Tag Archives: finance

Autumn Statement

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Two things struck me about the small print of yesterday’s announcement, apart that is from the procurement savings that should favour TeachVac if anyone takes any notice of the requirement to reduce costs.

The first was the final point in the education section:

2.67 The department will deliver 20% core administrative savings through greater efficiency.

I assume this means fewer Ofsted visits. Whatever happened to the aim of visiting every trainee in their last term of a preparation course and the first term of their employment? That seemed like an interesting idea, but very expensive. The second area that might be threatened is the expansion of the Regional School Commissioner idea. The present small band have huge areas to cover and need more staff to really understand their bailiwick.

Even with the cuts in the Education Support Grant, it seems to me that local authorities might still have a part to play in ensuring education performance across all types of schools, including the free schools/academies sector. After all, local authorities and local councillors have a genuine interest in their local schools and are often close to what is happening in them. I doubt most Commissioners would be as aware as fast about what is happening in every primary school in their region as the host of local councillors of all political parties. Why not stop complaining about them and harvest their enthusiasm and support.

The second piece of information buried in the small print at the end of the Treasury document (page 136 for anyone that cares) is the assumed change in wages and salaries each year between 2015 and 2020. Now no doubt some of the change will be accounted for by growth in the labour market overall, but presumably a large part will be increases in wages for existing employees. Some will be the result of salary drift to offset the Living Wage increase as those higher up the wage ladder seek to retain their differentials with those below them. No doubt this is why the Treasury sees wage growth above 4% every year to 2020, peaking at 4.5% in 2016 and 2017.

Those levels of increases mean that thanks to the power of compound interest someone on £25,000 in 2015 might be earning over £30,500 by 2020. That’s fine if public sector wage rates keep pace, but if they are held down, a teacher on £25,000 in 2015 would only be earning around £26,300 by 2020. This would be more than £4,000 adrift over the wage settlements decided during this parliament.

What such an outcome might do to recruitment into teaching of those concerned about pay, I leave for others to decide. All this comes after the recent OECD review of the pay of teachers in different countries that revealed where teachers in England were placed on the global scale of teacher remuneration.

If teachers’ pay falls too far behind that of other graduates of a similar quality there will eventually need to be a catching up exercise, but probably not until after the next general election, unless the economy does remarkably well during the next few years.

 

Belt tightening in evidence

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Life is beginning to return to normal after the summer break. The final figures on teacher training offers will appear later this week. However, last week the government published the last data of education spending under the coalition with the figures from the Section 251 budgets for planned expenditure by schools and local authorities’ services for this financial year.

With the split between academies and maintained schools comparing between authorities on schoolings remains a bit of a challenge. In other children’s services it is still relatively clear what is spent by local authorities on say, youth justice or fostering. However, now that the majority of academies are what is known as ‘recoupment academies’ this means some comparison between per capita spending across the country is once again possible.

Overall spend per capita on the individual school budget at local authority levels has seen an increase in expected expenditure from £4,361 to £4,408 per capita, up by £47 or a little over one per cent. This may well help to explain why schools feel that their budgets have effectively been cut, since increased government take back through pension contributions and increased National Insurance contributions have been greater than the increase in income. To some extent this has also reduced the recruitment crisis in some places by diverting funds away from employing staff.

The local authority per capita expected spend doesn’t distinguish between spending in the primary and secondary sectors in the government’s aggregate figures, so it is impossible to tell whether the authorities where spending per capita is expected to be lower in 2015-16 than in 2014-15 is across the board or in only one of the sectors. What is interesting, however, is that five of the bottom ten ranked authorities, or five of nine if Middlesbrough is excluded on the basis that the figures don’t look credible, have selective secondary schools across the authority. Additionally, three of these authorities appear to have a lower per capita spend in 2015—16 than in the previous year. Now, as academies have a different financial year to maintained schools, that may account for some of the difference, but it isn’t clear whether or not that is the case form the data as presented.

Another interesting feature is that per capita spend in Inner London has also declined from £5,842 to £5,759 per capita in 2015-16. The drop isn’t across the board, but is greatest in Camden and Kensington and Chelsea. Tower Hamlets still tops the list with a spend of £6,842 per capita, down by some nine pounds per capita, but still some £350 ahead of Hackney, the next highest. (These figures exclude the single school in the City of London and on the Isles of Scilly where figures are much higher. However, it isn’t clear why the primary school in the City of London should receive £600 per pupil more than the average for schools in Tower Hamlets.)

Indications are that with increasing pupil numbers and the government’s commitment to austerity the 2016-17 budgets now being assembled at the macro level aren’t likely to be any more generous than this year, and might put schools under even more pressure at the per capita level. That will make free services like our TeachVac www.teachvac.co.uk more valuable to schools than spending money on services that often increase in price every year regardless of inflation levels and technological changes.

Do teachers face a pay cut in real terms?

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So much for the School Teachers Review Body. The Chancellor’s announcement of a 1% pay rise, seemingly not just a 1% rise in the pay bill, is bad news for education. What will there be for the STRB to do now it has been told not just its terms of reference but also its outcome for the life of this parliament.

Even more worrying was the absence of news about local government finance in the budget. Even keeping the current threshold on Council Tax increases of 1.9%, when added to general price inflation, may tip teachers and others working in education over the edge into seeing their pay cut, especially now that young teachers have no guarantee of an annual increment. And any removal of the limit on rises could see extra taxes being collected by some localities to fund deficits on social care and other local services, but no schooling of course.

There is some relief in that young teachers sharing a flat, as I did in my early 20s, can no doubt find a way to make use of the increase in tax-free income from the rent a room scheme. But, that’s still likely to be small beer.
I also think the budget strengthens my case for taking teacher preparation courses out of the student loans system and paying the fees for everyone. There is no time to earn anything during the graduate preparation course that is now so intense that for many it leaves little time for anything else except sleep.

In those parts of the country where the graduate labour market is strong, notably London and the Home Counties, the budget may do serious harm to the school system. Could it unwind some or all of the gains achieved over the past decade? It might well do so because many teachers in the age bracket where it is feasibly to look for a change of career. After all, second careers don’t have to be into teaching.

Oops there goes …

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Earlier this year I reported on the summary closure of a state funded school. In that case it was an academy in Kent. That event followed closely the demise of an academy chain, but not the closure of its schools. Now we learn of the summary closure of another state funded school; The Black County UTC.

Following a second Ofsted inspection the school has decided to close at the end of this term.

Here’s the message on their web site;

Planned closure of Black Country University Technical College

The Governors of the Black Country University Technical College (BCUTC) based in Bloxwich, Walsall, regret to announce that it will close on August 31 2015.

The wellbeing and success of the students at the school is the priority for the Governors and sponsors and full support and guidance is being given to them all, in particular those undertaking exams this term.
This outcome has been reached following a recent disappointing inspection, a thorough assessment of actual and projected student numbers, financial challenges, staffing capacity and the impact these will have on standards of teaching and learning.

“This has been a difficult decision for all concerned. Our primary focus remains the wellbeing and success of the students at the school, not least of all those due to sit exams this term. We are absolutely committed to ensuring that all of our students can continue with their chosen learning outcomes.

“Support and guidance is being provided to students and their parents and carers both internally and through our local partners including the Walsall Connexions Centre, Walsall Council and our neighbouring authorities of Sandwell, Dudley, Wolverhampton and South Staffordshire, and our sponsors at Walsall College and the University of Wolverhampton.

“BCUTC will work closely with the Department for Education, Walsall College and other local education institutions over the coming months to ensure a smooth transition for all students.”

Now it was always the case that private schools could summarily close, in bad times some did the day after the end of the summer term, but state funded schools had to go through a process of consultation and approval. Indeed, a school in Oxfordshire having gained approval for a sixth form is now going through the consultation process to revert to its former 11-16 status because it believes a sixth form won’t be economically viable. Had it been an academy it could seemingly just have closed that part of the school down.

As I reported in an earlier post, there are some UTCs and studio schools that appear to be struggling. Whether closing them down is the answer is a moot point, but it does beg the question of who is really in charge of the education system in England. Presumably, since the Prime Minister was prepared to extol the virtues of UTCs in parliament last week, his Education Secretary hadn’t told him of the impending closure in Walsall. With so many UTCs and studio school heading the table of schools with high absence rates something needs to done; and quickly. Rules about closure also need to be made clear to academies, free schools and others in receipt of public money.

National Funding Formula

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I have been reminded that my last post didn’t explicitly mention the need for a new funding formula for schools. This has been such a long-running saga, started under the Labour government and not brought to a conclusion during the coalition that I confess it slipped my mind.  My apologies to the F40 Group of local authorities that have long campaigned for better funding for their parts of England.

I suppose one good thing to emerge from the coalition was that both the Pupil Premium and Universal Infant Free School Meals were funded at the same rate across the whole country and not pro-rata to authorities on their other funding levels for education. There are those that might argue that the funding wasn’t enough, but it was the same for all. However, that doesn’t obviate the need for a coherent plan for education funding that can be justified on a rational basis. Any reforms must accept the consequences of the raising of the learning leaving age to eighteen. In rural areas the continuation of the old transport rules that assumed staying in education post sixteen was an option need urgent reform.

During the election campaign I met sixth formers of all abilities in both further education and schools that had faced considerable challenges to be able to continue their education. With subsidies to rural bus services under renewed threat this is an unfair burden on young people living in the countryside. If we tried to take away the free travel enjoyed in London there would no doubt be a great outcry.

There is no doubt that what funding there is will increasingly be taken up by increased pay. In those parts of the country, notably London and the Home Counties, where recruitment is at its most challenging it won’t take long for teachers to recognise that the new pay freedoms mean they can ask for more in their pay packets and leave it up to school leaders and governing bodies to decide how to manage the consequences of saying ‘no’.

One outcome is likely to be larger classes, especially in the secondary sector. However, judging by the downward trend in pupil-teacher ratios seen in recent years the system should be able to handle some worsening in ratios and larger class sizes. But, that makes planning teacher supply just that bit more difficult, as trainee PE teachers are no doubt finding out to their cost this year.

Schools will have to look for ways to cut costs, and recruitment advertising is one obvious source of savings as we have shown with TeachVac. By providing a free service to secondary schools that now covers promoted posts as well as main scale vacancies we have created a platform that could save school many millions of pounds as well as providing them with more information about the state of the labour market. If you haven’t visited www.teachvac.co.uk they pay a visit and register. The site will shortly be extending to cover leadership vacancies directly input by schools and I will announce that development on this blog as I will our future plans for extending into the primary sector.

Election manifestos are starting to appear

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Right of centre think tank Policy Exchange this week published its education manifesto. Not quite in the league of Kenneth Baker’s call for a coalition with Labour in terms of headline grabbing policies it did however have some surprises. I am delighted that they recognise that charging fees for trainee teachers is wrong. Their solution is slightly more nuanced than mine which regular readers will know is to make training free at delivery. Policy Exchange only want fees paid off for those working in state schools. This presumably means that the private sector will have to pay extra to attract teachers as such teachers would still be required to repay their fees. That’s an interesting idea, but it leaves a third group, including possibly many PE teachers where government training numbers are too high, in limbo. What of the trainee that wants to work as a teacher but cannot find a job: should they be penalised for training if they have to take a job outside of teaching because the government mis-calculated training numbers? For those reasons I am still personally in favour of remitting fees for all trainees.
Policy Exchange also wants to allow city regions to create incentives for teachers to work across the country. This seems like a thinly disguised version of regional pay and I wonder whether it is based on serious research since most of the teacher shortages that don’t affect the sector as a whole are likely to be in and around London where teacher turnover is at its highest. A more radical move would have been to hand the training to regions or even local authorities to administer.
The think tank’s idea that all 16-18 year olds should study maths, but not seemingly English, is a sensible proposal that most would now agree is worth implementing once an acceptable curriculum can be devised.
Earlier this week I attended the launch of the DataLab project funded by the Fischer Family Trust. This initiative should be a useful source of independent research into education using the large databases on pupils and teachers that are now available. Their first projects showing that learning isn’t a linear process but has its ups and downs and their work on pupils that just gain a place at a selective schools and those that just miss out is well worth reading. The fact that those that just miss out on a grammar school place often outperform those who just gain a place must give pause for thought to the lobby wanting to expand selective schools on academic grounds.
Next week is national apprentice week and it is really good to see the focus on those young people not going to university. One of the great failings of the Blair Labour government was to cast aside the Tomlinson Report without really understanding what it was trying to do. Perhaps if there were a Labour/Tory coalition we might see some more progress. But, we might also see a Liberal Democrat as leader of the opposition facing the PM every Wednesday: now there’s a thought to cheer me up.

Burying bad news: a dishonourable tradition

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The DfE has continued the tradition of publishing bad news at a time when it presumably hopes many won’t be looking. However, in the current digital age the tradition of burying bad news on a Friday afternoon before a school holiday no longer really works. Thus, even though the adverse report by the Education Funding Agency on the Cuckoo Hall Academy Trust plus the Financial Notice to improve appeared on Friday 13th February on the EFA website (under respectively transparency data and correspondence for anyone having difficulty finding the details), they didn’t go un-noticed.

Cuckoo Hall Academy Trust was one of Gove’s flagship convertor schools and an early sponsor of ‘free schools’ in parts of Enfield, the North London borough.

Indeed, Gove visited the school and the head teacher was on the panel set up by Gove as Secretary of State to review teaching standards. As a result, the investigations of the goings-on at the Trust makes uncomfortable reading in what must been seen as a Tory flagship Trust.

As Cuckoo Hall has also been at the forefront of some of the school-led innovations in teacher training the findings regarding the approach to employing staff without current DBS checks has hopefully also been investigated by the NCTL to ensure that the same shortcomings haven’t been happening with respect to those taken onto teacher preparation courses and not shown as employees by the Trust.

The previous week to the Cuckoo Hall publication the EFA published the heavily redacted report on the Park View Academy Trust. There are now 10 reports on one part of the EFA website in a list first published in March 2014.  But, that isn’t the full list ofreviews, as there is another list covering investigations into financial management and governance at academies that was started at the same time, but that now contains 15 reports including some schools and trusts not on the other list.

Some schools have always broken the rules and these remain a small minority of academy trusts, but the risks remain high that governance arrangements and audit trails don’t always seem to be good enough. Too frequently the mis-use of credit cards appears in the reports and good leaders seem too often to succumb to a failure to manage basic operational procedures in the correct manner.

One solution would be to require all internal management auditing to be brought back into government with local authority teams auditing academies as well as maintained schools.  It might also help if there was a common accounting year for schools of all types as maintaining two different periods as the NAO has shown can also lead to a lack of understanding and poor control.

The other development should be to ensure all schools have a properly trained bursar with the power to refer any anxieties about compliance matters to an external regulator. Ofsted should be retained for teaching and learning compliance issues but financial and other matters needs a mechanism that will encourage the highest standards of public life across the board in education.

No good with numbers

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This blog has always contented that numeracy wasn’t Michael Gove’s strong point during his time as Secretary of State for Education. Today the National Audit Office seemed to affirm that view when it produced an adverse opinion on the financial handling of Mr Gove’s flagship academy schools policy. The NAO concluded that the DfE failed to meet Parliament’s accountability requirements on academy spending. The NAO said that ‘the inability of the Department for Education to prepare financial statements providing a true and fair view of financial activity by its group of bodies means that it is not meeting the accountability requirements of Parliament.’ Their analysis continued, ‘In particular, if the challenge posed by consolidating the accounts of so many bodies and the fact that so many have a different reporting period is to be surmounted, the department and Treasury need to work together to find a solution.’

Much of the problem stems around the fact that academies have the same financial year as their academic year but the department reports on a government financial year to end of March so don’t know the absolute state of finances at the end of the financial year in academy trusts, but must make some assumptions. This isn’t a new problem for government since universities have had academic years as their financial years for a long time and the department could no doubt have learnt from that experience. But, as universities are now in the business department and not the DfE, perhaps they didn’t think to ask for advice in the headlong rush to get the 2010 Academies Act on to the statute book.

A Secretary of State interested in the finances of the department might have seen this issue coming. His hedge fund managers and others on the department’s board must also answer as to why they either hadn’t noticed or weren’t bothered by the reporting arrangements for academy trusts’ use of public money. As the following extract from the department’s consolidated accounts shows, there was in fact an awareness of the issue.

Followings discussion with Ministers, the Group has chosen not to compel ATs to adopt its 31 March financial year end, both to avoid misalignment of ATs’ financial and academic years, and on the principle of giving ATs as much operational independence as reasonably possible. This allows synchronisation of both their business and financial decision making: alignment of an AT financial year to the academic year enables the accounts to be more useful at a local level, as factors such as budgeting, recruiting and funding are usually based on the academic year.

This decision makes operational sense for ATs but it means that the Group accounts now have to be constructed through the application of a number of significant and material adjustments. This is to cope with problems that arise from having different financial year ends within the Group, and from ATs and the rest of the Group preparing financial statements using different accounting standards. As the number of Academies increase, there is a growing risk that this will give rise to material error or uncertainty within the financial statements. This risk has been realised for both the Group’s 2012-13 and 2013-14 accounts, as set out in the C&AG’s audit certificates and reports, which issued a qualified audit opinion for 2012-13 and an adverse audit opinion for 2013-14.

One wonders what those schools that are not academies make of this justification since their budgeting and funding would also be more usefully based upon an academic year as is most of their recruitment. The operation of two different sets of reporting years is surely not a long-term solution for a government that claims to want to reduce costs. A process of harmonization should be high on the agenda of the department after the general election.

Finally, buried in the depth of the report, is the fact that spending on international air travel has increased from £30,000 in 2010-11 to £234,000 in 2013-14. Even more worrying is the associated comment that ‘reasons for this are being investigated.’ This seems to be another area where financial controls don’t allow for immediate explanations.

Prediction comes true

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In December I wrote on this blog in a post headed crocodile tears that: ‘One must assume that since the majority of academies are secondary schools the overall figure for school balances might be in excess of £4 billion and possibly even higher across the system.

’ According to figures obtained from the DfE and printed in the Guardian today schools are carrying balances of more than £4 billion and, as I predicted, academies had more than £2.4 billion in reserves at the end of March 2014, although one must be slightly careful as that isn’t the end of their financial year as it is for other state funded schools.
Although schooling is big business, with millions of pupils and more than half a million teachers, this is still a sum across all schools equal to half the level of investment it is suggested that the NHS needs in England between now and 2020. The question must therefore be, is this level of reserves necessary at the school level and, if not, what can be done about the situation?
Guidelines suggest reserves of 5% for secondary schools; 8% for primary schools and I would suggest perhaps 10% for the smallest rural primary schools. However, the Minister in his answer to Frank Dobson’s question referred to schools holding one month’s expenditure as the test of solvency. That equates to just over 8% of annual revenue, so probably a bit high for a large secondary school since academy financial years mirror the school year so salaries are secure for the whole of an academic year.
Today Children’s Services Weekly has reported that Cambridgeshire faced a large increase in home to school transport costs due to more staying on after sixteen and increased SEN transport costs. This highlights the dilemma facing our education system: putting the funding where it is most useful. Certainly sitting idle in schools bank accounts because there might be a rainy day at some point in the future, is a waste of public money. As regular readers of this blog know, I dislike revenue spending being saved and turned into building projects for future pupils. The money is, in my opinion, for the education of the present generation not for their younger brothers and sisters.
Personally, I think the government should now publish the revenue balances of all academies in the same manner as they do for other publicly funded schools. They should also measure overheads paid to academy trusts compared with local authority charges for similar services and those bought directly from the private sector. Protecting the education budget is one thing, but obtaining value for money is another and equally important duty.
As regular readers know TeachVac launches today. It was originally an idea to collect data about the labour market but now, like the disruptive retailers, it has been shown to offer significant saving while providing the level of management information any large organisation should possess about the turnover of its workforce. If you haven’t been to http://www.teachvac.co.uk do pay a visit and view the demo videos on both the schools and teachers sections of the web site.

Worrying reports for teaching

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Two new pieces of evidence that support the ‘NO FEES for trainees’ campaign launched by this web site at the beginning of January were published today. High Fliers, the organisation that has been monitoring graduate recruitment since 1995, updated its forecast for 2015 graduate recruitment to suggest the market is still growing and that Teach First will be the largest single employer of new graduates in 2015. But, they don’t count the 30,000 graduates entering training to be teachers in their survey partly because to do so would demonstrate how teaching dominates the graduate labour market.

The second piece of evidence was a research report by Income Data Services for the NASUWT on pay in teaching. This shows pay on entry falling behind. Governments have always been reluctant to accept that by imposing an extra year of unpaid preparation on would-be teachers that affects the decision of some that would become teachers when there are plenty of other graduate job opportunities. Making trainees pay fees just adds insult to injury and further reduces the incentive to teach. It have pointed out before that if the Ministry of Defence can pay trainee officers at Sandhurst, the DfE should be able to pay all trainee teachers rather than impost a levy on training through the fees.

With the labour market for graduates now recognised as buoyant, the fee remission is something that can be achieved quickly and relatively cheaply for government and could make a difference to recruitment. Yes, some individuals would have become teachers and be prepared to pay for the privilege, but the same is true for army, navy and air force officers, not to mention civil servants and many others in the public sector.  We don’t expect them to, so why teachers?

After the recruitment crisis of 2000-2003 teachers’ pay rose in relation to the private sector, partly because Ministers took the brakes off the progression through to the Upper Pay Spine. It may have been reasonable during the recession for public sector pay to be kept down, but once pay starts becoming uncompetitive something has to be done or a teacher recruitment crisis develops. The warning signs have been there since 2012, as readers of this blog know.

With most graduate jobs located in or around London traditionally it is in the capital that pay pressures have been likely to exert the greatest effect. But, with new businesses able to start in bedrooms these days and then turnover many thousands of pounds through a single computer pay and conditions have become a national issue that the government’s broadband strategy will only make worse.

Schools can offer what salaries they like these days, and we will try to monitor this trend. Schools may seek to use their reserves to offer higher salaries and savvy trainees will undoubtedly use the evidence from today’s reports to negotiate higher starting salaries, especially if they know that they are in a shortage subject. Schools that register their vacancies with www.teachvac.co.uk will be told about the size of the market and can respond accordingly.

At the end of this month we will know the initial recruitment figures for 2015 training places and can compare the situation with January 2014. Any deterioration will be bad news. Cut tuition fees now.