The matter for consideration is the scale of investment, which will be determined by how much responsibility is delegated to local teams, and the Committee will have an input into that decision.

Mr McCausland:

Consider, for example, housing. Ultimately, housing decisions are made by local-level Housing Executive officials, under the authority of centralised officials. Every council has a housing-liaison committee, which tells people what to do and ignores what they say, and that brings us back to the observations about the DPP. It is important that we deal with questions about the structure for delivery; however, we must also consider the structure for decision making, and I am concerned about local input. One model might incorporate a central ESA, but it could also include localised decision making in that centralised framework. Decisions made in that way are often better. For example, a decision about where to locate a youth club would be better made locally.

Mr McGrath:

I do not disagree; however, at the heart of such arrangements is the question of who takes such local decisions. No one would argue that decisions about the pattern of local service provision should be taken locally. However, if investments are involved, decisions may have to be referred up the line in order to consider investment priorities. The question is: who should take such decisions?

Mr McCausland:

In the Housing Executive, district managers ask to do things, and their bosses overrule them. I cannot see any way round the problem of authorising local people — who are accountable and understand the community — to take decisions.

Mr McGrath:

The regional organisation that we are discussing will be governed by the ESA, and the members appointed to it will be accountable to the Department and to the Minister. A model that advocated splintered authority would not be a good one, and, given the amount of funding that the ESA will have, I suspect that the Committee would not consider such a model to be good at any time. We must strike a balance. The committees will be ESA committees, not local ESA boards.

Mr McCausland:

I accept that point entirely. However, you must find a model that allows decisions of that nature to be taken by local people who know the area well and who have some affinity with it rather than by an employee of the system. An appropriate model must be produced, because there is a lack of clarity about where we are going. Local influence in decision making — not just local delivery — is vital.

Mr Boyd:

Considering that from a slightly different angle, the peripatetic music service is an interesting case in point, because different philosophies underpin various regional music services. In Belfast, there is an emphasis on excellence, resulting in organisations such as the City of Belfast Youth Orchestra and the City of Belfast Youth Concert Band. In Belfast, although inclusion is important and there is a great deal of activity, there is a clear focus on excellence. Other areas have their own approaches. Therefore, music provision demands a clear policy and a strategy that can be applied across the board.

After that, we will work out precisely how we will provide schools with support for the music service. Some of that service will, inevitably, be provided at the weekend or in the evening at a location that makes it available to all children, thereby not excluding some children because of where they live. I anticipate that some of the thinking behind that will refer to the area-planning process, which aims at considering the need for an educational service in an area and how it can be met.

We consider the provision of youth services in the same way: we examine the existing services and the demand for youth services in an area, and the community also has a major input into such decisions. Decisions on investment must, as always, be signed off by the Minister. I will take your points on board and will return to the Committee with more detail as the work progresses.

Mrs M Bradley:

Gavin, you talked about transport and you also mentioned the change in the provision of school meals to a regional service. What consideration was given to that change? Given that the existing service is excellent and that we cannot afford to let the quality deteriorate, can school meals be improved? I would like to hear more of the thinking that led to that change.

Mr Boyd:

First, Mary, there is not a single school meals service at present; there are at least five. Until recently, pupils paid a different amount of money for a school meal depending on where they live, and the content of the school meals was different, although that situation is being addressed. I make no comment about that, other than that there were differences and, therefore, not everyone was getting it right.

The proposition is to have a single regional school meals service and, therefore, a strategy: a single price; a single approach to the nutritional value of school meals; and decisions on what should and should not be provided. That strategic approach should be applied across the board. However, we recognise that most people who provide meals and who provide a wonderful service work in schools, and we will continue to support them in doing so. The supervision of their work will be organised locally.

As far as the school meals service is concerned, phase 1 simply involves the reorganisation of its management. We will streamline the management of the service, but we recognise that the service will continue to be delivered as it is at present for the time being. We should not lose sight of the fact that the total turnover of the service is £65 million, and, through one means or another, it is subsidised by approximately £35 million.

We have not considered, in any way, shape or form, efficiencies or better ways of delivering a service that is worth £65 million; our only consideration is its management. However, I would be very surprised if we do not learn lessons down the line. A great deal of money is tied up in the service, and thousands of great people provide those meals.

Mr B McCrea:

I remain concerned that you changed the frame of reference and that you are now concentrating more on educational outcomes than on savings and efficiencies. My biggest concern is the number of redundancies that you estimate will result, as my guess is that they will account for most of the savings. How confident are you that you will achieve those savings through redundancies?

Mr Boyd:

Lest there be any doubt, I am absolutely confident.

Mr B McCrea:

You say that you are sure about that, but your outline business case states that somewhere between £24 million and £45 million can be saved through redundancies. Which of those figures is correct?

Mr Boyd:

The cost depends on exactly who takes a voluntary severance package, because the model must be based on some assumptions. It is, therefore, based on an individual in his or her mid-50s with approximately 30 years’ service. The higher figure is based on someone whose removal from the system would be relatively expensive.

The lower figure can be based on a different set of assumptions. The final figure will not be known until we get to the date that each individual leaves the system and we become aware of their length of service and salary, among other things.

Mr B McCrea:

Therefore you cannot tell me whether there will be savings of £25 million or £45 million in a £50 million cost budget.

Mr Boyd:

That is not right.

Mr B McCrea:

When I asked the question — [Interruption.]

The Chairperson:

That relates to the business case, so we will return to that issue when we are discussing the business case. I want to keep to the question of modernisation.

Mr B McCrea:

I appreciate that, Chairman. However, we are talking about letting people go. We have talked about our experiences in other organisations. As a member of the Policing Board, I know that there are not enough detectives in the PSNI, for instance. Part of the reason is that people who were doing important work were let go, and that problem might arise in this case.

I share Mr Lunn’s concern about IT; I have never known an IT system to come in on budget, and that is due to emergent requirements. I assume that you are going to tell me that savings will be made because all the people who are doing manual work will not be required as the computer can do it.

Mr Boyd:

No; that is not what I am going to tell you.

Mr B McCrea:

What do those people do?

Mr Boyd:

That will take us to the outline business case.

The Chairperson:

I want to stay on the issue of modernisation, but I am happy to let Mr Boyd answer those questions if he wishes.

Mr Boyd:

I always find it helpful if members answer their questions as well as ask them. We are absolutely clear on the projected £20 million savings; that is in the outline business case. I have made it clear that as we worked through the last year we became more confident about the figures. The savings figure is clear.

We provided a range on the cost of achieving those savings. I cannot remember the figures that we provided for range in costs to achieving the savings, but it was between £22 million and £45 million. Savings are clear, but the costs depend on the individuals who leave at any given time.

The outline business case states that 463 positions are to go, and, in the paper that we provided for the outline business case, we set out the analysis of what posts are to go at different levels. Members will see that there is a disproportionate percentage of posts at higher levels, because the first phase is about reorganising management and the supervision of staff. It makes no big assumptions about losing large numbers of staff further down the organisation; it is about management.

We also recognise that a significant proportion of the target group is over 55; in fact, they are over 60. I am not making a point about ages, but there is a recognition of that fact. All the feedback that we receive states that a significant number of people will see this as an opportunity to leave the service and to move on to the next phase of their lives.

Mr B McCrea:

I am glad that you found my attempt at giving you an answer helpful, because experience tells us that when we ask questions we do not always get an answer.

I do not think that you will hit your targets within your cost budgets. As the deputy permanent secretary said, we are entering a difficult financial period. The problem with such projects is that they start off with lofty ideals, which everyone thinks are great, but massive cost overruns appear. I want to ask whether we can be sure that the costs come in, but I am sure that we will talk about that in future.

The summary of the outline business case says:

“The group most affected by this change will be senior management … where 44% of posts will go.”

However, data in the outline business case shows that senior management accounts for only £1·8 million of the annual savings, whereas middle-management professions account for £10 million and supervisory management comprises £6 million. Therefore, the totals are £16 million compared with £1·8 million. The real cuts will be to middle and supervisory management, who are the real workhorses, heroes and Trojans. If you cannot make your systems work better, I am concerned that no people will be left to run the organisation and chaos could ensue.

Mr Boyd:

I accept Mr McCrea’s comments and genuine concerns. In percentage terms, senior management will receive the biggest hit. When we move from six finance departments to a single finance department and from 34 or 35 payrolls to two payrolls, the need for supervision and middle management will disappear.

Mr B McCrea:

I do not want to labour the point, as the Chairperson has been indulging me, but you are trying to make changes in two to three years, yet determining how to amalgamate those systems properly is a heroic challenge. If you do not get it right, Mr McGrath will have problems with his budgets.

Mr McGrath:

The outline business case is a robust piece of work. Basil mentioned implementation and change, and we discussed IT. Examples have shown that assumptions do not necessarily guarantee delivery. That is the test. In my experience, there is more investment in the front end of this case than during other organisational changes. The rigour of the outline business case will be applied, and elements of it operate on a worst-possible-cost scenario rather than one of best possible costs. Therefore, some of figures on top-end costs are based on the assumption that everyone who leaves will be in the most highly paid category, which would generate the required level of net savings. We can tackle that issue during discussion of the outline business case.

Mr Poots:

Unlike my colleague Mr McCrea, I do not think that the proposals go far enough, and I support greater rationalisation. Children are, ultimately, most important to education, and it is teachers and classroom assistants who have the most contact with children. Teachers constantly tell me that the implementation of changes and new initiatives is absorbing more and more time and that they spend too much time writing reports for administrators to check. When will teachers be allowed to concentrate on teaching children? The initiatives make changes that do not necessarily significantly and demonstrably improve teaching. Change is well and good, but it must be change for the better. We are not against change. When will teachers be allowed to stay in the classrooms and educate children? If that were the case, significantly less administration would, perhaps, be required.

Mr McGrath:

Nelson raised the issue of underachievement. The Department believes that the key to tackling that issue is improving the quality of teaching and, therefore, investing in the teaching workforce. Teachers should spend more time teaching; we do not disagree on that. As Gavin said, the model for the future will give schools more freedom on issues of professional development and will enable them to decide what sources to use to invest in their workforce. Again, we agree on that point. However, we undoubtedly expect future efficiency savings from the £2 billion education budget, which is a significant amount of money.

Ideally, that should come out of the non-school element. However, that means taking a fair chunk of savings out of £600 million or £700 million rather than £2 billion. That will be the challenge. We made the point that we start with the outline business case. We see the ESA as a vehicle to get the rationalisation of support services and to generate efficiencies, either to meet efficiency savings requirements in the centre — as agreed by the Executive — or, ideally, to go into the front line. That is the agenda. Twenty million pounds a year is there for the taking — it is almost in the bank. Mr Poots’s points are well made with us.

Mr Poots:

To take the matter a little further, many of those who are employed have to justify the work that they do and that is where much of this change comes from. Teachers are not opposed to many of the proposals and ideas, but they get swamped with the numbers that come forward at the same time. Ten years ago, teachers had nothing like this to contend with. Now, however, they are being dragged out of the classrooms, the children are not getting the best out of their teachers and principals, and, ultimately, we are paying for that as it requires more administration. That is why I feel that further cuts are needed.

Mr Boyd:

That is exactly the sort of feedback that we have received from teachers, school principals and teachers’ unions. The underlying premise is that school improvement can be achieved only in the classroom; that can be done only if there is reliance on the expertise of the classroom teacher and the principal of the school. That leads to the inevitable conclusion that we must free up their time to allow them to get on with teaching.

I will give another reflection on how we have managed to introduce some technology into the classroom. The Committee will be aware of the integrated and administration control system (IACS) technology that we are using for literacy and numeracy. One of the attractions of the technology is that records become available automatically. The teacher does not have to mark or write up on the work: the records are held and we can measure a child’s performance year on year. We managed to get some 20,000 children through that assessment in the autumn. It was a huge technical achievement, and we will have 50,000 children going through the assessment next year. The use of such technology can greatly ease the burden on teachers. Quite apart from the administrative and initiative issues that have been highlighted, that is an area where we can ease the burden on teachers.

The Chairperson:

Can we move on to the outline business case? I appreciate members’ indulgence. We have done reasonably well over the past few weeks in managing presentations.

Mr D Bradley:

May I ask a question about the previous topic? The message that we were given at the beginning was that the ESA would provided savings that would be an added bonus to the education system. However, from what Mr McGrath said earlier, ESA savings will end up subsidising shortfalls in the budget. Therefore we will not see much benefit at all.

Mr McGrath:

There is no such thing as a snapshot that gives us the fixed pressures and the fixed budget, and that if one gets savings out of the budget — which would be ideal — they can be invested in front-line services.

If inflation rises faster than the provision made in the Budget, if pay awards are given that are higher than expected, if there are job evaluations, those have to be dealt with from the quantum of money that is made available to us by the Executive. That can mean that the ideal of where you would like to invest your savings is overtaken by the urgency of where you have to put them.

Many of the pressures that we flag up with the Committee in our discussions on monitoring rounds are beyond our control; few of them are generated by the Department. However, they must be dealt with; people have to be paid, inflation has to be met, job evaluations and health-and-safety issues have to be dealt with. That may mean that the “must” issues consume resources rather than the “desirable” issues.

Those issues enhance the need to introduce a more efficient administrative system that can squeeze savings out in the overall management structure from day one, and will provide a vehicle to challenge the support services over time to generate more savings. Everything that the Finance Minister said the other day suggests that efficiency savings of at least 3% — the First Minister recently mentioned a level of 3·5% — are here to stay. The education budget is the second largest chunk of the Northern Ireland block. Although it is desirable that it should be excused some level of efficiency savings, it is unlikely.

Therefore we need mechanisms to meet most of that 3% or 3·5% over time by way of genuine back-office support service efficiencies; we should not make efficiencies from front-line services. The fact that the resource position is becoming more challenging strengthens the case for administrative reform and efficiencies.

The Chairperson:

I would like to move on to the outline business case.

Mr McGrath:

The outline business case was submitted to the Department of Finance and Personnel late last year and was duly approved by it in December. It was made available when the Minister introduced the Education Bill, and it has been available on the Department’s website.

It is a robust piece of work that validates the case for the ESA as an organisation and which provides a vehicle to improve schools and to reduce the gap in attainment levels. It also provides a benchmark against which the work that Gavin and the Department will be doing can be measured. That will be to the particular benefit of the Committee and the wider community in future.

The outline business case evidences that from the outset there are significant savings of approximately £20 million a year to be garnered against an investment of up to £45 million. It would therefore pay for itself in three years — possibly sooner — depending on the initial costs. One of the advantages of having a prolonged period before the ESA is established is that more preparatory work has been done on organisational changes and how they could be achieved. That should avoid some of the other organisational mistakes to which Basil referred.

We will use the outline business case as a benchmark against which we will measure Gavin’s performance in the early years of the ESA. It is likely that the Department will look for further savings in senior staffing structures above those set out in the outline business case as the organisation beds down.

The Chairperson:

This is an outline business case. When is the full business case likely to be finalised? The outline business case was finalised in April 2008, so it did not reflect the regional/local functional split. Could the outcomes of your work on that split radically change the number and level of staff projected in the outline business case as possible reductions?

Mr McGrath:

First, we want the full business case to be available by the summer. It will underpin and validate the level of savings that are predicated in the outline business case, although some fine-tuning is necessary to develop the precise organisational structure. However, the overall envelope of senior posts around which this was based can accommodate the types of structures that we spoke of putting in place at local level and the degree of senior staffing associated with that. We do not believe that such thinking will undermine the fundamentals of the outline business case.

Mr Boyd:

I cannot add to that. I simply reinforce the point that all our work to date has been within the envelope of the outline business case. Since April, nothing that we have done or turned up has made us reconsider whether we can achieve the targets set out in the outline business case.

I recognise that additional pressures might arise down the line, and I am conscious of Edwin’s comments about such possibilities. However, nothing that we have done in the intervening period has undermined any aspect of the outline business case.

The Chairperson:

Earlier, we heard about the three levels of the transfer services. You said that transfer services will be subject to a medium-term review and that the innovative service will be subject to radical change. In giving evidence to the Committee, representatives and chief executives of the education and library boards said that the transform services are already subject to a three-board or five-board shared delivery and, in some of those service arrangements, a lead board. Where will the savings come from in the outline business case?

Mr Boyd:

The number of shared services is relatively small; one example is the board of legal service, which is a single service housed in one board. Most of the big services — finance, human resources, and other support services — are on each board. Therefore savings will be driven out of that. The big savings will come from back-office services such as finance and human resources and other big services.

The Chairperson:

That is outside the in-scope costs. The Department has identified approximately £1·3 billion that is out of scope of the RPA. Therefore we are talking about —

Mr Boyd:

We are talking about £135 million, which relates specifically to costs involving 4,150 staff. We focused our efficiency modelling on a fairly narrow sliver.

Mr McCausland:

Reducing the number of initiatives is a key area in which savings in the educational sector can be made. Rationalisation and the further mainstreaming of services would benefit schools and remove a huge amount of administration. Major savings can be made in that area. A key element of the outline business case is saving money.

What would be the difference in the savings made through the rationalisation of administration and those made through the rationalisation of educational initiatives? Have you done any work to see how those differences would stack up against each other?

Mr McGrath:

You are quite right, as was Edwin when he made the point about teachers and new initiatives. Initiatives, even if money is granted, still distract from the core task. The key issue is the standard of teaching: we must let teachers teach. To a certain extent, we must keep it simple and not distract teachers with a plethora of initiatives, although many of them are important.

We are examining the number of earmarked budgets that we have. There are two issues. First, do we need so many initiatives? Initiatives complicate the position throughout the system and complicate the situation with teachers.

Earmarked budgets also add to the Department’s administration costs. We are also asking whether some of the earmarked budgets are past their sell-by date. We are questioning whether we need an earmarked budget for certain things or whether the money could be redeployed into the common funding formula. We will come back to the Committee on that.

We have not quite been able to do the de-sizing that you talked about, although we regard the savings as one slice of that. It is an interesting debate. On the one hand, there is a view that further savings may be gained beyond those outlined in the business case, and that may happen over time. There is another, equally merited, view that asks how we know that we will get those savings — other exercises have not demonstrated such savings in the past.

We are taking a robust but measured approach. Over the two or three years at the start of the ESA, that level of saving can be taken out of the £135 million. That is the starting point for savings; it is not where we are ending.

Mr Boyd:

I have made the point before that bureaucracies breed bureaucracy. Bureaucrats, like me, think of more and more things to do. That is why we must refocus on the model every so often. In this case, the model is about schools, teachers, children and school principals.

There is an argument that once the focus is kept on the model, it challenges an organisation to consider — every day, every week and every year — why any money at all is being spent at the centre and whether it absolutely must be spent. That is not a criticism of what has gone before; it is a challenge that, in my experience, an organisation must set itself every year to make sure that it does not just grow and grow. It is important to keep thinking of the next good idea.

Mr McCausland:

Is there a point when you will get a figure for the potential saving that can be made by rationalising all those initiatives?

Mr McGrath:

The Department will consider that, simply because we face severe resource constraints to allow it to do what it needs to do in the future. The combination of reducing some earmarked budgets at the same time as we move into the ESA might make it difficult to determine cause and effect from savings.

Mr Boyd:

The Department has developed the Every School a Good School policy, which sets outs what is expected from schools, and everything follows from that. It makes schools’ objectives and focus clearer and, in itself, will lead to a rationalisation of initiatives.

Mr McCausland:

I was really asking whether you know how many people are employed in administering all those initiatives and how much teacher time they involve. That should be fairly easy to work out — for example, there may be 49 secretaries and administrators working on them.

Mr McGrath:

I do not know that because there are not many people in the Department whose sole job is to work on such initiatives; nor am I clear how many people work on them in the education boards. I agree that we should consider simplifying initiatives, redirecting funding into mainstream funding and taking out as many savings from that as we can. That will lead to a simpler world, which we are already reaching, in which the agenda is to raise standards and reduce the gap in attainment. To reach that, we must invest in the wider education workforce, improve the infrastructure and streamline the management of the education service.

Mr Boyd:

We got the detailed analysis of the current situation. Between the Curriculum Advisory and Support Services, C2K, the curriculum part of the Council for the Curriculum, Examinations and Assessment, the Regional Training Unit, and the advisory part of the Council for Catholic Maintained Schools, we have 750 staff at the centre. That is 750 people who you might otherwise call professional staff, which is a significant number in anybody’s book.

Mr Poots:

I note the £20 million savings and the £700 million budget. That coincides with the 3% administration saving that we are supposed to be making. However, a 3% efficiency saving is required from all Departments. Therefore if the £20 million equals the 3% saving from the £700 million, a 3% saving must still be made on the remaining £1·3 million.

I do not accept John’s views that that is the beginning of savings, because ultimately £60 million of efficiency savings must be made from the Department of Education’s budget. If only £20 million is being saved from administration, the other £40 million has to be saved from front-line services. That is unacceptable. We have to sharpen the knife and return to consider cuts in administration. Rather than make the savings in five or 10 years’ time, those efficiency savings must be made over the next two or three years. It is fair enough as far as it goes, but it does not go far enough.

Mr McGrath:

I think that we agree on that. The point was made earlier that the ESA is seen as a vehicle to further challenge the basic infrastructure in order to make the savings that the centre will expect from us and, as far as possible, to protect front-line services. If that is not done, some of the efficiency-savings targets will affect the front line because of the sheer scale of the budget. That is the challenge.

The point was made last week that the current level of efficiency savings has meant that some money had to be taken from the schools’ budget, because there was nowhere else to take it from. We need a vehicle that will allow us, over time, in the next three to five or 10 years to challenge the system and to squeeze it further and further. If savings are not made from the support structure, they will have to be made from front-line services. That will mean that difficult issues may arise down the line, involving how services are to be provided, the balance between central and local contracts, the centralisation of back-office functions, and perhaps even outsourcing. To take Edwin’s point, we must test every option in order to protect funding for the front line.

Mr Poots:

If I was in the witnesses’ position, I would ask: where do we start from? I do not think that they would be starting from the present position; they would scale even further back. Where would the Department start from if it had a clean sheet? That is where it could make significant savings. It is not good enough that for every £1 of the £2 billion budget spent in the classroom, £1 is spent on administrative support.

Mr Boyd:

At a previous meeting with the Committee I got into a little bit of bother by identifying some systems that we have considered elsewhere in the world, where 80% of the budget is allocated to the school or the classroom. For the avoidance of doubt, I am not saying that we can do that overnight, but we have looked at systems where that has been achieved. The counterbalance is that there is a fairly healthy scepticism around the table about whether we can deliver the savings that we are talking about. I recognise that.

Mr Poots:

That is just Basil; do not worry.

Mr Boyd:

I have to be careful not to over-commit, either to the Committee, to the Minister or to the Department, because this is an important issue. I have to manage in the context that we find ourselves in. The education system is part of the public sector, and we operate within the existing contracts of employment. I understand precisely your points and am keen to hear directions from the Committee on the general line that should be taken; however, I must balance that with what I believe is possible in the short term. We are only talking about the first three years.

Mr McGrath:

It is important that £1·3 billion of the £2 billion budget goes directly to schools. The balance includes the capital budget — which is another £200 million to £300 million — and there is also funding for the youth services and special education. However, the balance between spending on the front line and spending on administration is not 2:1.

Mr Poots:

The entire budget for a school is not all for teaching; it also covers administration.

Mr McGrath:

I am aware of that. On the other hand, some of the earmarked budgets are not part of that budget, but they go to schools. It might be useful, if, in a financial discussion at the Committee, we were to try to get a clearer picture about how much of the budget goes to the front line, directly or indirectly, and how much goes to administration. I do not think that the ratio is 2:1, which would mean that a third of the budget is spent on administration. However, it could be that the ratio is 80:20; it is important to analyse that and pin it down.

Mr Boyd:

To give a simple example, the Department spends £85 million a year on transport; our kids travel 1·5 million miles a day going to school. That figure is reached as the result of various policy decisions. In addition, the Department is locked into allocating between £37 million and £38 million to Translink, on which there is very little negotiation — Translink has to make a return. With a different policy perspective different outcomes might be possible, but those are big issues that require serious consideration, as serious amounts of money are involved.

The Chairperson:

John, when you are back next week, we may talk about financial matters. I wonder how many pupils use their Translink bus pass every day in comparison with the cost to the Department of covering it. There is no way of monitoring use of bus passes for a set period. For example, my daughter does not use her bus pass every day because she sometimes has other ways of getting to school. Such issues are practical realities, and money can be saved in that area. A huge amount of money is spent on travelling to school.

Mr Boyd:

The Department has targeted £135 million from which to save £20 million. There are several big issues — you have just mentioned one — that we have not considered seriously because we have not had the opportunity to do so. I imagine that you will encourage us to do that quickly.

Mr McCausland:

If children are to be bussed in future in order to get the socio-economic mix that the Minister wants in the secondary sector, the bill for buses will go through the roof. I mention that now by saying that it will not happen.

Mr Lunn:

Before he left, Basil talked about the severance costs and the rules for early retirement. Will the ESA take over responsibility for the operation of all pension schemes, ideally on 1 April 2009?

Mr Boyd:

The single employing authority will take responsibility for all staff. The vast majority of staff are members of the Northern Ireland Local Government Officers’ Scheme (NILGOS); a small number will be members of the Civil Service scheme and other schemes. The ESA will not take over the operation of the scheme, but it will take over the responsibilities.

Mr Lunn:

Who will decide whether to continue to apply the early retirement factors, for instance? I note that three dates are set out for the reduction in the enhanced pension arrangements. Will that be the ESA’s responsibility?

Mr Boyd:

That is a matter of policy. First, the pension scheme rules decide people’s entitlement. Secondly, the reference to that in the outline business case reflected the fact that the scheme’s rules had been changed to take account of the age-related discrimination legislation. Previously, people in the scheme who were over 50 were treated differently from people under 50. The scheme had to be changed, and it was to be wound out over a period of three years. That is now a matter for the Department of Education to clear with the Department of Finance and Personnel.

Mr McGrath:

I can provide an update on that in the context of the wider RPA changes. The trades unions agreed a principle in the area of health.

The terms available to people who leave at the end of the process will be the same terms available to those who leave at the start; it should not change the package over a two- or three-year period. That principle should apply no less in the education sector, and colleagues in DCAL and in the Northern Ireland Library Authority are pursing the same changes there. We are dealing with DFP to ensure that the drop-down highlighted in the outline business case is drawn out longer and that it does not happen against that timescale in order to allow the review of public administration changes in education. Therefore, people who leave at the end of the process will be eligible to the same terms as those who leave earlier. Again, because of the robustness of the business case, it does not make any difference to the costs because we have assumed the highest level of cost anyway.

Mr Lunn:

Have you noticed any disillusionment in the profession? Has there been an increase in requests for voluntary severance under what would appear to be slightly more advantageous terms at the moment than what they will get in a few months’ time?

Mr Boyd:

No; we have not noticed an increase. I am not aware of any data on that, but the pension scheme has noticed a significant increase in the number of people inquiring about what their pension entitlements would be.

Furthermore, we have made it clear that any voluntary severance scheme would be targeted; in other words, it would depend on whether there was a continuing need for the job to be done. There is a need for educational psychologists and, if anything, that need is not being fully met. Therefore it is highly unlikely in those circumstances that a voluntary severance scheme would be available for educational psychologists. That is different from people who are working in positions that are at risk, so it will be a targeted scheme.

Mr Lunn:

Will there be any difference in the treatment of those who are made compulsorily redundant and those who volunteer for redundancy?

Mr Boyd:

It is a significant priority for us to avoid any element of compulsory redundancy. There is no requirement for compulsory redundancy, but the terms in the voluntary scheme are contractually binding; therefore they would also apply in a compulsory redundancy.

Mr O’Dowd:

I have a comment rather than a question. I am concerned that Edwin is advocating that hundreds, if not thousands, of administrative posts should be dismissed from the education system. For various reasons, the economy cannot afford to lose hundreds or thousands of public-sector jobs.

Mr McCausland:

Rubbish.

Mr O’Dowd:

The economy cannot afford to lose them. The private sector is on its knees, and if we start dismantling the public sector, the economy will collapse.

Mr Poots:

The money would be better spent in the classroom.

Mr O’Dowd:

I will come to that point.

A £2 billion budget needs to be administered, no matter how it is done. If we divert a significant percentage of money into schools, it must be administered, which means that our principals and vice-principals will turn into accountants.

Mrs M Bradley:

They have already turned into accountants.

Mr O’Dowd:

They will need an administrative team around them. Therefore the money will not go directly into the classrooms; you are only fooling yourself by saying that. All you are doing is sacking thousands of workers to achieve a goal.

All services need to be examined closely. Thirty-five million pounds is spent on transport. I cannot let your comment go, Nelson, about the Minister looking to bus pupils to create a social mix. Every day, 4,000 pupils are bussed from north Down to various grammar schools. If those children attended local schools rather than being bussed from north Down, how much money would we save?

Mr McCausland:

The Minister has no power to stop that.

Mr O’Dowd:

As the days and weeks evolve we will see what happens, but I will not get into that argument now.

There is a £63 million budget for school meals. Perhaps that service could be provided more efficiently. We need to look at each area of our education system to consider whether the service is being delivered efficiently before sacking thousands of people simply because it looks good on a spreadsheet.

Mr D Bradley:

Several costs are excluded, including the huge cost of rationalising the schools estate; five other cost areas are also excluded. Do those exclusions not invalidate the business case to some extent?

Mr Boyd:

I go back to the point that I made earlier: we focused on what could and should be done quickly and on what was logical to do quickly. That process led us to the cost figure of between £135 million and £140 million and to the 4,100 staff that we anticipate reducing to about 3,600.

Other huge change programmes need to run in parallel with the business case, but this exercise did not consider those.

Mr D Bradley:

Is this just a snapshot?

Mr Boyd:

It studied a very specific area of activity that we believe can be influenced very quickly, covering a three-year period.

Mr D Bradley:

How can you ensure that the model is dependable?

Mr Boyd:

I will address the issue from a slightly different perspective. John McGrath recently told the Committee that the change-management process is huge and will go on for many years. We must manage that process from an organisational perspective.

I fully expect the Department to drive change from a policy perspective and from a perspective of controlling the budget. The Department will continue to drive us and pressurise the organisation to deliver the flip-round in the budget — in a planned way — that we are trying to achieve.

Mr McGrath:

We are trying to create an ESA that will provide leadership, raise standards and close the gap; it will also deliver efficiencies. The outline business case demonstrates that the organisation has an unfulfilled potential to demonstrate efficiencies. During the initial years, the preparatory work demonstrates that £20 million of savings is already in the bank. Further savings will be made as the organisation beds in.

Not every public-sector organisational change has guaranteed savings from the very start — they are mostly aspirational, but the £20 million is guaranteed in a robust review. It can identify posts that could be removed without affecting the quality of service delivery. As time passes and the organisation beds down, it will tighten up and meet the challenges in relation to the support and back-office functions, which will generate the level of efficiency savings that may be needed simply to meet budgetary pressures. If those savings go to the front line, so much the better, but Gavin highlighted that money is tied up in various professional development areas. Those funds could be loosened up and made more available for school principals so that they can meet what they regard as the development needs of their teachers.

Some efficiency savings go to the front line, but they do so in a very prescribed model. However, school principals should have a greater say in identifying the funds that they need to drive forward professional development in their schools. The role of the ESA is to help to support that. All our conversations with school principals have produced very positive responses to that model.

Mr D Bradley:

Are those six areas covered in the full business case?

Mr McGrath:

This cannot be a business case for the level of efficiency savings in the education sector for the next five years. It is a business case to justify the move from the present organisational model to the single organisation, and demonstrating that in so doing £20 million has already been saved and that a vehicle has been created to drive out further efficiencies.

Mr D Bradley:

There are other areas in which you do not yet know the costs or the possible benefits. Surely you should take those into account.

Mr McGrath:

There is a limit to which we can forecast the future. As we said, many pressures arose in the education budget of which we were not aware 12 or 15 months ago. We need a more efficient, tighter management-focus vehicle to cope with those challenges.

Mr D Bradley:

This document states that more detailed work needs to be done.

Mr Boyd:

We identify a major change programme and we identify a major price tag to go along with it; we then make a business case that sets out the benefits against the price tag. It is for the Minister to make a judgement against that.

If there is a significant price tag when we move into other change programmes, departmental approval will be required; a business case will be required and it will have to go through DFP. That will be delivered when we get round to doing it. That is probably not a very satisfactory response, but it is the best that I can give you at this time.

Mr Lunn:

I hope that I get away with this question, Chairman: is the cost of the top management board of the ESA included?

Mr Boyd:

We are confident that the figures include everything that is associated with running the board.

Mr Lunn:

In an ideal world, if you were putting the board together, would you like to see the majority made up of local councillors?

Mr McCausland:

Perhaps you would prefer experts.

Mr McGrath:

As Gavin does not have that responsibility, it is invidious to ask him.

The Chairperson:

Page 41 of the business case concerns middle management and professions; however, we need a breakdown. The status quo is 762 staff, but option 4 is 579 staff; what is the breakdown in reductions between what we deem to be middle management and professionals?

Mr Boyd:

Typically, we use salary grades to identify staff; however, I cannot remember the particular classification of salaries. There are groups of professionals who, because of their professional qualifications and status, are paid at the equivalent level of middle management, which might be responsible for significant numbers of staff. I can get you more detail, but I do not have that information to hand.

Mr McGrath:

Do you mean how are the predicated reductions split between those two groups of staff?

The Chairperson:

Yes.

Mr Boyd:

I can get you that information.

Mr McCausland:

I think that John O’Dowd is being somewhat disingenuous — I use the word “disingenuous” because I am not allowed to use language any stronger than that. It is inappropriate and disingenuous to suggest that savings can be made in education without reducing the number of people employed. Salaries are the biggest cost. If we want to put the maximum amount of money into front-line services, that is where cuts have to be made. That may not go down well with some of John O’Dowd’s friends in the trades unions; however, that is the reality, and any attempt to evade that is window dressing to save face.

Could we ask the Department to produce an assessment of how much money is spent — it may only be a guesstimate — on the administering, monitoring and servicing of all funding initiatives. We need to get some idea of the cost, not just for the Department but for schools. How much principals’ time is spent on that? A rough estimate would be helpful, as that is a major saving that could be made. I am keen to see that done. A guesstimate would give us some idea as to whether we should be putting more pressure on the Department to move in that regard.

Over the years, the funding system has not been right. However, instead of fundamentally reviewing it, extra bits have been stuck on to deal with this and that, and we have ended up with a mishmash. An assessment is needed to establish how much the Department should be prioritising that. Principals want to see that, and that is how to get more money to them.

The Chairperson:

I realise now that you are referring to John O’Dowd; I thought, at first, that you meant John McGrath.

Mr O’Dowd:

Nelson is right; I am not saying that there should be no job losses in the education system. The ESA is about the delivery of an efficient education system, and that will involve job losses. My concern is his colleague’s comment: “We have to sharpen the knife and return to consider cuts in administration”. That should not always be the first port of call.

Let us ensure that the £2 billion budget is spent efficiently. I have no doubt that, in future, Nelson will stand with the trades union movement, campaigning on their behalf against the Education Minister as he has in the past.

The Chairperson:

Both sides have aired their views on that.

Mr D Bradley:

Can we have some information additional to that on page 48 of the outline business case, which relates to the six areas that have been excluded? I want to know more about the indications of costs and benefits that might accrue from those areas.

Mr Boyd:

We will send you that.

Mr McCausland:

Please send us a guesstimate for the costs of initiatives.

Mr McGrath:

I am cautious. The member is asking us to trawl 1,250 schools and ask each principal to calculate the time that he spends dealing with certain initiatives, having to specify which initiative. That would add to the administrative burden on schools. I seriously doubt whether, when we add up the responses, we will obtain a meaningful figure.

Mr McCausland:

I admire John’s simplified view. As a civil servant, he can always find reasons why we should not do something; it must be a part of their training. One does not need to trouble 1,250 schools, as he well knows. We are asking for a guesstimate; we are not asking for a figure to the precise penny. How many people in his Department are administering initiatives?

Mr McGrath:

The Department is separate; I am nearly sure that the member said “each school”. If you want to take three or four typical schools in each sector, we can do that.

The Chairperson:

The example that was brought to the PAC was the £40 million that was spent on numeracy and literacy. Teachers told us consistently that if the money that had been allocated for numeracy and literacy had been put into front-line services — teachers — there would have been a better outcome and the report that went to the PAC would not have been so critical. That is the kind of issue that Edwin and Nelson were driving at.

We set aside a huge amount of money on a project that we hope will change the world. However, to achieve that we may use 80% of the money on administration but not change the outcome. Forty million pounds was spent on improving numeracy and literacy, but there was no change. Will we spend £12 million only to see no change?

Mr McGrath:

In future, as far as possible, we want to give unlabelled funding to schools and specify the standards that outcomes must meet. The more small pockets we have — and we have discussed this before — the more time is spent monitoring them than is spent on monitoring the vast bulk of the money. That is not conducive to positive outcomes. We want to take that direction in future. However, as I told the Committee previously, if we were to stop some of those earmarked budgets, there would be some interests arguing that we need a special fund for X or for Y. The largest chunk in the earmarked budget is the C2K budget, which we regard as important. Were we to do that, the Committee would have to recognise that certain narrow initiatives would be abandoned that some interests regard as important. Whereas a strategic approach that put all the money in, asked schools to deliver, and monitored them against outcomes would reduce the number of special initiatives. That is an approach that I would support; however, it is swings and roundabouts.

Mrs M Bradley:

Principals may be accountants, but they are also teachers, particularly in the primary sector. That must be taken into account.

Mr D Bradley:

My question is addressed to John and Catherine. What is the position of teachers who have applied for redundancy?

Mr McGrath:

The issue of teacher redundancies is difficult. Changes mean that the cost cannot fall on the scheme itself but must be met by employers. We flagged it up in the strategic stocktake — it was almost the biggest bid. However, that bid was linked with whether we wanted to pursue the rationalisation of schools through teacher redundancies. It is almost a question of investing to save.

One of the major challenges that emerged from last week’s stocktake statement is that a lack of provision for premature retirement and redundancies next year may create significant problems. The question is how to strike a balance. We may return to the Committee before too long to tell it that the Minister proposes to carve out some money for redundancies and early retirements. It may be argued that that is not the most important or front-line need. Rationalisation is an important and a difficult issue.

Ms Catherine Daly (Department of Education):

John has covered the points well. The key issue is value for money, which is fundamental to any public expenditure decision. Early redundancy decisions must be taken in the context of value for money in individual cases, and that would be in the wider context of rationalisation or how redundancies benefit the system as a whole.

Mr D Bradley:

Is there a time frame for those plans?

Mr McGrath:

We want the resource proposals for next year; that is one of the proposals in the strategic stocktake. There is no funding available for it now, and it is one of the issues that we will discuss with the Minister.

Mr D Bradley:

What is the position of those who applied before the deadline in November 2008?

Mr McGrath:

I am not sure of their technical position. There may be issues if their applications fall into next year.

Ms Daly:

I do not know the exact timing of cases that are in train, Dominic; may we come back to the Committee on that?

Mr D Bradley:

Will you provide the Committee with a detailed update on the situation?

Mr McGrath:

Yes.

The Chairperson:

John and Catherine, thank you very much. That concludes the evidence session on the Education Bill.