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Chamber and committees

Education, Culture and Sport Committee, 08 Jan 2002

Meeting date: Tuesday, January 8, 2002


Contents


Scottish Borders Inquiry

The Deputy Convener:

The first item on this afternoon's agenda is oral evidence from Nicol Stephen, the Deputy Minister for Education and Young People, on the Scottish Borders inquiry. Assisting Nicol Stephen are Mike Ewart and Mary Newman, who are Executive officials.

The Deputy Minister for Education and Young People (Nicol Stephen):

Thank you very much. Mike Ewart is the head of the schools group in the Scottish Executive education department. Mary Newman is in charge of the best value in local government unit in the Scottish Executive finance and central services department.

I add my happy new year wishes to the committee and echo the sentiments that were expressed in the convener's remarks.

I will start by making a statement, a copy of which was provided to the clerk to the committee yesterday, so that members might have it. It is, however, important that the statement is available in the Official Report.

The Scottish Executive welcomes the inquiry into the education budget of Scottish Borders Council, particularly given that the situation has caused such widespread concern for pupils and parents in the Borders. We agree with the interim conclusion of the committee that the educational well-being of young people in the Borders must be the top priority. We hope that the lessons that are learned from the inquiry will be of general benefit and, together with other measures that are being taken by the Accounts Commission for Scotland and the Executive, that they will emphasise the importance of stewardship and governance in local government.

The Standards in Scotland's Schools etc Act 2000 puts a duty on education authorities to ensure that the education that they provide is directed at developing the fullest potential of the child or young person. Parents and others understandably want to see that duty fulfilled and are concerned when they see budget difficulties, especially on the scale that has been experienced in the Borders.

Local authorities have autonomy as to how they meet their obligations and how they manage their budgets, particularly in focusing on the needs of their local areas. It is therefore for the council to consider how it deals with the historic £3.9 million overspend and the potential for overspends in the future—also its responsibility—while maintaining the quality of the education service and fulfilling its statutory obligations.

There is no immediate role for ministers in the council's financial difficulties beyond the specific issue of virement within the excellence fund, which Scottish Borders Council has raised with us. Responsibility for consideration or investigation of broader issues rests in the first instance with the council, its auditors, the controller of audit and the Accounts Commission for Scotland.

Nevertheless, the Executive has been concerned by the case and wishes to see the situation addressed appropriately as soon as possible. Diverting central grant to the Borders is not, however, an appropriate solution. The Executive cannot simply provide extra grant to local authorities when they overspend or mismanage their resources. Ministers have, however, taken a particular interest in the case by meeting the council to discuss its future plans.

The council has set out plans that show how it seeks to get back on track financially without compromising education quality. Although the Executive will monitor implementation of those plans, it is for Scottish Borders Council to rectify the situation without compromising its statutory obligations across the full range of its activities. Her Majesty's Inspectorate of Education will report on the functioning of the education service and if there are concerns following that inspection, which has not yet commenced, the council will be required to take further action.

We understand that the Accounts Commission for Scotland, which published a report on the budget deficit in the autumn of 2001, will also monitor closely the council's progress.

Those were my introductory comments. I am happy to take questions from members of the committee.

Jackie Baillie (Dumbarton) (Lab):

Happy new year to you, deputy minister.

I have a number of questions to ask. I acknowledge entirely that local authorities rightly have autonomy in those issues and that the council has found itself in a position in which it has a £3.9 million deficit. Does the Executive have a view on the committee's interim recommendations, of which you will be aware?

Nicol Stephen:

As I said in my opening remarks, we support the committee's conclusion in so far as it relates to the educational well-being of young people in the Borders. It is clearly vital to protect the quality of education; indeed, the issue was uppermost in our minds in our discussions on virement within the excellence fund. We sought and received reassurances from the council on that point, and I am sure that we will go into the subject in more detail later.

As an education minister, I want the quality of education within every council in Scotland to be not only protected but improved. Furthermore, I want to ensure that the additional resources that we have made available to local councils for investment in our schools are delivered on the ground. That is my top priority.

As for the action plan, it would be beyond my remit—and wrong of me—to comment on the detailed line-by-line plan that was agreed by the council.

Jackie Baillie:

My follow-up question concerns the Executive's additional resources for education. We have heard evidence that some of those resources were not finding their way into the appropriate pots. Although we do not want a huge discussion about ring fencing, I am interested in teasing out how the Executive monitors implementation of measures within education. You referred to HMIE and the Accounts Commission. The Accounts Commission will obviously examine the budget deficit, whereas HMIE has responsibility for the education service. Across what range of targets will they carry out their monitoring? Furthermore, will they monitor where money goes and how effectively it is spent? Once local authorities receive that money, what can the Executive do if it picks up concerns on the ground that are subsequently validated?

Nicol Stephen:

I will ask Mike Ewart to supply some of the detail on that. However, I think that your question has two answers, the first of which relates to excellence fund moneys and the second of which relates to money that is given to councils through grant-aided expenditure.

On the first point, we pay very close attention to the spending of excellence fund moneys, which is why we had detailed discussions with Scottish Borders Council and, in order to ensure that educational interests were protected, sought its detailed assurances about the virement that it wanted. As for the other expenditure, a general allocation is made to local authorities. If we increase the funding that is available for schools—as we have done—there is no absolute guarantee that that money will be spent on education. As an education minister, I must ensure that that happens and that we examine the outputs and how the money that has been made available to councils is spent.

For example, we make certain that money for funding the McCrone agreement is spent on the purposes that we agreed with the teacher associations and the Convention of Scottish Local Authorities. However, there is no cast-iron guarantee that the money will be spent on education instead of on other public services for which local authorities are responsible. All I can say is that I am unaware that any authority—including Scottish Borders Council—is seeking to take money away from education. Over the next few years, money should be available to increase investment in education in Scottish schools through the budget allocation that we have made for local government through GAE.

Mike Ewart (Scottish Executive Education Department):

Without going too far into the detail of the specific grant and other arcana—as Jackie Baillie requested—I should point out that where we have provided additional resources over and above the allocations that have been made through the revenue support grant settlements in the form of specific grants, those grants usually contain specific requirements to report back to the Executive.

The example that the minister quoted—the excellence fund programmes—is a case in point. Alternatively, in some cases where additional money has been made available in year for payment directly to schools, there has been a requirement for authorities to publish locally what allocations they have made to schools and how the money has been used.

Ian Jenkins (Tweeddale, Ettrick and Lauderdale) (LD):

You will remember that last financial year there was a substantial pay-out of £400,000-odd to schools in the Borders. The schools then told us that the authorities clawed back money from them. Although on paper it could be said that the money had gone to schools, clawing it back made it feel as if no extra money had been paid. Am I right in thinking that when Mr McConnell was Minister for Education, Europe and External Affairs he attached conditions and asked for assurances about the money that was paid in this financial year, which amounted to £200,000-odd then another £200,000-odd and now, I think, another £417,000? Am I right in thinking that that money will not be diverted to pay for cuts in expenditure but will get to the schools where it is seen as a lifeline in the current circumstances?

Mike Ewart:

That is entirely right. One of the conditions of the grants to which you have referred is that they should be additional to existing or planned expenditure.

Christine Grahame (South of Scotland) (SNP):

That is correct. The director of finance of Scottish Borders Council signalled that that was the case. When £416,000 was allocated, within a month £350,000 had been cut from—as I understand it, in layman's terms—the planned expenditure for education in the Borders. That left a net total of £66,000. Do you accept that? What penalties can be incurred by a council, such as Scottish Borders Council, for doing just that? It seems to me to be a breach of the contract on funding with the Executive.

Mike Ewart:

My understanding is that when the funds that were budget 2000 consequentials came through to schools and Scottish Borders Councils allocated those funds to individual schools, the council was also reclaiming staffing allowances that had already been made to the schools. The council dealt with those two sums of money at about the same time and, in some schools, within the same letter. That was perhaps not a great success in terms of presentation. The Executive was assured, however, that they were two separate exercises. We are convinced that the clawback of the staffing adjustments was a legitimate claim. It is unfortunate that it should have appeared as if the two sets of money were being offset against one another.

Christine Grahame:

You were talking about the excellence fund and the virement of £525,000 that was made that included certain categories in education. One of the assurances was to do with early intervention. Supporting parents was also a category. The assurance that was given to the minister and the Executive was that the virement would not impact on children who have special educational needs. How are you monitoring that?

Mike Ewart:

The transfers of money that were involved in the virement in the summer of last year did not include any virement out of the inclusion programme or the provision for special educational needs. Indeed, there was—as a result of the virement—an increase of £31,000 in the amount that was made available to the inclusion programme.

Christine Grahame:

I am at a loss. I have in front of me proposed budget adjustments from the council. In the categories that make up the £525,000, classroom assistants, early intervention, support for teachers, supporting parents, inclusion and alternatives to exclusion are listed under spending.

Nicol Stephen:

The figure that was given in Jack McConnell's written answer to Ian Jenkins was a total of £358,000 being transferred into the national grid for learning programme from resources that were, at that stage, uncommitted in the Scottish Borders Council budget. I wonder whether those figures tally with Christine Grahame's. The figures are as follows: £100,000 for early intervention; £10,000 for supporting parents; £198,000 for classroom assistants; and £50,000 for support for teachers. In his written answer, Mr McConnell refers to:

"Separately, £31,000 to be transferred from the Alternatives to Exclusion Programme into the Inclusion Programme."-—[Official Report, Written Answers, 14 September 2001; p 60.]

That is the additional money that was made available to special educational needs pupils. Is Christine Grahame talking about the same figures?

Will Christine Grahame provide the official report with a copy of her figures?

I have only brought some of them from my vast files.

It would help if you could supply the official report with that information at the end of the meeting.

I will do so.

Ian Jenkins:

The figure of £525,000 was an initial figure, but money relating to the autism unit did not feature in the final settlement, as the council withdrew its request for that money. The figure that Nicol Stephen gave was the final figure. Christine Grahame gave the initial, notional figure of £525,000.

Christine Grahame:

We are moving away from the key point. Members may correct me if I am wrong, but the assurance was given that this crisis would not impact on children who have special educational needs. I would like to know whether the minister is satisfied that that is not happening at the moment. How will he monitor whether that remains the case?

Nicol Stephen:

We are committed to continuing discussions with Scottish Borders Council. I have had a meeting with representatives of the council and Mike Ewart has had several meetings with them. We have a commitment in writing from Scottish Borders Council that it will ensure that the interests of children who have special educational needs are protected. If we received information that the council was failing in any way to meet its commitment, we would treat that extremely seriously and take appropriate steps.

Are you actively monitoring the situation, rather than waiting for someone to come to you with information?

Mike Ewart:

The obvious source of information for us is the investigation by Her Majesty's Inspectorate of Education, which will take place later this year. We also have regular contact with the authority and the local inspectors, who themselves have regular contact with parents and schools in the area.

Our time with the minister is limited and there are other issues that we would like to discuss with him.

I do not want to dominate the discussion.

You referred to the investigation that will be carried out by HMIE. What is the likely time scale for that?

Mike Ewart:

It will take place early this year.

Nicol Stephen:

When an HMIE inspection of a local authority is to take place, a letter is sent to the council giving notice—normally, eight weeks' notice—of the commencement of the inspection. It is only proper that that letter should come from HMIE. However, Jack McConnell indicated that he was anxious that the inspection of the education department of Scottish Borders Council should proceed once the Accounts Commission had completed its report. That inspection has not yet taken place, but we expect it to happen soon. It will be under way in the early part of this year.

What is the time scale for the inspection?

If it is to take place in the early part of this year, it will have to be under way by spring.

Has the council received the letter from HMIE yet?

It has not.

So it will be at least eight weeks before the inspectors visit.

That is correct. However, the inspection will take place early this year. It would be wrong for me to indicate today exactly when it will happen and thereby to change the normal protocol, but the inspection will take place soon.

Irene McGugan (North-East Scotland) (SNP):

You said that there is no immediate role for ministers beyond the specific issue of virement. From the way in which you phrased that statement, I assume that you are not ruling out further involvement by ministers. Under what circumstances do you feel that it would be appropriate for you to intervene?

Nicol Stephen:

Ministers would have powers under the Standards in Scotland's Schools etc Act 2000. If additional concerns were raised as a result of the inspectorate's report, our interest would be in ensuring that the recovery plan that the council agreed was implemented in such a way that it protects the quality of education that is provided to pupils in the Borders. We would be concerned that the plan should be carried out and managed with a high degree of quality; we would act speedily if the inspectorate made further concerns known to us.

Irene McGugan:

I will ask more about the recovery plan. You have said that you and Mike Ewart have met Borders Council several times. Can you give us more details? Were those meetings at the invitation of Borders Council or were they initiated by the Executive? Was the intention specifically to talk about the council's recovery plan? Did the Executive have an input to the plan? Are you broadly content with the proposals, and can you expand on the issues involved?

Nicol Stephen:

It is important to emphasise that the meetings have been at the request of Borders Council in relation to the virement of the exclusion fund moneys; they did not take place as a result of a proposal to the council by the Executive. If there are budgetary problems, overspends and mismanagement in a council, the primary responsibility lies with that council; it is not for the minister to intervene. If we see that there are problems and believe that we can help—help was requested by the council in relation to the excellence fund—we will do that. If those problems are sufficiently serious we will take further action. That is what we have done in relation to the HMIE inspection. That is the appropriate route for ministers to take, rather than sending in officials from the department. It is appropriate that the inspection is carried out by HMIE, which brings objectivity to the situation. HMIE is respected by everyone who is involved in the education process. We look forward with interest to receiving its report when it is made available later this year.

I understand that. Have you seen the plan that Borders Council has accepted as a way forward?

Nicol Stephen:

I have seen it—Andrew Tully spoke to it when he met me with his senior officials and he talked me through the detail of what they propose to do. He also raised some other, wider issues relating to the particular circumstances of Borders Council, and the situation of rural councils and other smaller councils in Scotland. He raised a range of devolved and reserved issues.

Ian Jenkins:

Does the Executive recognise that there are budgetary problems in special educational needs? Most of what we are dealing with today has arisen from a lack of good financial monitoring and so on. However, in special educational needs—for reasons that we need not go into—there is an inherent difficulty in budgeting. Pupils carry heavy financial needs that can easily throw a budget off. Is the Executive prepared to consider such an issue, in respect of the provision and grant funding of education as a whole, and not just in relation to the Borders? Does the Executive recognise that a bit of flexibility and support is needed in that regard?

Nicol Stephen:

We are considering that at the moment, in relation to the development of the national strategy for children with special educational needs. If any council wants to make representations on that issue, we would be happy to receive them. A variety of representations have already been made to me on that point.

Rural and smaller councils have emphasised strongly the impact on their budgets of a rise in the number of children with severe special educational needs, especially if a child requires to be sent to an independent special school. We will examine those issues throughout the early part of 2002 and we will publish a draft national strategy on special educational needs.

There is no easy solution to the problems. Urban councils have particular concerns about issues that impact on them. It is important to emphasise that any changes to a GAE allocation have to be agreed with COSLA. Currently, COSLA reaches agreement on a range of factors, some of which can be seen to be to the advantage of urban authorities and others of which can be seen to be the opposite. It is a difficult set of negotiations, but in general a sensible agreement is reached. Nevertheless, we are ever more conscious of the rising demand for services for children with special educational needs. That is not particular to Scottish Borders Council or to rural councils, but it clearly has a significant impact in such areas. We will keep that under review through the new national strategy.

It is also a problem because of the smallness of the council. Such provision impacts disproportionately on a smaller budget.

Absolutely. When I refer to rural councils, I should say rural and/or smaller councils.

Ian Jenkins:

Rural councils have a particular problem with transport, in terms of the need both to transport the special educational needs youngsters—who might need to travel in individual vehicles—and to bus youngsters in general considerable distances around the country.

I know that Mr Tulley has spoken to you about a reserved matter in relation to taxation and the waiving of certain fuel duties for public transport, but not for school transport. Perhaps we can put it on record as something on which we might seek help from another place.

Can I ask another question, convener?

I am conscious that other members want to ask questions, so this will have to be your final question, Christine.

I have a couple of questions. Thank you for being so tolerant, convener—I will reciprocate if you ever come to my committee.

I will let you have one question and then decide about the second.

Christine Grahame:

In that case I will hedge my bets and ask one question in two parts.

The minister talked about the additional resources for special educational needs wherever, because of the change in presumption of inclusion under the Standards in Scotland's Schools etc Act 2000. I want to ask you about money, minister. I do not think that you answered Jackie Baillie's question about the second part of our recommendation, that

"the Scottish Borders council should not claw back any of the £3.9 million taken from reserves from the Lifelong Learning Department budget in this or subsequent years."

Do you have a view on that? Will you tell us what it is?

In your opening statement, you said that it is not appropriate to divert central grant to Scottish Borders Council. In other words, you consider it inappropriate to bail a council out of a difficulty of its own making. Perhaps there is an alternative when a council—not just the Borders—gets itself into a real mess that has a serious impact on some area of its service delivery. Ministers should consider giving such councils borrowing powers under certain constraints, with low or no interest over a certain period. Would that be an appropriate idea to consider after the HMIE report has appeared? That report might show that special educational needs are being affected. How can the Executive deal with that without putting in more money?

Nicol Stephen:

I would like Mary Newman to answer your second question. I am not seeking to provide an answer for all councils in all situations at all times. All MSPs agree that we would not be setting a good precedent if the Executive stepped in and provided additional funding because of mismanagement or the sort of reasons that we have heard about from Scottish Borders Council, and—

It would be borrowing, not a grant.

I will ask Mary Newman to comment on borrowing and the other approaches that could be taken.

As to the committee's recommendation, as you rightly identified I was careful not to—

Not to answer?

Nicol Stephen:

No—not to give a view. I do not think that I should give a view on the detail of the recovery programme, which is a matter for Scottish Borders Council and for the local electorate. All I can say as a minister is that I do not want the education of any child in Scotland to be prejudiced by cuts in a council's education budget. The Executive has made available sufficient resources to allow councils to expand education funding. Indeed, the McCrone pay and conditions agreement represents a major investment in the education system. All 32 councils have access to the additional funding that the Executive has made available.

My priority is to secure high-quality education in Scotland and to ensure that the education system is improved. The scale of our investment will make that improvement possible—it is not just about investment, but investment is an important part of our work in education.

Mary Newman will talk about schemes to assist councils that are in difficulty.

Mary Newman (Scottish Executive Finance and Central Services Department):

I am afraid that I cannot profess to be an expert on that subject. In a sense, the deputy minister is right, as it is for Scottish Borders Council to decide how to rebalance its budget, which the action plan that it has put to the Accounts Commission is designed to do. The Accounts Commission will monitor how well the authority rebalances its budget across the range of its activities and statutory obligations. The plan that the council put to the Accounts Commission involves a rebalancing of the budget from existing resources. Grant from the Executive is only one source of income for the council; it will make other borrowings and it will use its local tax-raising powers.

I am not aware of a precedent following which the Executive could get involved in a council's borrowings, apart from the Western Isles case of several years ago. I am not familiar with the grounds on which loans from the Public Works Loan Board were taken out, but I will find out and write to you.

That would be very helpful—that is the furthest that I have got with that question.

I will not let you ask any more questions.

We will provide that information to the committee.

That would be helpful. We have had a fair blast on the Scottish Borders inquiry this afternoon. I thank the minister and the Executive officials for their contribution.