There are many mysteries in David Blunkett’s Department for Education, but the greatest of them all is this: where has all the money gone?
Just over 18 months ago, on July 14 1998, Mr Blunkett announced a spending bonanza for schools. “The government is providing an additional £19 billion for education over the three years from 1999 to 2002,” he said. This was a very great deal of extra money; the annual budget for the entire educational establishment in the whole of the United Kingdom in 1998 was only £38.3 billion.
Mr Blunkett declared that this was “an historic day for education and for the country” and “the fulfilment of our pledge that education would be our number one priority.” These resources, he explained, would transform standards in the education service, boost literacy and numeracy for those under eleven, cut truancy and exclusion by a third, and give half a million more people access to higher and further education. More than that, he went on to pledge that this extra £19 billion would “give everyone in our society the opportunity to realise their full potential.”
Ever since then, Mr Blunkett has pointed repeatedly to this extra £19 billion as the touchstone of New Labour’s commitment to Britain’s schools. When he wrote for the Guardian in reply to the first part of this series, for example, he said: “Of course, our education policy is backed by substantial extra resources. The extra 19bn over three years is real.”
Eighteen months after the announcement, there is little sign of this torrent of extra resources sweeping through our schools and colleges. On the contrary, we have found that the education budget is so tight that three months ago, Mr Blunkett’s officials were forced to make emergency changes to keep local education authorities in the black. And when we conducted our own survey of local authorities, all but one of them reported that they had schools whose budgets were locked into deficit. Leeds, for example, said that 68 of its 299 schools are in deficit; Somerset has 32 schools in the red, with a total deficit of £776,000; Northumbria has 34; Staffordshire has 29; Rotherham has 39.
So where is the £19 billion? Maybe it is already in the schools and we have simply failed to observe it. Maybe it is on its way down the pipeline and will arrive any week now. Or maybe the truth is that there never was an additional £19 billion for education. Maybe the truth is that Mr Blunkett’s £19 billion is largely composed of magical money, literally billions of pounds which have been conjured out of thin air by trickery – double counting, treble counting, several different book-keeping manoeuvres and a steady stream of fundamentally misleading public statements. Watch closely and you can see the conjurer at work. The first trick is the biggest.
Ever since the birth of inflation, government departments have been increasing their spending each year. When David Blunkett made his grand announcement on July 14 1998, he was reporting the results for education of Gordon Brown’s Comprehensive Spending Review, which had laid down a budget for every Whitehall department for each of the final three years of the parliament. The existing budget for UK education, for 1998/9, was £38.3 billion. As a result of the CSR, Mr Blunkett was able to announce that this would rise, in 1999, by £3 billion; in 2000, by £3.5 billion; and finally, in 2001/2, by £3.2 billion. That was all he announced. But, of course that adds up to only £9.7 billion. Where was the rest of the £19 billion? The answer is that it does not exist. Contrary to Mr Blunkett’s description of his £19 billion as ‘real’, nearly half of it is manufactured by a single book-keeping trick.
It works like this. You take the increase for the first year and you say “Well, if I pay this in the first year, it will become a permanent part of the budget, so I will still be paying it in subsequent years when I make further annual increases, so I should carry on counting it as an increase each year.” This is not the way that any British government has previously accounted for its budgets. Carl Emmerson of the Institute for Fiscal Studies says it is ‘misleading’; David Heald, professor of accountancy at Aberdeen University and a special advisor to the Treasury Select Committee, says it is ‘confusing’ and that “most people were astounded by it, there is no precedent for it.”
But, for Mr Blunkett, the result was simply excellent. In Year One, he had a rise of £3 billion. In Year Two, he had a rise of £3.5 billion but he added in the £3 billion which he would still be paying from Year One and called it a rise of £6.5 billion. Then he came to Year Three, when he had a rise of £3.2 billion, but he added in the £6.5 billion which he had already committed to the budget in the first two years and called it a rise of £9.7 billion. Then he stood back and added the whole lot up – £3 billion plus £6.5 billion plus £9.7 billion. A £19.2 billion bonanza.
In principle, there is nothing to stop the government pursuing this creative arithmetic for every subsequent year. For 2002, for example, Mr Blunkett might announce the lowest increase in education spending for years – say, a meagre £2 billion. But, by then he would be able to count his 1999 money four times, his 2000 money three times, his 2001 money twice. And so his meagre £2 billion would become a super soaraway mega-rise of £30.9 billion. If he is still running education at the end of a second Labour parliament, Mr Blunkett will be in a position to announce annual rises which will wipe out the debt of whole continents.
This analysis cannot be news to Mr Blunkett or, indeed, to the chancellor of the exchequer, Gordon Brown, whose officials dreamed it up, for this is not the Guardian’s discovery. The wizardry in the arithmetic was spotted within two weeks of the original announcement by no less a source than the Treasury Select Committee. This committee of MPs interviewed all of the key people who had been involved in delivering the Comprehensive Spending Review including Gordon Brown and his then chief secretary, Alistair Darling; they also took advice from three independent experts in public finance. Despite the fact that this committee is dominated by Labour MPs, they filed a highly critical report, dated July 27 1998.
In the report – which received virtually no public attention at all – the MPs took one look at David Blunkett’s £19 billion and saw straight through the figures. They came to two conclusions about this and about a comparable stunt with the health budget. First, in the most courteous terms, they told the government to stop playing with the numbers: “We recommend that, for the sake of transparency, in future the government should refer to annual increases over the previous year, rather than a cumulative total.” Second, they noted how the media had “faithfully reproduced” the misleading numbers and stated their own view: “There is no cash bonanza of the type which newspaper headlines might suggest.”
The truth is that for his first two years in power, Mr Blunkett actually invested less in education than the Tories had been and, by the end of this Parliament, with all of his increases in place, he will still be only marginally ahead of the Tory level of spending – a level which he used to describe as ‘miserable’. This was uncovered by researchers in the House of Commons library who reviewed the pattern of funding for education throughout the entire period from Margaret Thatcher’s first day in power, in April 1979, to John Major’s last day, in May 1997, and worked out the average annual rise for the Tory years.
They projected that forward for the five years of this parliament and compared the result with Mr Blunkett’s budgets (even though, as we shall see, these figures are themselves questionable). They found that in his first year, (looking at England alone) Mr Blunkett spent £324 million less than the projected Tory level. In his second year, he undershot them again, by £323 million. In the current year, 1999/2000, Labour have finally begun to nudge ahead of Tory spending levels, with an increase of £770 million; but even in the fifth year, with the maximum effect of their new budget, Labour will still be spending only £3 billion a year more on education in England than the Tories would have done if they had stayed in office and pursued their ‘miserable’ pattern – £38.8 billion compared to the £35.8 billion projected for the Tories. The additional £19 billion is nowhere to be seen.
One of the few MPs who has woken up to what has been happening is Phil Willis, the Lib Dem spokesman on education, who has been bombarding Mr Blunkett with parliamentary questions. “The education bonanza is just an old-fashioned con-trick,” he said. “Ministers have been evading my questions. When we asked about the delays, civil servants told my staff that I had tabled ‘the questions from hell’. If Labour really had a record to be proud of, the truth would not hurt so much.”
Even though the Treasury select committee’s alarm call passed almost entirely without notice in Parliament and Fleet Street (coverage consisted of part of one short story in the Scotsman), there can be no doubt that Mr Blunkett’s officials and ministers know that their £19 billion claim was found to be bogus. This is not simply because the select committee report threatened to tear the guts out of their spending claims, but also because one of the Labour MPs who sat on the Treasury Committee and endorsed that report was Charles Clarke who, only 24 hours after publishing it, became David Blunkett’s Minister for Schools. None of which has stopped the Secretary of State for Education, his officials and his ministers from continuing on every possible occasion to mislead the public and Parliament with the same phoney figure.
But this is not the end of the conjuring. Not even nearly. For example, not content with the magical conversion of £9.7 billion into £19 billion, Mr Blunkett and his ministers have indulged repeatedly in a second kind of trickery, in which they have recycled money through a sequence of different announcements, each time pretending that they are unveiling new spending when, in truth, they are simply delivering old money in new clothes. The distortion can be huge. Once again, if you watch closely, you can see the sleight-of-hand.
On June 26 1997, the DFEE announced they would spend £100 million to fulfill Labour’s pledge to cut the size of classes for infants. Five months later, on November 17, the then Schools Minister Stephen Byers announced the release of £22 million to cut infant classes. But, in truth, this was part of the original £100 million which had already been announced. Eleven days later, Mr Byers announced the spending of £100 million to cut infant classes. It was the same money again. Two months after that, on February 12 1998, Mr Blunkett himself stepped forward to announce the spending of £22 million on cutting infant classes. If anyone was beginning to become suspicious, they may have been reassured that Mr Blunkett explicitly stated that this was new money, referring to “the £22 million of Standards Fund money that I am announcing today…” The truth, however, is that it was the same money all over again. The combined implication of the four statements was that the government were releasing £244 million; in fact, they had released only £100 million.
Sometimes, in the small print at the end of the statement, the department acknowledges the truth. Invariably, this does not make its way into press reports and invariably ministers do nothing to correct the misleading impression that is left. In this same way, the department has also recycled its PFI funding. A year after David Blunkett announced that schools would receive £1 billion of PFI credits, the department issued a statement which began: “Schools will receive a £1 billion private finance boost, Schools minister Jacqui Smith announced today.” It was the same money. They have done it with the Sure Start scheme for pre-school children, with computer schemes for teachers, the national numeracy drive and computers for poor families. David Blunkett announced £575 million of capital support for local authorities and Voluntary Aided schools. Three weeks later: “Schools minister Charles Clarke today announced allocations to Local Education Authorities and schools of £575 million…”
The distortion in some of the recycling is breath-taking. On November 25 last year, for example, Mr Blunkett found an extra £64 million for local education authorities and also saved schools some £90 million by allowing them to delay new contributions to teacher pensions. This net improvement of £154 million was announced by his department with the following words: “An increase of £1.8 billion for local education authorities in England was announced by Education and Employment Secretary David Blunkett today.” Mr Blunkett had managed this huge leap by recycling £1.6 billion of funding which, so far from being ‘announced today’, had been revealed and repeatedly discussed for up to 16 months.
The Press Release Trick has added layers of confusion to the original double and treble counting, but now, if we dispel Mr Blunkett’s illusion that he is constantly announcing new money, we come back to his £19 billion; and if we also dispel the multiple counting, we can see that all he is really offering is an increase of £9.7 billion over the last three years of the Parliament. But no – he is not offering even that much.
For a start, he has taken no account of inflation in his figures. In real terms, according to the House of Commons library, in 1997/8 prices, Mr Blunkett is actually talking about an increase over these three years of £1.9 billion in 1999; £2.3 billion 2000; and £1.9 billion in 2001/2. In other words, his £19 billion bonanza now shrinks to only £6.1 billion. Even that would be a substantial increase, particularly in comparison to the Tory years, but look more closely.
In order to work with the figures which are publicly available, we have to forget for a moment that Mr Blunkett has ignored inflation and go back to the three-year rise of £9.7 billion. Now, ask two questions: first, how much of this money is real and not simply the result of yet more book-keeping stunts; and, second, to the extent that it proves to be real, how much of it is additional funding and not simply the extra cash which is needed to keep pace with new demands – not just inflation but rising pupil numbers, new pension obligations and so on?
The conjuring is well concealed. While the DFEE insists on transparency from others, its own budget remains opaque. The department, for example, claims to have no information at all about £1.6 million of this money which is ear-marked for education in Scotland, Wales and Northern Ireland. It simply disappears off the books. But we can still try to trace the lion’s share of the rise, the supposed increase of £8.1 billion which Mr Blunkett says will bring such rewards to education in England from 1999 to 2002. The short story is that there is some extra money here, but the political claim easily overshoots the reality. Although the DFEE’s lack of transparency makes it impossible finally to put a figure on the truth, it is clear that the real new benefit turns out to be substantially less than £8.1 billion. The money is to be paid out under three headings.
The first part of the £8.1 billion increase which Mr Blunkett claims to be spending in England is £1.2 billion for capital works – ie repairs and new buildings. In a way, this is a repeat of the Press Release Trick – real money dressed up in hyperbole.
The government’s problem with the physical fabric of schools is immense. Estimates of the cost of repairing and replacing buildings which were neglected during the Tory years run as high as £20 billion. A 1995 survey found 600 primary schools still using outside toilets. John Lennon’s old school in Liverpool still uses a temporary canteen that was erected during the last war. Engineers have advised Bradfield Comprehensive in Sheffield to put a wind gauge on top of their mobile class rooms so that they can evacuate the children before a storm takes the rotting rooves off.
This £1.2 billion is part of a £5.4 billion programme for capital works over the next three years which was announced by Mr Blunkett in November 1998. In its flourish of optimism, the announcement echoed his claims for the £19 billion: “This investment could enable major repairs in thousands more schools… This substantial investment… transform our schools… a new beginning… regenerating local economies and boosting the surrounding communities.”
Anyone who heard this announcement would be forgiven for believing that the government was going to invest £5.4 billion in capital works for schools over the next three years. However, they would have been wrong. Schools ministers have since recycled the announcement, claiming explicitly that the government is investing this money. But they are not.
What the government is actually investing in school buildings over the three years is only some £1.735 billion: £1.085 billion from the New Deal for Schools, announced by Gordon Brown in his 1997 budget as part of his windfall tax; and a further estimated £0.65 billion in cash grants for voluntary aided church schools and former grant maintained schools. The rest of the £5.4 contains more magical money and a degree of exaggeration.
£0.8 billion has been conjured out of thin air. Contrary to being an investment by the government, this money will come from the hard-pressed local authorities – if it comes from anywhere. Contrary to being real cash, it turns out to be what the DFEE describes as a ‘notional’ contribution – a Whitehall estimate of money that the local authorities might be able to come up with by selling land and buildings or by diverting cash from the rest of their education budget or from other programmes. Or they might not. The figure is there; the bold announcement is made; only time will tell if the cash materialises. And none of it will come from the government.
The remaining £2.9 billion does at least represent a contribution from central government, but it is not cash. It consists of ‘credit approvals’ and ‘PFI credits’ – ie permission to borrow cash, either from the Public Works Board or from private finance partners. Under PFI, for example, the government are saying that for each of the three years, LEAs can take part in PFI projects worth £350 million. What the government is actually investing is nothing like that – in the ten months of this financial year, for example, they have spent only £6.28 million on PFI in schools.
The permission to borrow, supported by payments from Whitehall, is arguably a real asset to local authorities although these schemes – particularly the PFI ones – are far more complex than simple cash transactions. A group of Cardiff schools, for example, who are desperate for PFI funding for new buildings, have been turned down flat. Some schools and councillors are deeply suspicious of handing over ownership of their school buildings to private financiers. Others have engaged in expensive and time-consuming presentations in an attempt to secure approval for PFI schemes. As with the notional LEA money, it is too soon to know how many of these credits will actually materialise. With only two months of this financial year to run, schools have taken up only 53% of the PFI credits on offer for the year.
Most of this £5.4 billion programme of cash and borrowing sits outside the £19 billion scheme – it cannot be presented as new spending by the DFEE. Only a £1.2 billion slice fits. This consists of some cash, in grants for voluntary aided church schools and former grant maintained schools and also for higher and further education and special projects. But there is no new cash for mainstream LEA schools, only credit approvals. The bottom line, however, is that, despite the misleading hyperbole and despite the fact that there is not nearly as much real, new cash as the government has claimed, the final outcome is that capital projects in schools and colleges are likely to receive from one source or another something close to the extra £1.2 billion which the government has quoted. The same cannot be said of the second heading of funding in the supposed increase of £8.1 billion.
This is an extra £3.6 billion for English local education authorities to spend over the last three years of the Parliament. This is the core of education funding: a school gets its entire annual budget from its local authority. But how much of it is real and new? Here, Mr Blunkett is performing the political equivalent of cutting his lovely assistant in half with a saw. It’s such an old trick that the audience really ought to be able to see through it; and yet, it’s such a good trick that it still fools them every time.
What Mr Blunkett announced was an increase in the education Standard Spending Assessment and, even if his audience don’t understand, he knows that an SSA is not money at all but simply a Whitehall guideline to indicate the level of spending which the government says would be appropriate. The money is hidden away in the conjuror’s other hand, under a heading called Total External Support, which consists of Rate Support Grant and a central pool of business rates and various smaller grants, all of which are paid out to the local authorities through the Department of Environment. Don’t look at the SSA. Look at the TES.
You have to look carefully here, because governments use a traditional but highly effective concealment. They announce SSA guidelines for each area of local authority work – not just education but social services and road maintenance and so on. But when it comes to providing the money in TES, they don’t break it down. They simply announce a lump sum so that nobody can say with 100% certainty how much of the increase is available for any particular service. Nevertheless, you can see the gap in David Blunkett’s claim.
Senior figures in the DFEE assured us that, although the Tories had habitually announced increases in the education SSA and then failed to provide the cash to back them, this government was different. The entire increase was fully funded, they claimed. However, research commissioned by Phil Willis from the House of Commons library shows that this claim is simply untrue. For the first year of Mr Blunkett’s bonanza, 1999/00, of the 150 local authorities in England, only four received an increase in TES cash which matched the increase in their notional SSA guideline for all services. The 146 others were all left with an increase which was part fact and part fiction. Twenty of them received so little extra cash that even if they ignored every other service and passed all of it to education, they would still not have enough new money to pay for the supposed increased in education alone. The government had announced an increase in SSA for all local services of £2.065 billion, but they actually provided only £1.5 billion. Contrary to their claims, they had funded only 73% of the total increase they were announcing.
For the current year, Mr Blunkett claims, in the words of his original announcement, that “government is providing” an increase of £1.1 billion for the LEAs. But if you look at the cash which the government is really providing in TES and, for the sake of clarity, assume that local authorities spread it equally across all their services, it turns out that the government is providing only £0.8 billion extra for education. Over the three years, the £3.6 billion guideline would turn out to be backed by only £2.6 billion of cash. The problem here is not simply that Mr Blunkett was misleading us when he claimed that the government was providing the extra money; worse, the evidence is that the local authorities will struggle to provide the missing cash themselves.
They can raise council tax, but the government has warned them that it will intervene if any of them raises local taxes too high. They can raid their reserves, as they did during the Tory years. Staffordshire, for example, spent £16.2 million of reserves on education; Leicestershire spent £13.7 million; Merton estimates it spent £30 million. But for several years now, increasing numbers of councils have been reporting that their reserves are running out. Or they can skim money off the top of their other budgets, particularly social services. This, too, was a common tactic in the Tory years, but this, too, is becoming increasingly difficult. In order to protect services for vulnerable children and old people, there is now real pressure at least to stop the skimming and, in some cases, to reverse the flow and to start skimming the education budget to protect social services.
There is, nevertheless, on the face of it a cash increase of some £2.6 billion over three years in government funding for the LEAs. So the next question is how much of this money is new and not simply swallowed up by debt and rising costs?
Here, you need to understand that for years, Whitehall has been playing a game with the local authorities, holding down the SSA guidelines for education to a level which was so low that councillors were forced to spend more than the SSA in order to defend their schools – even if they were given no money to do so. This gap widened in the early 1990s to £2.9 billion a year – cash that the local education authorities were spending over and above the SSA guideline, even though the SSA guideline itself was not being fully funded by the Tories. But in the last six or seven years, more and more councils have been falling by the wayside, exhausted of extra cash, allowing their spending on education to slump back to the SSA level. This is the hidden story of Britain’s education funding which is concealed by the talk of rising SSAs.
In 1992, according to figures supplied by the House of Commons library, there were only two LEAs in England who were not spending above the SSA guideline. By the time David Blunkett took office, there were 30 who had been forced below the SSA level. Behind the annual announcements of increases in SSA, the amount which the LEAs actually spent on education was falling steadily in real terms. In 1992/3, LEAs were spending £25.6 billion. Adjusted to 1992 prices, the figure fell sharply in the next year, to £21.8 billion. This was partly because further education was taken out of local authority control, but it was also part of a real funding fall which continued in every single subsequent year. In 1994/5, LEA spending dropped to £21.2 billion, then to £20.6 billion, then to £20.3 billion. And all this time, pupil numbers were rising. By the time Mr Blunkett announced his spending bonanza, his own department’s figures showed that, in 1992 prices, the LEAs were spending only £19.9 billion; and, whereas they had once been spending £2.9 billion more than the SSA, they were now spending only £1.1 billion more than the Whitehall guideline. If Mr Blunkett wanted to avoid further cuts in LEA spending, he had to build any rise on top of the real level of spending, not on top of Whitehall’s notional guideline. He chose not to. He ignored the entire shortfall of £1.1 billion in LEA funding.
On the face of it, he was steering the LEAs into disaster. If the extra cash he was giving them really amounted to only £0.8 for the first year, then all of this increase and more was going to be swallowed by this hungover annual debt. The reality is that LEAs have carried on clawing in extra money – but some of them also have carried on cutting. This year, the first of Mr Blunkett’s bonanza, there are now 53 out of the 150 LEAs in England who are spending less than the SSA guideline on their schools. And all of the LEAs put together are now spending only £0.4 billion above the SSA guideline. There is no sign here of a reversal of fortune for the LEAs.
(Last summer Mr Blunkett savaged LEAs for failing to ‘passport’ enough of their cash to schools, holding back too much for central administration. The LEAs said his figures were grossly misleading; Mr Blunkett continued to savage them. But that is a separate argument. The figures which have been falling are the total figure for LEA spending on education, whether it is passported to schools or spent on central services.)
It turns out that this lingering debt is only the first of a list of unacknowledged costs which will soak up Mr Blunkett’s limited extra cash. This was spelled out to Mr Blunkett’s department at the end of last year when local education authorities in England and Wales submitted a report – which the Guardian has seen – in which they explained in black and white that they did not have enough cash for the coming financial year, 2000/1. Mr Blunkett was suggesting (as part of his £3.6 billion increase in SSA over three years) that they spend an extra £1.211 billion for the year and that this would allow them to raise standards, but the LEAs complained that – even supposing they had enough cash to fund this increase in SSA – it would not allow them even to cover debts and unavoidable changes in their basic costs.
To close the remaining gap between SSA guidelines and real spending, the report said, they would need £388 million; plus £250 million for ordinary price inflation; £140 million for an increase in pupil numbers; £20 million for an increase in children with special needs; £125 million for an increase in employer contributions for teacher pensions; and £150 million for Mr Blunkett’s new pay incentives for the best teachers. That long list left them with an increase of only £138 million for the year. And they had still allowed nothing for the annual teacher’s pay rise (which has since been costed by Mr Blunkett at nearly £400 million); and, crucially, nothing at all to fund any improvement in standards. Mr Blunkett’s officials disputed some of the numbers, but the embarrassing fact remained that right in the middle of Mr Blunkett’s widely advertised three-year bonanza, the education authorities were heading for the red.
If you bear in mind that LEAs are not just partners but the sole source of mainstream budgets for schools, this was not only a financial problem for schools but a nasty political problem for Mr Blunkett. One official described the atmosphere in the department simply as ‘panic’. The LEAs were particularly alarmed that they were being expected to take £150 million out of their inadequate budgets to pay for the new pay incentives for teachers, even though they had been promised that this scheme would be funded separately. And so it was that – without explaining any of this background – Mr Blunkett wrote to MPs on November 26 last year to announce an increase of £64 million in grant and a £90 million delay in school contributions to teacher pensions. This was a radical shift in plans – an emergency move. “It was a complete surprise,” according to Neil Fletcher, head of education at the Local Government Association, “although we were glad they admitted that their figures were wrong.”
There is no torrent of cash flooding through the mainstream of education; essentially, the same old drought continues. In Buckinghamshire, for example, the local authority last year (99) surveyed the state of local schools and found they would need a 13% real increase to meet their need for teachers and other running costs, but Mr Blunkett’s three-year increase gave them scarcely enough to allow school budgets to match rising costs. Looking at their buildings, they found they needed £6 million a year for repairs; they could afford only £2 million; and the backlog of building work had reached £21 million. Any plan to meet the needs of their schools, the council concluded, was “unlikely to be achievable” within Mr Blunkett’s spending limits. When the Association of Teachers and Lecturers surveyed a third of the schools in England and Wales last summer, they found that more than 2,000 teachers were about to lose their jobs for financial reasons, while others were holding on only because schools were spending reserves, cutting part-time hours and shedding support staff.
Some local authorities are claiming that, allowing for rising costs, there is simply no real new money for them at all. The system is constructed so as to make it impossible finally to prove or disprove the claim. The funding of local government is notoriously complex and produces irrational discrepancies between similar areas and so it may be that some local education authorities will receive real, new cash from central government but it is clear that the £3.6 billion boost which Mr Blunkett advertised is a political mirage.
There remains one final category – £3.3 billion of direct spending by the Department for Education. Here, at last, there is real additional money, unclouded by hyperbole or conjuring. Here, at last, there is some ground for Mr Blunkett to congratulate himself. And yet, even here, the story is not quite the one that he likes to tell.
Part of this direct spending does not go on education at all. It pays for Ofsted and for the central running costs of the DFEE. The department is the only area of British education which is exempt from the scrutiny and regulation which it has imposed on those below it, and local authorities have complained that while the department canes them for spending no more than 3% of their budget on central costs, the department spends nearly 7% of its own budget on its own administration, a trend which it has appeared reluctant to admit. For example, when Phil Willis asked how much of the budget for Education Action Zones had been spent on administration, he was told the answer was £500,000. When he asked a few weeks later how much of the budget for EAZs had been spent on a specific list of administrative activities, he was told the answer was £1.14 million – nearly ten per cent of the entire EAZ budget. Willis went on to discover that the DFEE’s spending on consultants has soared by more than £2 million during the current year, and that a single conference to discuss the New Deal for Schools in Birmingham had cost the DFEE more than a quarter of a million pounds.
The element of spending which does represent a real increase in spending is targeted grants – the Sure Start scheme for pre-schoolers, the programme to reduce class sizes, Education Action Zones and, most important, the Standards Fund, a rapidly expanding collection of cash which is parceled out by the department on some of Mr Blunkett’s most high-profile projects including the literacy and numeracy schemes, the training of ‘superheads’, the programme to reduce truancy and exclusion, the National Grid for Learning plan to provide computers for all schools. This year’s Standards Fund is worth about £700 million, an increase of £300 million over last year. Next year, it is due to rise by a further £400 million, with a comparable rise expected in the final year of the Parliament. During the three years of Mr Blunkett’s bonanza, it will have risen by about £1 billion. This money is real, it is new, and, although it accounts for only about 5% of the cash received by schools, we found when we surveyed LEAs, that it was cited repeatedly as a liferaft in the ocean of debt. However, there are two real problems with the way in which Mr Blunkett has administered the grants.
The first is that this system of grants not only bypasses the school budgets which are the core of education, but actually steals money away from them. This is because LEAs have to pay for most SF grants by providing up to 60% of their own matching funds: for almost every pound they accept from SF, they have to find up to 60 pence from somewhere else in their budget. This year, they are expected to pay out £400 million in matching funds. Next year, as the SF rises, they face a bill of £600 million. Almost all of the LEAs who replied to our survey reported that they were struggling as a result. Brent has decided to turn down grants in order to protect the budgets of its schools; Islington says it has accepted the grants but may have to start top-slicing its school budgets to find the matching funds; Cheshire has already cut its school budgets by 5% to pay for SF grants; Derbyshire has had to divert £1.8 million from its school budgets; Stockport has had to cut its central services by £360,000. The director of education in Worcestershire, Julian Kramer, told us that as a result of pressure from the Standards Fund, “we can point to significant evidence of schools who are cash-strapped for almost everything except training”.
The second problem is that this money is failing to reach the most needy schools. The department has consistently claimed that it wants to provide, in the words of Schools Minister Estelle Morris, “targetted support for the areas of poverty”. There are one or two programmes, like Excellence in Cities, which are specifically focussed on deprived areas. However, most SF grants are distributed on a simple formula which takes no account of deprivation and the rest, as well as grants for some repairs, are distributed on a bidding system. When the former Lib Dem education spokesman, Don Foster, extracted figures from the department, he found that there was no correlation at all between successful bids and areas of poverty. Indeed, the richer authorities tended to do better, apparently because they had more staff and resources to prepare their bids.
Mr Foster found that schools with the most affluent pupils (less than 10% eligible for free meals) were receiving grant worth between £326 and £1,264 per pupil, while schools with the most deprived pupils (more than 40% eligible for free meals) were receiving no more than £791 per pupil. Local authorities in affluent areas, like Rutland and the Isles of Scilly (both with only 6.4% eligible for free meals) had reaped more than £1,000 per pupil, while areas like Sunderland or Sefton, with four times the rate of eligibility for free meals, had been given only £298 and £317 respectively. There was no match between the funding and the need for it. As a DFEE official explained at a Treasury workshop last year: “The simple truth is that those who start with an advantage are usually better placed to exploit any new system.”
Don Foster’s research also revealed that overstretched schools and local authorities were wasting considerable time and money in unsuccessful bids. During Mr Blunkett’s first two years, there were 25,353 bids but only 8,972 were successful. Oxfordshire made1,015 bids and saw 1,002 of them fail. Blackpool put in 212 bids and succeeded with only 10. These figures were shocking partly because of the unfulfilled need which they indicated, but also because of the scarce resources which were being lost in the bid process. In many cases, Foster found, local authorities had hired consultants who would skim 10% off the top of any grant which they succeeded in landing.
The torrent of new money turns out to be little more than a trickle, with new cash being soaked up so fast that it scarcely leaves its mark. You can see this in the experience of St Giles’ primary school in Coventry, where they won a grant from the Standards Fund to buy 15 new computers – and then had no money to make the IT room secure or even to pay for the sockets to plug them in. Eventually, they raised extra funds with bingo and a Christmas Fayre. You can see it on a larger scale in one of Mr Blunkett’s proudest achievements, the highly successful scheme to cut the size of classes for infants, aged five to seven. By 1999, the Prime Minister was pointing to impressive results with 100,000 more infants in classes of under 30. What the Prime Minister did not say was that children in every other age bracket – nursery, junior and secondary – were all being taught in classes that were even more overcrowded than when New Labour came to power. Last year’s figures showed the number of children in classes of more than 40 had doubled since David Blunkett took over; the number in secondary classes of more than 30 was the worst for 14 years; secondary classes generally were more overcrowded than they had been for 20 years.
And this trickle of new money over the last three years of the Parliament is flowing into a system which was made marginally worse during Mr Blunkett’s first two years. Despite Labour’s election promise to make education their first priority, the department’s share of government spending actually fell during these two years, from 11.8% to 11.7%. Ten years earlier, when Kenneth Baker was running the department, he had put 12.3% of government spending into education. By the end of Mr Blunkett’s first year, spending per secondary pupil, in real terms, had fallen from £2,550 in 1992 to only £2,380. During his second year, spending in real terms was frozen while pupil numbers rose with the result that spending per secondary pupil fell to its lowest since 1989. Looking back at Blunkett’s first two years, the Educational Publishers Council reported last year (99) that Britain was providing its pupils with only £18 of books each year, less than any other country in Western Europe.
The reality is that while Mr Blunkett is entitled to point to his increase in Standards Fund and other central grants as a real bounty for British education, almost all of the rest of his £19 billion is an illusion, and the grants alone have not begun to reverse the historic underfunding of Britain’s schools and its aggravation during his first two years. The idea that his original announcement of the bonanza was an historic day which would “give everyone in our society the opportunity to realise their full potential” was just another flourish from the man with the magic wand.
Additional research by Helene Mulholland
