Department for Education
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Securing the schools system for the future - Ed Balls

Children’s Secretary Ed Balls yesterday called for a new drive in schools and local authorities to invest public money effectively, while securing frontline services post-2011.

Mr Balls also announced that he would invest £12 million in new ‘smart’ meters to give schools real-time digital information about their electricity use from January next year thereby helping children learn about climate change, carbon reduction while at the same time helping schools with financial management.
Speaking at the Specialist Schools and Academies Trust annual conference today (SSAT), the Secretary of State said he was proud that the Government’s record funding over the last decade had transformed school standards and children’s lives.
But he challenged the schools sector to have an honest and vigorous debate about making the best use of resources in the face of more challenging public finances.
And he said that headteachers, governing bodies, schools' forums and local authorities needed to work closer together urgently to plan properly for the coming years.
Mr Balls said that it was not for ministers to micromanage individual headteachers’ budgets but he pointed to a discussion document, Securing our future: using our resources well, published today, which sets out four main areas where finances could be run more efficiently: 

  • greater value for money from sharper procurement, collective buying and better use of technology
  • greater efficiency through the wider adoption of partnerships and shared services between schools
  • stronger strategic financial planning – including through greater use of school business managers and more effective financial management skills
  • more effective use of external advice, already available, in strengthening financial management – and setting out a clear future role for central and local government and expert School Improvement Partners in supporting frontline delivery. 

And he urged schools to use the support available now to help them make the right financial and investment decisions. This includes: 

  • a free programme of financial consultancy support for every maintained school in England – giving schools tailored advice on planning and managing their workforce and management; strategic management; how schools can link with their neighbours; and more effective procurement
  • proactively using the Department’s financial benchmarking service – which allows schools to compare their patterns of expenditure against schools operating in similar circumstances – with 10,000 schools already signed up
  • tapping into the Department’s procurement advice and signing up to the online procurement trading system OPEN – already 54 local authorities are signed up and 10,400 schools expected to be using it within a year
  • signing up to the Schools Recruitment Service, launched in October 2009 – an online system that helps to save schools time and money when recruiting permanent leadership, teaching and support staff
  • using the new Let's talk resources website, which signposts all the national resources available for schools – with clear case studies and to share expertise across the sector.

He announced that there would be a national event early in the new year for heads and local authorities, jointly led by the Department and National College for Leadership of Schools and Children’s Services, to draw together the sector’s collective financial expertise and experience –  followed by series of regional and local events.
The smart meters announced today will give ‘real-time’ digital read outs on how much electricity a building is using second-by-second - clearly demonstrating the impact of switching on and off individual pieces of electrical equipment, computers and lights on easy-to-read display monitors.
The move will be part of a major campaign launched early next year to slash demand for energy and change teachers and pupils’ behaviour in using electricity in every school in England - alongside ministers’ responses to their Zero Carbon Task Force’s final report, which will set out a clear roadmap to cutting carbon emissions in schools
Research by the Carbon Trust shows that smart meters and wider behavioural changes in using energy could see 10 to 15 per cent cuts in fuel bills – meaning the average one-form primary school could save up to £700 a year and the average 900-pupil secondary school more than £3,000 a year on fuel bills alone, potentially releasing millions of pounds across the entire system.
Writing in the foreword of today’s publication, Securing Our Future – Using Our Resources Well, Mr Balls said: 

The last twelve years have seen sustained increases in spending on education and as a result school funding is at its highest ever level.  Investment in the school workforce, school buildings, one to one tuition, continuous professional development and many other areas has transformed standards and this summer we saw the best ever examination results.  
Together we have opened up opportunities for thousands more children and young people.  I am committed to ensuring that this progress continues and that despite tougher times vital frontline services are maintained.
Now more than ever we need to ensure we are getting real value for money from our investment.  We will only achieve efficiency savings while at the same time continuing to improve school standards and raising levels of achievement by working together. 

I am clear that outcomes for children and the ambitions set out in the Children’s Plan are of paramount importance and to that end my priority is protecting the front line: the purpose of identifying efficiencies is to release resources to support those services. If we prepare now we can protect our frontline priorities such as the additional 41,000 teachers and 120,000 teaching assistants that are working in schools and our one-to-one tuition and school-building programme.  The National Agreement and re-modelling have led to a transformation in the schools workforce. I am committed to the independent pay review process but we will have to ensure that pay is affordable.

I am also clear we must support and facilitate heads and school leaders: they are best placed to decide how to deploy their resources to ensure the best outcomes for children.  In issuing this paper I want to facilitate a continuing discussion about how, together, we can secure greater value for money because it is an essential part of the job for all of us who are charged with spending public money, and it is the key to helping even more children live better lives.   
This paper sets out a number of broad areas we feel offer the greatest scope for savings and that we would like to see discussed further and where schools can learn from the experiences of other schools and share best practice.  These areas include the opportunities for schools to work in federation; to use their collective buying power to get better procurement deals; to make the best use of money currently held in school balances and at how to spread best practice in the use of resources.  I believe that in these areas, working together, we can ensure that we are making the best use of the resources we have, but there may be other areas that schools feel are important and I would welcome further suggestions and proposals.  
It is in order to get the maximum value from every pound we spend on the school system that I am taking the unprecedented step of promoting a national debate with schools, school leaders and their colleagues about what steps we can all take to ensure the best use of our school resources in the coming years. I see this as a way of improving the tools schools have available to them for securing greater efficiency, not the creation of a top-down menu of near-instructions. The aim is to help and support, not to direct.

Further information

Securing Our Future – Using Our Resources Well is published at: 
The support package for schools includes:  

  • Free national consultancy programme for every maintained school in England – giving tailored, timely advice to schools that request help and guidance on how they can make the best use of their resources:
  • Wider school workforce – how schools plan and manage their staffing:
    • leadership – how much time and experience school leaders have to focus on delivering value for money
    • strategic management – how schools approach financial and resource management, including linking the two with school improvement
    • collaboration and partnership – how schools work together - and with other organisations - to improve outcomes together
    • challenge and governance – the role of the Governing Body in supporting delivery of value for money;
    • procurement performance – how schools approach procurement. 

In this academic year a developed offer will be available to schools. Topics that are covered will remain the same but the delivery method will vary. One day consultancy support for an individual school is as offered before. However, an additional day of contract review is offered for those schools with particular issues with procurement; carrying out work on behalf of the Education Procurement Centre.
A tailored workshop is offered for a group of schools, usually within the same local authority which would focus on particular local issues and also encourage collaboration between schools.
A total of three days consultancy for schools is also offered in particularly challenging circumstances as identified by the local authority (this might be for example that the school is in, or is in danger of reaching a large deficit).
Furthermore, the programme is designed to deliver workshops to groups of schools – should this be required
We have now reached over 1000 schools and feedback has been positive, with 96 per cent saying they’d recommend the visit to other schools. 
For more information please see the Consultancy for Schools website and the Financial Management Standard in Schools site

Practical help to improve school procurement, offering better value for schools. This support includes:

  • OPEN, an online procurement system for schools designed specifically to make the process of buying goods and services faster, easier and simpler. Fifty-four local authorities are already actively involved in implementing OPEN, and 10,400 schools are expected to be trading through the system by December 2010.
  • Building procurement capability and capacity in schools through online training and guidance. This includes BuyWays, a free interactive e-learning course which has been developed for anyone involved in procurement in schools.
  • A team of people providing procurement advice and practical support to schools at a local level, identifying key savings and sharing knowledge of local procurement practice.
  • Working with major public sector buying organisations to find better ways of buying major categories of spend collaboratively.
  • The launch of the Schools Recruitment Service in October 2009, an online system that helps to save schools time and money when recruiting permanent leadership, teaching and support staff.  

Financial Management Standard in Schools (FMSiS)

The Financial Management Standard in Schools is a simple statement of what a financially well-managed school should look like, formalising what schools should already be doing. Ministerial expectation was that all Secondary schools would meet the FMSIS by 31 March 2007 and that all schools would meet it by 31 March 2010. We are on track to meeting this requirement. Schools will continue to be assessed (and re-assessed) against the current Standard.   
Consistent Financial Reporting (CFR) and Financial Benchmarking

This was introduced in April 2003 to allows schools to compare their patterns of expenditure against schools operating in similar circumstances (e.g. with similar levels of deprivation) It is a well used tool, with around 10,000 schools using it over the last academic year. CFR was introduced in Apr 2003 and the benchmarking website later that year so that common criteria can be used to compare schools’ income and expenditure.   
The benchmarking site allows schools to compare their patterns of expenditure against schools operating in similar circumstances (e.g. with similar levels of deprivation). It is a well used tool, with around 10,000 schools using it over the last academic year.  
The site allows contact between schools being able to identify the schools being used in the benchmark group.

Securing our future: Using our resources well sets out progress to date but proposes four main areas for greater efficiencies: 
Procurement and Technology

Almost all procurement is currently done at individual school level and in some instances by individuals with limited procurement experience. Better procurement can lead to significant savings and more sustainable and better quality goods and services in schools, and given that some £7 billion to £8 billion is spent annually by schools on non-staff expenditure so potential savings are significant.  Collective buying offers great scope for better value for money, and recent studies have shown potential in many areas – including ICT procurement, facilities management, energy contract, the use of supply agencies and photocopier contracts. DCSF has recently launched the OPEN online procurement platform to support schools’ in their procurement. To date 4000 schools have signed onto the system and 2600 schools are actively procuring through it. Savings derived from sharper procurement would be available for higher priority investment.

The huge investment of the last 12 years in information and communications technology in schools is an important area for review. In many schools the benefits realised from ICT are limited. Becta’s Harnessing Technology survey shows that only a quarter of all schools are using ICT effectively across all their business functions. Many other schools use technology imaginatively in some areas of their work such as tracking pupil progress, teaching in some subjects or communicating with parents. But in spite of some good practice, these schools are not deriving the full benefit. Becta’s self-evaluation framework gives schools a ready tool to help plan their use of technology more effectively to improve outcomes and efficiency. 16,000 schools have accessed the framework, and significant umbers are making progress. But better exploitation of ICT across the system would yield better outcomes at lower cost, especially where schools use it as a shared resource.
The use of energy needs to be considered alongside its cost to schools. Schools could achieve significant savings from energy reduction through simple changes in behaviour of those working and studying there. The Buildings Research Establishment (BRE) conservatively assessed opportunities for reducing energy demand from schools in 2006 and identified a number of management measure which can be implemented at little or no cost, such as good housekeeping practices associated with heating, lighting and general behaviour. BRE estimated that implementing these and other similar management measures could deliver seven per cent on fuel bills for a typical primary school and between 4 and 7 per cent for second schools. With English schools spending over £400 million per annum, the savings are potentially significant.  

Resource use and financial management

The White Paper makes clear that the better use of resources is essential to the implementation of the vision of the 21st Century School. As staffing on average absorbs about 80 per cent of schools’ budgets, the use and deployment of staff is a vital consideration in looking at effectiveness and efficiency in schools, as effective workforce remodelling shows. Many schools plan on an incremental basis building on historic plans. With budget constraints and ambitious aims for their pupils schools a more strategic look at the use of all their resources, human and material, to determine the optimum mix of resource for their circumstances is important. At the same time collaborative opportunities for getting better outcomes for their pupils and, where available, cost efficiencies in parallel should also be considered. Schools that fail to take a strategic view will find the delivery of their outcomes challenging.

Good financial planning needs skilled staff to support it, and schools have increasingly invested in higher levels of financial skills. Many secondary schools now have business managers, who bring expert skills in procurement and finance which National College research demonstrates can make a significant impact.  Improvements though have been uneven: for example business managers are less common in primary schools, but we believe they have a real contribution to make there too, albeit often on a shared basis. The National College’s work shows that a business manager for a school or group of schools can realise initial savings very quickly, and often deliver a significant surplus over the cost of their salary through a combination of cost savings and additional income. Business managers have the time and expertise to look carefully at the way a school uses its resources in a way that the head and other senior managers cannot afford the time to do. 
Partnerships and shared services
The White Paper places great emphasis on the improvements in outcomes for pupils that can arise from collaboration and federation. Schools are stronger when they work in partnership and are better able to meet all of their pupils needs. There are many benefits to schools from working in partnership and plenty of current examples of schools working together, for example on behaviour and sports or to increase the curriculum offer to pupils. Federations, hard or soft, allow our best leaders to share their knowledge and experience more widely across the school system, and are an important part of our approach to raising standards. We are currently consulting on a system of accreditation for providers seeking to run chains of schools. 
Federations should always be driven by local need and circumstances and the first priority must always be to ask whether they will improve outcomes for children. We do not believe it is right for federations to be centrally mandated, but we do want to explore ways in which federations can be encouraged and in which increased collaboration can be facilitated. This is why we have asked the National College to develop a national Leadership Models and Partnership Programme, which will support schools and Local Authorities to develop fit for purpose approaches. The National College’s new models of leadership website includes over 60 case studies of innovative and entrepreneurial leadership partnerships.
Federation has not primarily been driven by cost saving, but reduced costs can accompany improvements in outcomes, and must be welcome in a challenging environment for expenditure. There is firm evidence that opportunities for greater efficiency exist in federation and we want to ensure that this is maximised.  The Audit Commission’s Valuable Lessons report published earlier this year found that:

'While there may be increased costs through federation – for example, increased travel and integration of computer systems – there can also be significant cost savings, for example by:

  • making a broader curriculum more cost-effective
  • making joint appointments
  • achieving economies of scale, for example by aggregating purchasing
  • saving on planning and administrative time. (para 63)'

The report identifies examples of revenue savings of between 2 and 6 per cent in secondary schools.  Similarly, in small primary schools, the ‘Better Together’ research for DCSF published this year identified net savings from salaries of over £58,000 when an Executive Head was appointed across three small first schools.
Clearly the scope for savings from a federation depends on the way in which it is organised, as the case studies on federation show. We see federation as a growing trend in ensuring a better offer for pupils, and we need to derive savings from it where the design makes that possible.
Supporting schools - the role of local and national partners

School Improvement Partners
The White Paper clarifies the role and position of SIPs as the primary intermediary between schools and their LAs and as such key to interaction with schools. Their role is enhanced by the White Paper in parallel with a more devolved approach to school improvement. In particular the White Paper expects SIPs to have a wider role in brokering support.  SIPs’ leverage over weaker performing schools will be increased by making part of these schools’ funding for improvement contingent on the SIP signing off their schools improvement plans, and ensuring there is appropriate investment in improvement priorities.   The use of resource will therefore need to be a key part of their conversation with schools. This is a significant shift in the role of the SIP, and requires a cadre of SIPs with a wide range of skills and the ability both to analyse a school’s performance in a practical way and to coach the head and senior team in new ways of working. 
Role of the local authority

The role of local authorities as commissioners of children’s services is set out in the White Paper. A parallel issue is how much they should be involved in helping schools to make better use of their resources. Local authorities can support schools in a variety of ways: they have always been involved in supporting procurement and many are now engaged in the introduction of OPEN. They have a role in supporting the Schools Forum which can include the examination of efficiencies, and many have been actively engaged in fostering collaboration. The funding framework set by the local formula has a strong influence on schools expenditure, and can provide incentives and disincentives to more efficient resource use.
The role of DCSF
The White Paper describes a more devolved system with less being run from the centre. But DCSF still has an important role in supporting the system. The DCSF already promotes better resource use by schools through a number of its programmes. The DCSF benchmarking website is widely used by schools to check their expenditure pattern against their peers’. The current consultancy offer allows schools access to free consultancy on delivering better value for money.
The Carbon Trust has conducted a field trial of smart metering which indicated that "if properly used as a demand management tool, meters will reduce energy consumption and costs by between 10 per cent and 15 per cent".
It would mean that the average one-form entry primary of 210 pupils would see an annual saving of £630 to £700 pounds paying back the cost of the meter within 18 months; two-form entry primaries of 420 pupils would see savings between £1260 to £1470 with payback within 10 months and a 900-pupil secondary schools would save between £2700 to £3150, with payback within four months.
Overall costs per pupil are currently average approximately £60 per pupil, with anticipated per pupil savings between £3.00 to £4.50 - and when the social cost of carbon is factored in the annual cost benefit will be approximately 20% higher.
The Government has made significant steps to reducing carbon in schools

  • Announced £110 million specifically to install cutting-edge carbon reduction and renewable energy technology in more than 200 secondary schools undergoing major refurbishment over the next three years – most as part of the Building Schools for the Future programme (BSF). This was on top of the £21.9 billion capital investment in schools between 2008 and 2011, including £9.3 billion earmarked for BSF;
  • Introduced stricter design regulations meaning that energy use in new school buildings has already been slashed by 60 per cent on 2002 levels, thanks to stricter statutory regulations – which the Government is supporting with high-quality design guidance and advice;
  • Required all new school building projects to reach the “very good” standard on the internationally recognised independent BREEAM design assessment – which assess energy and water conservation, sustainable transport, low impact construction material use and biodiversity on school sites;
  • Developing a wider Carbon Management Strategy for the school system. This work is at an early stage and the Government is working with the Sustainable Development Commission and others partners to test feasibility and develop a practical strategy to reduce carbon emissions across the sector; and
  • Published the Sustainable Development Action Plan - "Brighter Futures - Greener Lives" last month, with supporting delivery plans outlining energy and carbon reduction management.

The 2007 Children’s Plan set out the Government’s long-term ambition to for all new school buildings in England to produce no carbon emissions at all from their day-to-day use by 2016. Ed Balls set up the expert Zero Carbon Task Force last year, led by respected architect Robin Nicholson, and set out their formal terms of reference.
It will give its report to ministers by the end of the year and the report and Government response will be published in the New Year.