18 July 2003
It would seem the Department for Education and Skills has learned its lesson.
The funding allocations for schools descended into confusion and mutual recrimination earlier this year, following the discovery of an apparent black hole in budgets.
As a result, Education Secretary Charles Clarke has declared his intention to inject some 'financial stability and certainty' into the system. Not before time, many would argue.
In his evidence last week to the School Teachers' Review Body, which is accepting submissions on the 2004/05 pay round, Clarke insisted multi-year pay deals were essential to allow schools to plan their budgets properly.
It is a point that he developed when he appeared before the Commons' education select committee on July 14, telling MPs a 'systemic failure' had caused the funding crisis, and that multi-year budget allocations were the answer.
'I'm not going to defend the current system of allocating funding to schools,' Clarke told the committee. 'We need a system that is transparent, that is rational, that does let schools know where they stand each year.'
He indicated during the hearing that he would publish details of education funding for the financial years 2004/05 and 2005/06 in the autumn – usually information is released each spring for the following year – in an effort to achieve this aim.
Local education authorities – which bore the brunt of ministerial wrath during the funding crisis when they were accused of holding back more than £500m intended by the government to go to schools – are thrilled at this change.
They firmly believe that the lack of advance information, along with the changes to the education Formula Spending Share, introduced in 2003/04, was a main cause of the funding crisis.
Graham Lane, chair of the National Employers' Organisation for School Teachers, said Clarke's comments were 'very welcome news' for LEAs.
'We have been advocating longer-term settlements and a move in the date for pay increases to September for some years. An early decision on pay increases covering more than two years will allow for certainty in budget-setting that is now vital to schools.'
Head teachers themselves back the move: their representative bodies, the National Association of Head Teachers and the Secondary Heads Association, made a submission to the STRB that emphasised the need for clearer medium-term planning of education costs.
This is particularly true now. The advent of performance-related pay means that salaries are taking up an ever-increasing proportion of school budgets.
For Clarke, this is not a welcome development: he told the Commons' committee that 'a number of schools in the country are now spending a very, very high proportion of their funding on salaries'.
But if this trend continues, it makes sense for schools to know the true cost of their wage bill early in the budget-setting process.
Clarke also used his appearance before the committee to indicate that he was not pursuing the idea of directly funding schools from Whitehall, thereby drastically reducing the role of LEAs.
'I think a national funding formula, if we were going down that route, would have a significant number of negatives… on local decision-making,' he told MPs.
LEAs are unlikely to get things all their own way, however. As Public Finance went to press, Clarke was due on July 17 to give some indications of how funding would in future be calculated.
At the very least, there will be a tightening up of the 'passporting' regime, to ensure that authorities do pass on to schools the money allocated to them by Whitehall.
LEAs may be expected to allocate to schools a minimum amount per pupil, with supplements for other factors, such as the number of children eligible for free school meals.
The changes outlined will make it easier for Clarke to achieve his aim of ensuring all schools get a real-term increase in their budgets next year. And, if he has his way, they are likely to ensure there is no repeat of the headlines about funding shortfalls and staff redundancies that did so much damage at the start of the year.
PFjul2003
