Finance Committee, 20 Apr 2004

Meeting date: Tuesday, April 20, 2004

Official Report 281KB pdf

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School Education (Ministerial Powers and Independent Schools) (Scotland) Bill: Financial Memorandum

Agenda item 5 is consideration of the School Education (Ministerial Powers and Independent Schools) (Scotland) Bill, which was introduced on 29 March by Peter Peacock. To assist us with our scrutiny of the bill's financial memorandum, we have with us two witnesses from Her Majesty's Inspectorate of Education: Graham Donaldson is senior chief inspector, and Stuart Robinson is head of corporate services. I welcome them both to the committee. We will take evidence on the bill from Executive witnesses next week. This is an opportunity for the committee to ask questions of the inspectorate. Do the witnesses want to make a brief opening statement?

No, I do not think so. We have provided the committee with some written comment in advance, and I am happy to answer questions.

Okay. I invite members' questions on the financial memorandum.

Your policy document mentions the fact that although the initial draft suggested that the bill would be cost neutral, most of the respondents to the consultation felt that it would not be. As a result, the administrative costs that are associated with the bill are now detailed in the financial memorandum. Can you explain how those figures were arrived at, given that the initial judgment was that there would be no on-costs? How did the revision of the costs come about?

From the perspective of the inspectorate, two things are important in relation to the bill. First, we see the ministerial powers as a last resort; therefore, we regard their financial implication for us as likely to be minimal. Secondly, the process of inspection will not change as a result of the powers of intervention. The bill introduces a possible new end to a process that is already in being. Therefore, in looking at the financial implications of the bill, we are focusing on the extra piece of work that we might have to do to satisfy that final stage of the process. As I hope is clear in our paper, we anticipate that that work should be fairly minimal.

We are talking about an element that is to do with HMIE staff time, both for those who have been involved in the inspection and for more senior staff in undertaking any necessary additional work in going back to the authority or the school that has been inspected to perform final checking out of the nature of any referral that we make to ministers. As you will see, the figures that we propose are very small in the context of the inspectorate's total budget. I anticipate that the costs would simply be absorbed within our normal working budget, to which we are not seeking any addition.

Initially, it was assumed that the bill would be cost neutral, but we have teased that out a little bit more for the benefit of the committee and we have shown what it would mean for the reallocation of resources internally in the inspectorate.

I accept that the intention is that the ministerial powers should be used very sparingly, but I presume that there would be costs for local authorities if the powers were ever used. For example, costs might be involved if authorities were directed to provide a service that they were not providing. I presume that the Executive's view of those costs is that, as the authorities are funded to do that work anyhow, it is their failure if they do not meet their responsibilities and they should therefore find that money from within their own resources.

Yes. As I said, it is part of an on-going process. As we go through the process of inspection, we make recommendations that are related to improving the quality of education for young people. The ministerial powers would be used only if there were serious concerns about what was happening in an individual school or authority in relation to the quality of education that young people were receiving. Therefore, the expenditure that an authority would have to engage in would be an expenditure that it should have engaged in anyway to provide the necessary education that it should provide for the youngsters.

I have a question on the same topic. It concerns the point that is set out in paragraph 74 on page 25 of the explanatory notes, which relates to part 1 of the bill and the power of Scottish ministers to require action by schools or by education authorities. Paragraph 74 states the Executive's position, which I presume is your position:

"We do not associate any costs involved in implementing any action specified in a direction."

It goes on to state:

"Several authorities, in their responses to the consultation, identified potential implementation costs or costs associated with redistributing resources. We have examined this issue again and concluded that such costs would not be attributable to the Bill."

I presume that that relates to the point that was made by Dr Elaine Murray. If education authorities or schools have not done things that they should have done, that has nothing to do with the passage of the bill; they should have been doing those things anyway.

The committee has to take a view about public finances as a whole. Could you share with us the view of local authorities? I do not think that we have heard from them individually about the scale of whatever extra costs they might envisage to be required. Did any of the respondents put figures on their concerns, or did they just highlight general concerns? I would welcome some amplification of local authorities' concerns—although I appreciate that you are not a spokesperson for local authorities.

Nor am I a spokesperson for the Education Department—and I think that that line of questioning, about assumptions of costs to authorities, would be more appropriate for the department. That is not part of the inspectorate's direct engagement with the process.

That is fair enough—I just wondered whether you could flag up any information for us, before we speak to the relevant Executive officials. We can put that question to them next week.

I want to ask about some of the assumptions underlying the relatively small extra costs that the financial memorandum contains. I refer to table 2 of the memorandum, at page 30. The additional costs for HMIE in years 1, 2 and 3 are described as between £18,000 and £27,000, between £8,500 and £10,500 and £5,500 respectively. My understanding is that those costs depend on assumptions about the number of establishments that need to be covered. You have given estimates of between four and six establishments in the first year of implementation, and you cite a cost per school of £5,500. How did you arrive at the number of schools that it is assumed would be affected by the bill if it becomes law?

The additional registrations apply only to schools that now come under the scope of the registrar but which did not previously do so; that includes schools that have fewer than five pupils. At the moment, we have no engagement with places with less than five pupils, which are not defined as schools. The bill introduces the possibility of such establishments being brought within the registration process. The information that is available to us suggests that a very small number of schools that were not hitherto part of the process would be brought under the process in year 1, hence the range of four to six schools. It is hard to be sure but we are assuming that, thereafter, one additional school of fewer than five young people will be brought into the process per year. That is what underlies the costs that we have given the committee.

The fact that you are here is very welcome, Mr Donaldson. My constituency is Tweeddale, Ettrick and Lauderdale, which has had many excellent reports about its schools, although a number of reports have been made into the Scottish Borders education authority in recent years. If the improvements that have taken place had not been made, I would have thought that the inspectors might have needed to get involved, as the situation could have been one in which ministerial direction was required over the failure of a local authority to make improvements.

You say in your written submission that you anticipate that the powers would probably be used one or two years after the follow-up visits, should no improvements have been made. The timescale was much shorter in the case of the Borders, and your involvement was much deeper. If the powers in the bill are used, might that be done over a shorter period than is suggested, with greater or more in-depth involvement, which would mean that your costs could be considerably higher? Improvements had been made in the Borders, but if they had not been, we would have expected considerable costs to be incurred, and such costs have not been highlighted in the financial memorandum.

Under the current procedures, engagement with the authority continues following an initial inspection, and that was the case in the Borders.

We have a network of district inspectors, each of whom has responsibility for two authorities. After any inspection that we undertake, there is engagement between the district inspector and the authority on the improvement process. The inspection strategy in which we are now engaged is different from the one described, which was the process of inspection with follow-up after one or two years. We are moving into a situation where the normal strategy will be one of continued engagement with a school or authority, where that is justified.

Once again, that is not an additional cost resulting from the bill; it is a reconfiguration of our inspection strategy, which has already taken place. It is part of the proportionate approach to inspection that now characterises the way in which we work. When I talk about the bill being the culmination of the process, it is the culmination of that process. It is correct that that could mean that engagement in particularly serious circumstances could occur much sooner than a year or two years after an inspection, but that would be the case anyway, and it will be the case, irrespective of whether the inspection culminates in a recommendation to the minister.

Paragraph 87 of the financial memorandum states:

"The cost of registering a school to HMIE is estimated to be £5500 based on a school of up to 30 pupils."

Does that cost fall on the school, or does it fall on the inspectorate?

It falls on the inspectorate's budget. The figure is based on an additional inspection, which we estimate at £4,500, and a follow-up inspection about a year later, which we estimate at £1,000.

How does that relate to the figure of between £18,000 and £27,000?

The £18,000 is four times £4,500. It does not include the follow-up, because there would be no follow-up inspection in the first year. The £18,000 is four times £4,500, and £27,000 is the cost of six inspections.

Paragraph 88 states:

"The additional costs for follow-up inspections in the second year on the same basis would be between £4000 and £6000."

Where did those figures come from? How do they relate to the figures that you have given us?

If we inspected four additional schools in year 1, those four schools would be liable to follow-up in year 2. The £4,000 for four schools is £1,000 per school, which is the cost of the follow-up. It is the consequence of the additional schools. That additional money falls out of the process as we move to a situation—if it proves to be the case—of one additional school being registered, in which case there will be one additional inspection and one additional follow-up in each year, once we get beyond year 3.

On behalf of the committee, I thank you for coming along and answering our questions. We will speak to the Executive officials next week.