Mr Sammy Wilson
Chairperson, Committee for Education
3 December 2007
Mitchell McLaughlin, MLA
Committee for Finance and Personnel
DRAFT BUDGET 2008 - 2011
- Thank you for your letter of 24 October 2007 which invited each Statutory Committee to put forward its views on the Draft Budget 2007.
Background and Analysis
- The Committee for Education commenced its scrutiny of the CSR 07 and the Draft Budget 2007 implications for education with a full Departmental briefing session at its meeting of 7 September 2007. This was followed up by comprehensive briefings from senior officials on 9 and 16 November, culminating in a presentation from and discussion with the Minister for Education on 20 November 2007.
- It was clear from the initial briefing that a key issue for the Department of Education (DE) in delivering the required efficiency savings (cumulative cash releasing savings of 3% each year over the CSR period i.e. £49m, £97m and £144m) is the nature and structure of the DE budget in that some 60% of the resource budget is allocated directly to schools under the common funding formula and a further 15% goes directly to the schools/classrooms. The schools’ delegated budget alone is in excess of £1bn. The key cost driver with schools and related budgets is pay, with over 75% of schools’ delegated budgets relating to teachers salaries and over 10% relating to non-teaching pay. The challenge therefore, given the scale of the efficiencies required, is that any additional resources secured must be put to the best possible use to minimise their direct impact on the schools budget, while at the same time to invest in measures to secure the efficient delivery of education services.
- One other key issue for the DE resource budget is that the DE opening recurrent expenditure baseline for 2008 to 2011 will not only be net of efficiency savings, but also the Children and Young Peoples’ Funding Package (CYP) and the Integrated Development Fund (IDF) allocation – some £38m and £5m respectively per annum.
- The above deductions on the opening baseline for DE means that the opening baselines for 2008/09 to 2010/11 are £1626m, £1578m and £1531m, compared to the opening baseline for 2007/08 of £1720m. The Draft Budget proposed allocations of £144m, £292m and £421m results in Draft Budget baselines of £1770m, £1870m and £1952m representing a year on year uplift of 3%, 5.6% and 4.4% (average 4.3%). The Department for Children Schools and Families (DCSF, formally DFES) outcome from the CSR 07 means that the increase in spending on education in England is 5.3% in cash terms on average between 2007-08 and 2010-11, compared to the proposed 4.3% Draft Budget DE allocation increase. The DCSF settlement is fully reflected in the Barnett consequentials for the NI Block over the 3 year period 2008/09 to 2010/11. Even though Barnett consequentials are unhypothicated – this is clearly a relevant issue in considering spending proposals for schools in Northern Ireland.
- The Committee for Education scrutinised in some detail the Minister’s prioritised bids during the period leading up to the finalisation of the Draft Budget. The Committee followed this up by scrutinising a scenario prepared by the Department of how the DE’s Draft Budget resource allocation increase might be utilised to meet inescapable bids and some highly desirable bids. This involved not only a considerable prioritisation of, but also a scaling back of original bids and in some areas only meeting bids in part on the final year of the Budget period. The Committee found this a highly useful and informative exercise, but would highlight that since the Minister had yet to make decisions on her priorities on how available Draft Budget resource allocations might be used, the Committee found it difficult to make firm judgements and recommendations on the implications of the Draft Budget for education. However, as detailed below, the Committee has reflected some of its specific concerns/priorities; but in most instances has simply noted and highlighted possible/probable Draft Budget implications and the associated concerns of the Department/Minister.
- DE’s strategic objectives and therefore its key top priorities for allocation of resources must be maintaining core education services at 2007-08 levels in real terms after taking account of demography and pay and price pressures; and meeting contractual, statutory and other inescapable pressures. However, it is also clear that to maintain education core services over the next three years and beyond it is essential to invest in the short term to deliver existing and planned education reforms. The Committee has scrutinised, in particular, over the last 6 months two main interlocking key VFM reforms being progressed by DE i.e. the RPA Education Reform and the Modernising of the School Estate with the move to strategic area planning. Although the Committee has currently some reservations on how these reforms will be achieved, it is clear and all-important in the short, medium and long term that the efficiency outcomes are delivered. Therefore, in welcoming the proposed allocation to DE of non-recurrent largely ‘Invest to Save’ money of £10m, £25m and £10m, the Committee notes these allocations are immediately absorbed to take forward the reforms highlighted above and £10m and £5m to continue CYP and IDF long-term essential services now in place, addressing both youth and school provision in disadvantaged areas. Some of these services give clear priority to improving core skills of Literacy and Numeracy. The Committee’s analysis to date shows that DE would have particular difficulties in finding funding to maintain CYP and IDF projects/activities in Years 1 & 2 of the Budget period at 2007/08 levels – the Committee would therefore share concerns that this is removing key services targeting disadvantaged school children and other initiatives now established such as the Extended School, Renewing Communities Programmes, and work engaging parents in the life and work of schools. The Committee noted recent research by the University of Ulster which concluded that school children in areas of high social disadvantage face a diminishing educational experience. Also, the Committee noted one particular cost pressure arising regarding DE support for the reforms is Departmental administration of £2.1m, £2.5m and £2.6m over the Budget period and the Committee noted it is essential that these resources are secured under the classification of administration.
- Another key area for funding is Curriculum Reform - again the Committee has some reservations on aspects of this, but it clearly has to be advanced and indeed the Department has a statutory responsibility to do so. The Committee examined DE’s original bids to DFP and a possible scenario of bids to be met under the Draft Budget proposals. It noted that resource budget pressures under the proposed Draft Budget may well result in scaling back of funding and delays in implementing Curriculum reforms. The Committee was informed that an important part of the reforms is to ensure that young people leave school having had the opportunity to follow a range of subject options that include skills and subject areas identified as being most relevant to the local and wider economy and to the need of local business – in line with the Draft Programme for Government Priority of Growing a Dynamic Economy.
- Although the Committee has yet to be appraised of the potential benefits and outcomes of the Special Education Needs (SEN) and Inclusion Review and the Early Years Strategy thinking, the Committee noted the general concerns that budget resource pressures could well delay improvements and efficiencies in these areas. For example, for SEN, measures to place a greater emphasis on early identification and intervention, co-operative working within and between schools and emerging diversity of need in the classroom. The Committee also noted the particular concerns that School Improvement Fund work and measures to promote Literacy and Numeracy may well be scaled back significantly. Some of this bid was specific to the current Literacy and Numeracy Strategy, while the bulk of it would have been devoted to Literacy and Numeracy enhancement through centralised services raising school standards and through specific programmes, for example, programmes for disadvantaged areas, reading recovery, and parenting. Again, not finding the funding for this bid runs counter to the draft Programme for Government PSAs 10 and 19 and is at odds with commitments given following the Westminster PAC Report criticisms.
- The Committee noted a specific bid to enhance Science, Technology, Engineering and Mathematics (STEM) skills may not be met at all. This bid would have enhanced the equipment used in STEM and the professional development of STEM teachers, the recruitment of STEM graduates into teaching and the uptake of STEM subjects by pupils. This again runs counter to the Draft Programme for Government Priority of Growing a Dynamic Economy, specifically PSA 2 and the fact that there has been a 31% decline over the past decades in the number of students at A-level taking maths, chemistry, and physics in combination. The Committee recommends that DE pro-actively pursues funding from the Innovation Fund for elements of STEM and other appropriate areas.
- The Committee would question why none of the bid for Maintenance of the School Estate might not be met – again a spend-to-save issue. Also, the committee noted with concern that a specific bid to enhance the Youth Service may not be met.
- The Committee examined in some detail one of the Department’s substantial inescapable bids to maintain educational services through the Aggregated School Budgets. It was found that these were adjusted to be net of demography changes, and were based on approximately 2.5% inflation. The latter contrasted to English School Budgets with guaranteed per pupil uplift of 5.5%.
- The Committee over the last few months has received substantial written and oral evidence and taken a particular interest in the need to reduce the differential in funding levels between primary and post-primary schools. The Committee noted the Common Funding Scheme (LMS) consultation with schools launched in mid-November 2007. This seeks views on the proposal to raise the Age Weighted Pupil Unit (AWPU) for primary pupils from 1.02 to either 1.03 or 1.04. The Committee sees the higher weighting (1.04, which generates only an average annual uplift of £24 per pupil) as a minimum uplift and understand that to have no negative effect on post-primary pupil funding would cost some £6m per annum over the next 3 years. The Committee considers it essential that this money is found. It also welcomes the commitments in the Draft Budget to fund the second day of Teaching Principals’ Planning, Preparation and Assessment (PPA). Again the Committee considers this to be essential funding as this would mainly benefit Primary School Principals where the evidence for PPA is clear. This is only a fraction of the PPA/Leadership and Management time measures emanating from the Curran Inquiry which would cost £44m per year, with the total package of recommendations at over £80m a year. Associated with this, the Committee enquired about the costs of employing Newly Qualified Teachers to cover part of teachers’ productive time and introducing a guaranteed induction year. The Committee were informed that this would cost approximately £19m per year. This was not on the original list of DE bids and the Committee considers it should be given active consideration, along with the issue of using Newly Qualified Teachers (approx. £24.5k) as opposed to experienced teachers (approx. £42k) for substitution teachers.
- Turning now to Draft Budget proposals for capital funding for DE under the Draft Investment Strategy. The Committee welcomes the recognition in the Draft Budget that it is important to deliver a modern and sustainable school (and youth) estate to support the development of a well-educated populace with the skills to engage fully and positively in society and the economy. The Draft Programme for Government proposed PSA 16 ‘investing to provide a modern fit-for-purpose education estate in line with best practice and VFM’ sets out DE’s specific actions and targets in this area. The Committee sees it important to replace deficient school buildings, but alongside this an area-based planning approach must be delivered and implemented as soon as possible. A total of £714.5m is proposed for allocation to Schools and Youth Services over the 3 year Budget period, with an indicative allocation of £2,792m over the remaining 7 years (£3,506m in total). This will enable over 100 major schools projects (previously announced) to be taken forward over the period, including 8 special needs schools, as well as continued investment in the school estate.
- The Committee noted that this will include both conventionally funded and PFI projects and that the Department is currently analysing anticipated profiles of project capital spend to determine how best to manage the delivery of the projects within the budget allocations. The Committee will carefully scrutinise the Department’s Investment Delivery Plans under the new procurement framework when published early 2008, as the Committee has concerns about delays in school capital projects and the £20m capital underspend reported in 2006-07. In particular, the Committee will be asking for feedback from DE on what additional resources for investment can be found from the disposal of DE assets under the new ‘Capital Realisation
Taskforce’ set up by OFM/DFM and DFP. In this respect the Committee notes the assumption that DE capital receipts from the disposal of surplus assets over the three year budget period is £48.5m.
- Bearing in mind the position outlined in paragraph 6 above, the Committee would highlight the following conclusions:
a. The Committee noted the significant resource budget pressures arising from the Draft Budget proposals; from required efficiency savings, the netting off of CYP and IDF funding, and where 80% of the DE resource budget is committed to salaries; the need to maintain core education services at 2007/08 levels in real terms; and meeting contractual, statutory and other inescapable pressures. (paragraphs 3, 4, 5 & 7);
b. The Committee noted the DCSF CSR 07 outcome of an increase of 5.3% in cash terms for spending in education in England compared to the Draft Budget 4.3% increase for Northern Ireland.
c. The Committee noted the clear need to invest in the short term to deliver existing and planned education reforms; to achieve necessary efficiencies, and reform the curriculum and improve school standards. Linked to ‘invest to save’ is the need to secure resources under the classification of administration. (paragraphs 7, 8, and 9);
d. The Committee noted the particular concerns and difficulties arising in finding funding to maintain CYP and IDF projects/activities targeting disadvantaged school children. (paragraph 7);
e. The Committee noted the general concerns that resource budget pressures could well delay improvements and efficiencies in SEN and Early Years, and in particular the concerns that School Improvement work and measures to promote Literacy and Numeracy may well be scaled back significantly – such as programmes for disadvantaged areas, reading recover and parenting. (paragraph 9);
f. The Committee noted a specific bid to enhance STEM and a bid for maintenance of the school estate, may not be met at all. The Committee recommends that DE pro-actively pursues funding from the Innovation Fund for elements of STEM and other appropriate areas. The Committee note with concern that bids for the Maintenance of the School Estate and a specific bid to enhance the Youth Service may not be met (paragraph 10);
g. The Committee noted the Department’s main bids to maintain educational services through the Aggregated Schools Budget were net of demographic changes and based on 2% to 2.5% inflation compared to English School Budget guaranteed per pupil uplift of 5.5%. (paragraph 12);
h. The Committee noted with concern that money has not been found to reduce the funding differential between primary and post-primary schools; that only minimal PPA funding is available and DE should actively consider funding the costs of employing Newly Qualified Teachers to cover part of teachers’ productive time and introduce a guaranteed induction year. (paragraph 13);
i. The Committee noted and welcomes the capital funding allocations in the Draft Investment Strategy and will carefully scrutinise the DE Investment Delivery Plans and what additional resources can be made available from the disposal of DE assets under the new Capital Realisation Taskforce.
Sammy Wilson, MP MLA
Chairperson, Committee for Education