Education: Funding

Lord Hill of Oareford Excerpts

Monday 5th July 2010 Lords Chamber

[The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)]

My Lords, first, I apologise for interrupting the debate again. With permission, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Education. The Statement is as follows:

“Mr Speaker, with your permission, I would like to make a Statement on education funding. This coalition Government are determined to make opportunity more equal and to reverse the decline in the performance of our education system relative to our international competitors.

Over the last 10 years, we have declined from fourth in the world for the quality of science education to 14th; from seventh in the world for literacy to 17th; and from eighth in the world for mathematics to 24th. At the same time, the gulf between rich and poor has got wider, with the attainment gap between students in fee-paying schools and those in state schools doubling. But the action necessary to improve our schools is made more difficult by the truly appalling state of the public finances left by the last Government.

This coalition has inherited a national debt approaching £1 trillion; a budget deficit of £150 billion; and debt interest costs every year which are more than the entire schools budget. It is no surprise then that the last Labour Chancellor of the Exchequer felt he had to pledge a 50 per cent cut in all capital spending, the last Labour Education Secretary could not make any firm promises to protect schools’ capital spending and the last Labour Chief Secretary to the Treasury left a letter saying simply that there is no money left.

Faced with the desperate mess left by the last Administration, this Government have had to prioritise, and our first priority is raising the attainment of the poorest by investing in great teaching. We know that the world’s best education systems have the most highly qualified teachers. We are fortunate that the current generation of teachers is the best ever, but we must do better if we are to keep pace with the best.

No organisation has done more to attract brilliant new recruits into the classroom than the charity Teach First. Since its launch, Teach First has placed hundreds of highly accomplished graduates in our most challenging schools and has helped drive up attainment in those schools for the very poorest.

We believe that every child should have access to excellence, especially the poorest, which is why we will more than double the size of the programme from 560 new teachers a year to 1,140. We will help to recruit hundreds more teachers into areas of poverty, so there will be Teach First teachers in one-third of all challenging schools. Breaking new ground, we will fund the permanent expansion of Teach First into primary schools, so that more than 300 superb new teachers will be working in some of the country’s most challenging primaries.

Therefore, to clear up the economic mess that we have been left, we have to bear down on the waste and bureaucracy which have characterised Labour’s years in office and reined back projects which have not been properly funded. Even before we formed this coalition Government and had the opportunity to look properly at the scandalous mess that we inherited, we knew that Labour Ministers had no proper respect for the public’s money.

The whole process by which the Government procured new school buildings was a case in point. The Building Schools for the Future scheme has been responsible for about one-third of all the department’s capital spending, but throughout its life, it has been characterised by massive overspends, tragic delays, botched construction projects and needless bureaucracy.

The BSF process has had nine meta-stages: preparation for BSF, project initiation, strategic planning, business case development, procurement planning, procurement, contractual close, construction and then operation. Each of those meta-stages has a series of sub-stages. Meta-stage 3, strategic planning, for example, has had another nine sub-stages: step 1, local authorities produce a strategic overview of the education strategy; step 2, local authorities produce a school and FE estate summary; step 3, local authorities submit their plans to both the non-departmental public body, Partnership for Schools, and the Department for Education for approval; step 4, once Ministers have approved steps 2 and 3, part 1 of the Strategy for Change is considered complete; step 5, local authorities produce another strategic overview, this time with “detail and delivery”; step 6, local authorities use the school and FE estate summary to develop an estates strategy; step 7, local authorities then seek executive approval on steps 5 and 6; step 8, once they get executive approval, local authorities submit the same documents to the Department for Education; step 9, once the Department for Education approves, part 2 of the Strategy for Change is complete.

I have here just the first three of the more than 60 official documents which anyone negotiating the BSF process needed to navigate. The whole process has been presided over by the Department for Education, the quango, Partnership for Schools, and at various times has involved another body, 4ps, and Partnership UK.

Local authorities involved in this process have employed a Partnership for Schools director, a Department for Education project adviser, a 4ps adviser and an enabler from CABE, the Council for Architecture and the Built Environment—another non-departmental public body. Local authorities have also had to set up a project governance and delivery structure, normally including a project board of 10 people, a separate project team of another 10 people and a further, separate, stakeholder board of 20 people. They formed the core group supervising the project. Beyond them, local authorities were expected to engage a design champion, a client design adviser and the 4ps gateway review team—a group of people who produce six separate gateway reviews over the course of the whole project.

It is perhaps no surprise that it can take almost three years to negotiate the bureaucratic process of BSF before a single builder is engaged or brick is laid. Some councils which entered the process six years ago have only just started building new schools. Another project starting this year is three years behind schedule.

By contrast, Hong Kong International Airport, which was built on a barren rock in the South China Sea and can process 50 million passenger movements every year took just six years to build—from start to finish.

Given the massively flawed way in which it was designed and led, BSF failed to meet any of its targets. BSF schools cost three times what it costs to procure buildings in the commercial world, and twice what it costs to build a school in Ireland. The previous Government were supposed to have built 200 wholly new schools by the end of 2008. They had rebuilt only 35 and refurbished 13.  The cost to each school for just participating in the early stages of the programme was equivalent to the cost of a whole newly qualified teacher.  The cost of setting up the procurement bureaucracy before building could commence—the so-called local education partnership or LEP—has been up to £10 million for each local area.

This expenditure did not guarantee quality. One BSF school was built with corridors so narrow that the whole building had to be reconstructed; another had to be closed because the doors could not cope with high winds; and one was so badly ventilated that additional mobile air conditioners had to be brought in during the summer and pupils were sent home.

After 13 years in power, only 96 new schools out of a total secondary school estate of 3,500 schools have ever been built under BSF. The dilapidated school estate we have today is, alongside our broken public finances, Labour’s real legacy. Far from using the boom years to build a new Jerusalem, the previous Government managed to fix only just under 3 per cent of roofs while the sun was shining.

The whole way we build schools needs radical reform to ensure more money is not wasted on pointless bureaucracy, to ensure buildings are built on budget and on time, and to ensure that a higher proportion of the capital investment we have gets rapidly to the front line: to individual local authorities and schools which need it most. That is why I can announce today that a capital review team, led by John Hood, the former vice-chancellor of the University of Oxford, Sir John Egan, the former chief executive of BAA and Jaguar, Sebastian James, the group operations director of Dixons Store Group,  Kevin Grace, Tesco’s director of property services, and Barry Quirk, chief executive of Lewisham Council, will look at every area of departmental capital spending to ensure we can drive down costs, get buildings more quickly and have a higher proportion of money going direct to the front line.

In order to ensure we do not waste any more money on a dysfunctional process, I am today taking action to get the best possible value for the taxpayer. I will take account of the contractual commitments already entered into, but I cannot allow more money to be spent until we have ensured a more efficient use of resources. Where financial close has been reached in a local education partnership, the projects agreed under that LEP will go ahead. I will continue to look at the scope for savings in all these projects. Where financial close has not been reached, future projects procured under BSF will not go ahead. This decision will not affect the other capital funding in those areas. Schools will still receive their devolved capital allowance for necessary repairs, and the efficiencies we make now will ensure better targeting of future commitments on areas of greatest need.

However, there are some areas where, although financial close has not been reached, very significant work has been undertaken to the point of appointing a preferred bidder at close of dialogue.  There are 14 such cases.  In these cases, two, or occasionally, three projects have been prioritised locally as sample projects to be the first taken forward in the area.  I will be looking in more detail over coming weeks at these sample projects to see whether any should be allowed to proceed.

Because we believe in supporting those in greatest need, my department will be talking to the sponsors of the 100 or so academy projects in the pipeline with funding agreements or which are due to open in the coming academic year which are designed to serve students in challenging schools in our most deprived areas. Where academies are meeting a demand for significant new places and building work is essential to meet that demand, where there is a merger and use of existing buildings would cause educational problems and where there is other pressing need, I will look sympathetically on the need for building work to go ahead, but where projects are some way from opening or academy sponsors can use existing buildings to continue their work of educational transformation any future capital commitments will have to wait until the conclusion of our review. That review is made all the more necessary because as pupil numbers rise in years to come we have to ensure our first duty is guaranteeing an expansion in capacity to meet that demographic growth.

Fortunately, in this coalition Government, we have a proper relationship between the Department for Education and the Treasury, which is why we have deliberately reduced our forecast reliance on underspends elsewhere and brought our spending into line. In the process, we have kept capital spending within the envelope outlined by the last Government so there are no reductions beyond those which the Treasury had budgeted for. By bearing down on costs now, we can ensure that money will be available in the future to help secure additional places, to help the most disadvantaged pupils, and to refurbish those schools in greatest need.

We have safeguarded front-line schools spending, front-line spending on Sure Start, and front-line spending on school and college places for 16 to 19 year-olds this year. We have cut spending on wasteful quangos, we have cut the unnecessary bureaucracy that has swallowed up so much money, and we have reduced the amount spent on regional government, on field forces, and on unnecessary government inspection regimes. But we have prioritised funding for better teachers, we have invested more in the education of the poorest, and we are giving schools greater control of the money which had previously been spent on their behalf. For everyone who believes in reforming education, that has to be the right choice, and I commend this Statement to the House”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Lord Hill of Oareford]

My Lords, if there are points of detail I shall write. However, let me respond in broad terms, first, to the points made by the noble Baroness, Lady Morgan.

Going back to 1997 generally, I hope I have always made it clear to the noble Baroness and other noble Lords on the Benches opposite that there are many things that the previous Labour Government did well in the field of education that we want to build on. As she rightly pointed out, one of those was Teach First, and I am happy to put on the record again my praise for the previous Government in setting up that scheme. I agree with her that this is the best generation of teachers that we have had. I recognise that that does not happen by accident and the efforts of the previous Government contributed to it I certainly want to dispel the notion that, in talking about Building Schools for the Future, one in any way wants to run down or disparage the achievement of teachers or pupils. That is not our purpose. If the noble Baroness were to be fair to me, she would recognise that, since I have started doing this job, I have sought frequently to praise teachers where praise is due.

Neither this Government nor any Government would want willingly to cause the difficulty and disappointment for schools that the noble Baroness rightly said would be caused by this step. It is being done because it has to be done. The NAO report pointed out that the costs of delivering the project appear to have increased by between 16 per cent and 23 per cent from when it was set up. Quite a lot of the evidence has been heard about the bureaucratic nature of the process from people who have involved in it. If one thinks that this is a very expensive way of spending capital and improving schools, one is under an obligation to try to find a cheaper way of doing it. To spend capital willy-nilly when one knows that there is a cheaper way of doing it, when we have all the other financial pressures that we face and when we are asking people to bear a heavier tax burden seems not a sensible or fair way to proceed. Therefore, I do not make this announcement with a light heart, and I recognise the noble Baroness’s point about the difficulty that it will cause, but we have taken the decision in order to try to get better value for every pound that we spend on capital and to make sure that, if capital is spent more effectively, we are able to help schools better.

The noble Baroness has asked me on a previous occasion about funding for the new free schools. The money for that is not coming from any savings from Building Schools for the Future because the previous announcement predated this one. The money for that, which I believe is in the order of £50 million for the first year, is coming from savings from an existing technology fund.

The noble Baroness asked how much will be saved. By stopping the expenditure now, we think that we can save £5 billion over the lifetime of the spending review period. That £5 billion would have been spent if we had just carried on.

I hope that I have responded to the noble Baroness’s general points; I shall follow up on any specific points. The purpose of setting up the independent review is to learn lessons from Building Schools for the Future and come up with a better, quicker and cheaper system of capital allocation which I am sure everyone would welcome. That money would then go to the schools that needed it most.

[Baroness Walmsley]

I thank my noble friend for repeating the Statement. I should like to ask him first about Teach First. He will be aware that, under Labour, many schools in deprived areas did not have properly qualified teachers in the STEM subjects, which include science, technology and engineering. Can he say anything about the distribution of the new teachers in Teach First, some of whom will by their nature have qualifications in those subjects? Will he prioritise those schools in deprived areas that have suffered from the lack of properly qualified teachers in those subjects? Can he say something about the resources available for training these new recruits to the teaching profession, who will know all about their own subject but will not know too much about teaching in the first instance? I am aware that they have a foreshortened programme of teacher training, but there will be a lot more of them and we need to be reassured that appropriate funding is available to do that training.

On Building Schools for the Future, the Minister has made it clear how much it has cost schools and local authorities already to become involved in this overbureaucratic process. When the coalition Government have brought this country’s economic situation under control, will those schools that have already spent a lot of money and time, but have suffered from the freeze that he has just announced, be at the front of the queue when we are able to get back to normal business?

Finally, when talking about quangos, will Partnerships for Schools be closed down?

[Lord Hill of Oareford]

The role of Partnership for Schools will be considered as part of the review that we have announced. We plan to roll out Teach First to areas of the country that it has previously not reached and go to primary schools, which I am sure my noble friend will particularly welcome given her interest in the teaching of young children. I take her point about the importance of training for STEM subjects, for which there is a particular problem in finding teachers. I know that the previous Government worked hard on that. It is a problem faced by all Governments and I hope that Teach First will help.

As for whether the disappointed schools that were a long way down in the process would be first in the queue, the answer to all those questions is inevitably dependent on the comprehensive spending review in the autumn and how much capital the department ends up with. It would be wrong of me to presume on the outcome of that, but those are factors that the department will take into account when making future capital allocations.

[Baroness Farrington of Ribbleton]

My Lords, in repeating the Statement, the Minister said:

“Where academies are meeting a demand for significant new places and building work is essential to meet that demand, where there is a merger and use of existing buildings would cause educational problems and where there is other pressing need”,

the department will look sympathetically on the need for that work to go ahead. Will he give a categorical assurance that all other schools in the voluntary and maintained sectors will be treated in exactly the same way? Can we have an assurance that after the review, the £5 billion to which the Minister referred, that everyone agrees needs to be spent on our schools, will be returned? There will not be £5 billion of savings after the review unless the money is gone.

[Lord Hill of Oareford]

On the noble Baroness’s first point, the Secretary of State said what he did about academies because the kind of schools that are in the academies programme from the previous Government, which we want to try to continue to support, are by definition focused in the areas of greatest need and deprivation. In looking at those, he will not give any blanket position but will review them on a case-by-case basis to consider as fairly as he can those individual circumstances.

On funding more generally, I suspect that those are decisions that will be taken by the Treasury, so I doubt that I can give any sensible undertaking at all.

[Lord Low of Dalston]

My Lords, after the Minister’s excoriation of the bureaucracy surrounding the Building Schools for the Future programme, I cannot help observing that the Government appear to have commissioned five people to undertake an independent review of school building. Be that as it may, I welcome the initiative to extend the Teach First programme. Another area where the previous Government took a valuable initiative was in the development of educational leadership. What are the coalition Government’s plans for the future of the National College for the Leadership of Schools and Children’s Services?

[Lord Hill of Oareford]

On the first point, five does not seem to be a completely outrageous number. In the composition of the review membership, we have a fairly broad spectrum of people with a range of perspectives which we hope will help us to find cheaper ways of delivering capital. On the second point, I know that my right honourable friend the Secretary of State has spoken recently at the national college and I think that he is positive about the work that it does. As I have already said again today, I agree with the noble Lord, Lord Low, about the work of the previous Government in encouraging national leaders. That was a successful programme on which there is much one would want to build.

[Baroness Perry of Southwark]

My Lords, I thank my noble friend for reading the Statement and for the sensitive and considerate way in which he expressed his feelings of a heavy heart with having to bring some curtailment to the BSF programme. While sharing his disappointment at the inability to continue the full programme, I should remind noble Lords that many of us felt extreme disappointment at the way in which the BSF programme was dragged out for many urgent cases. Exciting plans were bogged down in bureaucracy and the length of time that it took the department to respond. As my noble friend described, there were many stages, any one of which could make the whole thing fall and thus mean having to start again from the beginning. It was very distressing for many local authorities and schools to have to drag through that process, and to miss out on the plans which they had made.

Undoubtedly, many good projects are left. They may not necessarily be for new schools, which may have to be put on hold, but for refurbishment of some remaining very dilapidated buildings. Are there any ways in which the coalition Government can put pressure on local authorities to honour some of the more extreme cases of dilapidation and to spend such money as they have in their budgets to help those schools which really need help now?

[Lord Hill of Oareford]

I am grateful to my noble friend and I will reflect on her last point. In order to make it clear, as regards BSF and the first point made by the noble Baroness, Lady Morgan, on investment and what the previous Government did from 1997, I do not doubt for one moment the good intentions of that programme and what they set out to do. The trouble is that along the way, the programme became encrusted with processes that slowed things down, pushed up the costs and forced out some good things. Coming out of this review, I hope that we will get a better process that will help us to do better by our schools.

[Lord Radice]

My Lords, I thank the Minister for repeating the Statement made in the other House. We will, of course, want to look carefully at what has been said.

I just comment that there has been a certain difference between the actual Statement that the Minister read out and the way that he dealt in a rather emollient and sensible way with the interjections from all over the House. I much preferred his way of doing it to the extremely partisan Statement made in the lower House that completely ignored the fact that the previous Government built or refurbished 4,000 schools—the biggest infrastructure programme in education that has been seen in our lifetime.

[Lord Hill of Oareford]

I am grateful to the noble Lord. I am fast learning the difference between another place and this House, and I consider myself fortunate to be in this place.

[Baroness Howe of Idlicote]

My Lords, the Minister was right to praise the previous Government for a lot of the things that went on regarding education. Equally, though, I fear that the Statement in both Houses underlines some considerable mistakes that have been made and the wasteful way in which resources have been used.

Given all our concerns about special needs and schools in deprived areas, not least with the Academies Bill going through, I am thinking about the school buildings that are going to be left half-done, as it were. There is this attractive and clearly well qualified group of five people set up to look at some of these areas. Will the Minister assure us that they will be looking at both deprived areas and deprived needs as one of the major priorities for spending any money that they can find, and that they will move faster?

[Lord Hill of Oareford]

My Lords, I will ensure that the terms of reference for the independent review are available. If they have not already been placed in the Library, they should be. I take the noble Baroness’s point that it is precisely on those who need help most that one ought to be concentrating such capital as we have.

[Baroness McIntosh of Hudnall]

My Lords, in his brief time in this House, the Minister has earned the respect of the whole House for the way in which he has discharged his duties so far. I sympathise with him for having had to repeat what was really a pretty shameless bit of grandstanding on the part of his right honourable friend in another place.

However, my question now is concerned with the leadership issue that was raised by the noble Lord, Lord Low of Dalston. Without any question, we are facing difficult times—they are going to be hard, whichever way the cake is carved up—and the people who are going to have to be fully committed and thoroughly supported as we go into this next period are teachers. Rather than just suggesting that his right honourable friend should perhaps not think too badly of the National College for Leadership, will the Minister tell the House that there will be significant resources available not only to train teachers to come into the profession but to reinforce and reskill the teachers already in it, who will need to be at the top of their bent as we go into the next decade?

[Lord Hill of Oareford]

I am grateful to the noble Baroness. Forgive me for my previous answer to the noble Lord, Lord Low. I was not being evasive; I did not know the precise nature of the commitment that we had given. If the noble Baroness will permit me, perhaps I can contact her and the noble Lord after today and, I hope, give a more precise answer to her question.

[Lord Sutherland of Houndwood]

My Lords, there is support around the House for the emphasis laid, both in this House and in the other place, on the importance of the quality of teachers and teaching. We all support that warmly. I also associate myself with the positive comments about the initiative made on Teach First and the way in which new recruits to the profession have been brought in. Teach First is one of those initiatives that have been successful. The question that is not often asked is what it has to teach us for the continuing professional development of teachers already in post and for the future development of patterns of recruitment and training of teachers more widely in the system. Will someone be charged with asking those questions and bringing back an answer to the wider community?

[Lord Hill of Oareford]

In the light of those comments, I will charge myself with asking those questions, as I think that the noble Lord makes a fair point. Given that what he mentions seems to be so successful, there must be points from it that have a wider application. We should make sure that we learn from them.

[Baroness Farrington of Ribbleton]

If the House will forgive me, I will ask another question, as no one else wants to come in. In response to my earlier question, the Minister referred to the fact—and it is a fact—that the academies are concentrated in areas of deprivation. I asked him about equal treatment for schools in general. Will he give a categorical assurance that other schools in similarly deprived areas will have exactly the same criteria for new projects as the academies will have?

[Lord Hill of Oareford]

I understand the question and, although I do not want to go too much into the gory detail, I will say that there are two criteria. There is a point in the process of BSF called “financial close”, which the Government are taking for the cut-off. It applies to maintained schools and academies. In addition, because academies are in areas of greatest need and deprivation, the Secretary of State will look on a case-by-case basis at whether any of them merit funding, either because a merger is in process or because new buildings are being built, without which children would have nowhere to go to school.