Tag Archives: costs

Can state services save money for schools?

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When I first started writing this blog, back in early 2013, now nearly a decade ago, one of my mistakes was not to create an index. With more than 1,300 posts later, to do so now would be a labour of love that at present I don’t have the time for. The lack of an index means I am largely dependent upon visitors throwing up links to former posts to supplement my own memory of issues such as Jacob’s Law – discussed in the previous post.

Today, I have been reminded of a post from January 2018 about costs and savings in the education system that is relevant to the present economic situation. You can read the full post at Not Full Circle? | John Howson (wordpress.com) but one key paragraph was this:

“…. I wonder whether another stage in the cycle of government contracting is starting to emerge. In the immediate post-war period of central planning, public bodies often ran most services. There was no profit element to consider, but cost controls were of variable quality. The Thatcher era saw a mass transfer of services to private companies, with an expectation that costs would fall. Maybe some did, but others didn’t and some benefitted from the proceeds of technological change that drove down costs, but didn’t create competition and didn’t always drive down prices.”

This 2018 post had built upon an even earlier one from July 2014 Private or public | John Howson (wordpress.com) that dealt with the issue, concerning even then, of the cost of outsourcing children’s services to the private sector with no control over rising costs.

At that time, I was establishing TeachVac www.teachvac. To demonstrate how costs of recruitment advertising could be reduced. I concluded the post with the comment that;

“In a time of cutbacks on government expenditure, as we have witnessed during the past six years, it is inevitable that staffing costs will come under pressure, and the debate between cutting wages or cutting services will rage. Sometimes there is a third way, and a new technology or a different approach, can achieve the same service level for lower costs. Is that what we ought to be striving for in education? The only other alternative to preserve service levels is higher taxes.”

This debate about the profit element, and where the most cost-effective system can be found, is once again a live one as the country faces a new round of coping with living beyond its means and the consequences of a foolish attempt to ‘dash for growth’ when other global factors were pointing towards the need for sound government.

How to make savings in a devolved system such as schooling in England is an interesting question. Perhaps we should start with the role of the DfE. Is it there to provide services on a ‘take it or leave it’ basis, such as their vacancy site or is it there to bring together the different players to work out the best value approach for schools. If the latter, how does it enforce such a best value approach? Perhaps the annual audit report should make a comment to governors about where a school spending exceeds a benchmark?

TeachVac is currently in the process of creating an index on recruitment showing the position that a school sits both locally and nationally. Such an index would provide evidence to show the degree high spending on recruitment was necessary and justified.  

Marketing schools: value for money?

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Can we afford to spend millions on marketing schools to parents in the present cost of living crisis? Mrs Thatcher has been credited with creating a need for school marketing by introducing the concept of ‘parental choice’ into schooling after winning the 1979 general election. However, even before her victory in 1979, some schools were already seeing the need to compete for pupils during a period when the numbers transferring to secondary schools in some areas were already in decline.

I seem to recall that before I left Haringey in 1979, at least one school in Tottenham had already produced a colour brochure extolling its virtues to parents. By the mid-1980s, the idea of choice and marketing to encourage parents to select schools was already sufficiently acceptable for a publisher to ask me to put together ‘The Parents’ Guide to Secondary Schools in London’s Commuterland’ (ISBN 978-0333404447 but long out of print). By the 1990s, one of my students at Brookes University was writing a research article entitled: The School Brochure: A Marketing Tool? (Educational Management & Administration, v23 n2 p89-95 Apr 1995) and presenting a paper at a BERA conference, before going on to a distinguished career in higher education.

Now at that time I seem to recall that the definition of marketing was something along the lines of: “to seek, sense and satisfy, needs, wants and aspirations, within a legal, ethical and financial framework.”

After more than forty years of marketing schools, this summer’s examination results have highlighted the gap that still remains between examination outcomes, both across the country and between schools. So, has the money spent on marketing parental choice made schooling better or worse than before, and, more importantly, can we afford the cost to society?

It is interesting, within the definition quoted above, what schools don’t tell parents. Most, for instance, don’t mention the qualifications of their staff to teach the age group or the subject and how they have kept up to date with changing teaching and assessment, preferring to rely upon Ofsted while at the same time complaining loudly about the methods of assessing schools.

The head of the secondary school in Rutland that refused to join in the annual exam results ritual.  Uppingham Community College chose not to publish GCSE headline figures due to there not being ‘a level playing field in education’. Rutland achieves best GCSE results in England (stamfordmercury.co.uk) may be an outlier, but might this mark the start of a trend?

With the in-coming government likely to need to make savings, is marketing state schools an area where some limits should be placed on the amount that state-schools can spend on marketing each year?

After all, the Conservative government has been happy to introduce regulations on school uniforms – see earlier post on the topic – and on recruitment costs, by its free job board. However, the latter doesn’t seem to have reduced the spending in that area very much. Perhaps, because there are not enough teachers to go around.

Might the teacher associations be persuaded to back any curb on marketing if is could be shown that the savings could be applied to fund the inevitable pay rise that must surely come at some point if inflation continues out of control.

In recent years, I have wondered whether parental choice and the associated spending on marketing allowed government to avoid the issue of providing a first-class education for every child? As a result, spending money on marketing seems worth a debate in the present economic climate.

Buddy, can you spare a dime?

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Did schools really save money in the five-year period up to 2019-2020? The DfE has published a study showing the aim of ‘saving’ at least one billion pounds during that period was achieved. Progress in schools savings and resource management – GOV.UK (www.gov.uk)

The methodology of the study was to measure savings as the difference between actual non-staff expenditure in 2019-20 and what was estimated non-staff expenditure would have been in 2019-20 if schools had not changed their spending behaviour. This is expressed as the difference between the expenditure line and the counterfactual line as to where expenditure without saving would have been.

It is worth noting that the period covered was one where primary school rolls were generally on the increase, and for many secondary school rolls were either constant or falling. Academies and maintained schools also operate on different financial years, so that could be an additional complicating factor.

A significant proportion of the saving came in the final year 2019-2020. I am not sure whether that meant that the final third of that financial year for academies covered the first four months of the pandemic when, for instance, there would have been a significant drop in expenditure on school meals, as most children were forced to stay at home.

The target of £1 Billion pounds was set after the National Audit Office (NAO) report “Financial sustainability of schools” published in 2016 identified that schools would incur cost pressures of £3bn between then and 2019- 20. The DfE then produced analysis which compared schools with different levels of spending but similar pupil characteristics and levels of attainment.

According to the report,

 ‘the DfE estimated the impact of bringing the spending of the top 25% highest per-pupil non-staff spending schools down to the level of those at the 75th percentile. This analysis indicated that, schools could plausibly save around £1 bn on their non-staff spending and so this became the ambition of the SRM portfolio’ (Page 3)

It is not clear from the report whether that is what happened, or whether the schools better at managing their costs took more out of the system, thus widening the gap between those schools good at achieving savings and the rest of the sector. Since both primary and secondary schools were included, it would have been interesting to know how much of the saving was due to fixed costs that don’t alter with changing pupil numbers – it presumably cost a similar amount to heat and light a school even if pupil numbers fluctuate. The saving would be more impressive and longer-lasting if it was the variable costs that had been reduced. Primary schools often have higher fixed costs as a proportion of income, although many of these are staff costs.  

And, as the DfE note in the definitions on page 5 of the report.

‘“Saving” in this context does not mean a cash saving. We measure savings by comparing actual non-staff spend to where we expected non-staff spending to be had schools not changed spending behaviour – the counterfactual. We would calculate cash savings by taking away actual non-staff spend in 2019-20 from actual non-staff spending in 2015-16.’

And finally, it looks as if the special school sector was excluded if the study was only on primary and secondary schools. It would be interesting to know about cost pressures in that sector and whether similar saving was possible?

First Swallow?

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The Diocese of Bristol must be one of the first multi-academy trusts (MATs) to have posted accounts for the financial year 2017-18 on the Company House web site. At least, it is the first one I have come across. These account cover the year from September 2017 to August 2018, and thus follow the academic year. This is unlike accounts for maintained schools that follow the financial year from April to March.

In the past, this dual system has caused trouble with the government’s auditors for civil servants at the DfE. But, hopefully, that is all in the past.

One interesting feature to note is the five per cent overhead charge levied on schools in this MAT. There are eleven schools in the MAT and the cost to them seemingly increased from £403,000 the previous year to £486,000 in 2017-18. This charge covered physical, human, financial and legal support as well as education support and the classic category of ‘other’. From this, the Diocesan Board of Finance received £150,000 in 2017-18.

Now five per cent seems like a reasonable amount and it will be interesting to compare it with amounts levied by other MATs and paid by standalone academies for these professional services. There is also the question of how maintained schools should access these services? If schools in MATs must contribute to a central services charge, should maintained schools be required to do the same or be allowed to shop around for the best deal?

The Bristol Diocese MAT is coy in its accounts about the senior staff structure, although it has to declare the salary of its highest paid staff. There doesn’t seem anything about the gender pap gap, but I may have missed that bit somewhere during a quick read.

During 2018 the Minister wrote to MATs about excessive pay for some Chief Officers and it will be interesting to read any comments about this from auditors as more accounts are published. Will we see any significant reductions in pay or just an acknowledgement of the government trying to interfere in the running of MATs.

When more accounts emerge it will also be possible to review the amounts schools spend on those areas not covered in the DfE comparisons on the school data and performance indicators published by the DfE.

One area of concern that the accounts do highlight is the Local Government Pension Scheme, since all non-teaching staff in schools are normally entered into these schemes that are run by individual local authorities. Like most pension schemes, these have been in deficit and MATs and standalone academies have had to increase payments into the scheme to help overcome these deficits. Should the DfE now create a national scheme for these workers as they are clearly no longer local government employees? There may be an interesting debate to be had about the pension arrangements for these staff.

Until all schools are once again on a common annual accounting period there will remain two distinct groups that are difficult to compare in terms of income and expenditure. Such duality of approach is not helpful.

 

 

Bulk buying back in vogue

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When I was a young teacher in London there was a large central buying organisation for schools, called something like Greater London Supplies. I recall that they had a big depot at Tottenham Hale in north London. Purchasing basic supplies on behalf of large numbers of schools made good business sense, even to the most socialist of Labour councils. However, it didn’t make sense to the Thatcher government that believed market competition at a school level was the way forward.

Reading the DfE’s recent announcement on procurement and helping schools with costs, suggests that this is yet another move back in the direction of levering the purchasing power of schools as a combined unit, rather than expecting them to operate as individual business sites. How long will it be before Ofsted is asked to include in their inspection report whether a school is making full use effective purchasing decisions to target as much cash as possible on teaching and learning?

TeachVac, the free vacancy site for schools and teachers, www.teachvac.co.uk  where I am chair of the board, doesn’t yet feature in the DfE list. I am sure that they will find a good reason not to list it, as they don’t yet list any vacancy advertising services, whether they are either paid for services like all the others or free like TeachVac and their own nascent service. Maybe they don’t want competition?

The government’s actions in driving down costs aren’t completely risk free. After all, if prices are driven down too far then suppliers will exit the market and leave just one monopoly provider. At that point, it becomes an issue as to whether the State should regulate the provision of the service or actually take over the running.

As I have suggested in previous posts on this topic, once prices have been reduced by increasing efficiency then it can become very difficult to make a profit. Then there is also the reason why local decision-making was favoured by many: the speed of service delivery. A central maintenance contract may be cheaper, but what is the true cost of waiting several days for a window to be replaced or a leaking toilet mended?

I am sure that there is a unit within the DfE thinking of other areas where schools can either save money or increase their incomes without putting more pressure on parents. They might want to ensure deals there are good deals on school uniforms and sports kit and make schools explain why they are requiring a uniform that is more expensive than the average. Tradition, would not be a good enough answer.

My own suggestion for research is, as mentioned before, school playgrounds. They must be the least used piece of real estate in the country. I don’t suggest they are done away with, as when needed they perform a vital function, but what can we do with them for the other 99% of the year? More all-weather community pitches; a source of generating renewable energy; even vegetable growing spaces areas with a playground on top.

We are spending millions on research into driverless cars; how about a couple of million for more effective playground spaces?

 

 

Schools’ Costs

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At the beginning of February the DfE published a note to help the School Teachers’ Review Body (the STRB) and other interested parties understand about costs for schools in England at the national level over the period2018-19 to 2019-20. You can read the document at https://www.gov.uk/government/publications/schools-costs-technical-note

Many school leaders and governing bodies will find the DfE’s analysis reads like something created in a parallel universe. Core funding over the two year period the DfE states is to increase at 3.1%, slightly ahead of government predictions of inflation at a predicted 2.9% over the same period. If these percentages turned out to be correct, then schools overall would find budgets under less pressure than expected. However, the DfE’s analysis doesn’t take into account any variations to local government pension schemes rates for employers, as they were not known at the time the technical note was put together. The analysis cannot also prejudge what the STRB will do about pay rates for teachers as a group. Will they hold the line or recognise the recruitment challenges schools in some parts of the country are facing and the system as a whole is facing in trying to entice graduates to train as teachers in some subjects.

The DfE also helpfully comment in their technical note that their high level analysis indicates that if the 25% of schools spending the highest amounts on each category of non-staff expenditure were instead spending at the level of the rest, this would save these schools an aggregate £1 billion that could be spent on improving teaching.

As regular readers of this blog know, TeachVac www.teachvac.co.uk was conceived for this very same reason to offer a free recruitment platform for schools that would create savings from recruitment in order to support expenditure on teaching and learning.  We know that TeachVac is saving schools money now, just as the DfE’s own vacancy scheme will if it ever becomes an effective player in the recruitment market.

By 2019-20 the DfE sees academies as bearing the brunt of the cumulative net pressures as a result of the growth in pupil numbers and the fall in protection payments. The maintained sector will have to cope with the effects of local authorities retaining schools block funding for Education Support Grant (ESG) general rate duties over the three year period.

These figures act as a warning to the remaining maintained schools considering becoming academies. They need to consider the financial situation very carefully in the context of their own situation as well as these national figures to see whether they would be better or worse off.

The fact that the DfE has also apparently written to MATs and MACs where the chief officer earns more than £150,000 asking for a justification of the salary is also interesting. I heard one suggestion, not supported by the person making it, that these high salaries were the price the system paid for school leaders taking on the leadership of failing schools. A more insulting argument to the teachers and other staff working in these schools is difficult to envisage.

Might we perhaps be moving away from basic market economics and back to a negotiated national system of pay and conditions there are many that would welcome the better cost control such discipline would bring back into the system. However, the basic rules of supply and demand will always be difficult to ignore.