Oral evidence: Capital Funding for Schools, HC 961

Oral evidence, 13 March 2017.

Witnesses

Peter Colenutt, Phil Keay and Craig Knowles.

Chair

Welcome. I should alert everybody in the room that we are expecting votes at about 6 o’clock, but we cannot be sure when they will come so apologies to anyone who may be held up by that—that is democracy in action. Welcome to the Public Accounts Committee on Monday 13 March 2017. We are here to discuss capital funding for schools, based on the National Audit Office’s excellent work into the issue. I would like to welcome our first panel. We have Peter Colenutt, the chairman of EBDOG—I can never get the acronym, so I am going to get you to introduce yourself in a moment, Mr Colenutt—which is the body of officers and councils responsible for the capital funding of schools. We have Craig Knowles, who is the acting headteacher of Hetton School in Sunderland, which is in our friend and colleague Bridget Phillipson’s constituency, and Phil Keay, who is the former headteacher of Hetton School in Sunderland—so the before and after, or something like that. This is a very important issue that we are discussing today. As I said, we are discussing the NAO’s Report. The Department has now got a better idea of the stock condition of schools, but is facing a number of significant challenges. The NAO highlights that it would cost nearly £7 billion to get all buildings up to a satisfactory condition and just over another £7 billion to get them to a good condition. There are also another 420,000 school places needed by 2021, many in secondary schools, which is a bit more complicated to provide, as I am sure we will hear from Hetton. Then there is the Government’s agenda and policy to focus on setting up 500 more free schools by 2020, with extra money for another 110 announced in the Budget last Wednesday. We will be examining the cost of free schools and what the Department is doing about any spare capacity. Our hashtag for today is #schoolbuildings. I want to kick off by asking Mr Keay and Mr Knowles what impact school buildings being in a poor condition has on pupils and teachers.

Craig Knowles

I will kick off. The big impact is probably on the amount of time that we have lost in the classroom, in terms of days that our previous building was closed for various structural problems such as gas leaks and asbestos concerns—we had to close various different areas of the school in windy conditions because of the potential asbestos problems.

Chair

Do you want to explain that a little bit more? Most asbestos is encased; you had loose asbestos in the old building. Sorry, perhaps we have all jumped in a bit. We know your background at Hetton School, but perhaps you could start by explaining, to anyone else who may not have picked it up, what Hetton School was like and what the situation is now.

Craig Knowles

Yes. I will pass over to Mr Keay.

Phil Keay

In terms of the asbestos, most of the asbestos is encased, but there are some ceiling tiles that are taped together. They should therefore be fairly secure, but on windy days the wind literally got through the building and would open doors and lift ceilings—when ceilings lift, the dust then falls. We had two or three cases, as Mr Knowles said, where we had to close off schools. In fact, students had to go into the defumigation van—the emergency van—to make sure that they were de-dusted, hosed down and cleaned. It really was that serious. Obviously, parents were informed, and emergency services and so on. It was not a building that was fit to have children in for several years prior to its closure and us moving to the new building.

Chair

Mr Knowles, what has happened since then?

Craig Knowles

In September last year, we moved into our new build, and the comparison that can be made between the old and the new is obviously massive. The impact on the students is that they can now go about their learning with a mental readiness, which previously was not the case. Perhaps before, when they would come in from the rain, they would have to keep their coat on because of the lack of heating. They would have those kinds of issues when they were just trying to go about their daily work to learn. Those are not there anymore. We have a good new building. It is not without its continuing issues, but all the issues that I have mentioned are not there anymore. It is a fantastic environment for young people to go about their work, to progress, to achieve; and it’s great for the staff as well, because they can have confidence in their preparation and what they are trying to achieve.

Chair

Mr Colenutt, perhaps first you could explain the initials of your organisation. In your experience, is this common across England?

Peter Colenutt

Yes, thank you. EBDOG is the Educational Building and Development Officers Group. It is a body that represents all local authorities across the country with officers who are involved in capital delivery of these types of project and school-place planning. I think the issues that have been identified are fairly typical across schools.

Chair

Do you have an idea of how many schools still have asbestos in that sort of condition?

Peter Colenutt

Asbestos is managed differently by different local authorities. In Hampshire, which is the authority that I work for, we keep an asbestos register for every school across the county, so whenever any contractor would visit a school site, there would be an asbestos register that they could access in order to understand what they needed to deal with throughout that building.

Chair

But you say that is not common across all local authorities.

Peter Colenutt

I would struggle to comment on how all local authorities manage asbestos.

Chair

Okay. We might put that to the Department later. One of the challenges, of course, in providing new school places is providing them in a cost-effective way. Mr Knowles or Mr Keay, you had an original plan for a school and then the Building Schools for the Future programme finished and you had a different programme. Do you know what the relative costs of both those proposals were and what the benefits and disbenefits of those two approaches were?

Phil Keay

No, we don’t, actually. I was discussing this with Peter earlier, and we are not sure what the final build cost was of our current school, nor what it potentially would have been under BSF.

Chair

Are there any things that are different that would have been better under BSF or worse under BSF? You were presumably involved in trying to plan that—

Phil Keay

Yes. It was early days, it was early drafts of architects’ plans, before that programme finished. The new building is significantly smaller, in terms of square meterage, and obviously more efficient. It is hard to compare one with the other since we didn’t have the other, but certainly what there is—you’ve said it, Craig—is more than adequate for the needs of the students in the school, to achieve and to learn.

John Pugh

One feature of BSF that made it quite laborious was the massive consultation process beforehand involving hordes of consultants and so on, as well as stakeholders. Presumably you are familiar with that, having gone through the preliminary stages. For the development that you actually have now, were you consulted extensively about what sort of school you would like, or was it just a question of—bang—getting a model off the shelf?

Phil Keay

Probably the latter. The local authority put in the bid on behalf of the school—we are a maintained school—and we were successful in that bid as one of the 260-odd school buildings in the worst condition in the country. So probably the latter—there wasn’t an awful lot of consultation of the community or stakeholders, and it was pretty clear that we needed the new building. The time was from there on in—we were a first school in the programme, so I was also working with the companies that were bidding for the contracts, and then there were a lot of meetings with a variety of contractors and subcontractors. That took up a huge proportion of my time, as headteacher, and that of my school business manager colleague as well. But in terms of your original question—

John Pugh

At the design stage, you weren’t much involved?

Phil Keay

At the design stage, we were involved, yes.

John Pugh

Oh, right.

Chair

May I turn to you, Mr Colenutt, on the overall picture? Obviously, there is a need, as I highlighted, for a number of new school places. The current policy is that free schools will be the only new schools created. What impact is the free schools programme having on delivering those new school places? Is it being successful?

Peter Colenutt

There is a mixed answer to that. Some of the free schools have been delivered, and they have delivered those required places where they have been needed. There are some cases where free schools have been opened in places where they are not needed, which is a challenge when we have the constraints that we have across the school estate. One of the other issues for us—I don’t know whether you had a chance to look at the submission that I made.

Chair

Yes, we did. Thank you for that.

Peter Colenutt

Thank you. We were talking there about the mixed economy that we need in education, because as we are moving forward with the free schools agenda, we are struggling to find good sponsors. That is one of the challenges, and the timescale of the free school process for the delivery of new school places—they are always needed for a September, obviously, at a given point in a year. The opportunity to go back to the time when local authorities could also open schools—91% of LA schools are good or outstanding—would give us a much wider and bigger pool of schools to access, in terms of opening schools. What we are really saying is that there is absolutely a place for academies, free schools and LA-maintained schools, and it would be good if we could still use all three of those as a vehicle for delivering new school places.

Chair

You talk about some being opened where there are too many new schools opening in one place. What is the impact for your colleagues in the local authority, and the impact on some of the existing schools in terms of their running costs? Is that something that you look at?

Peter Colenutt

The impact of a school that opens and creates surplus places is that, obviously, new schools often appear to be the shiny new penny and are very attractive to parents and therefore that has a negative impact on those other schools, creating surplus places. As we know, revenue-wise, schools are predominantly funded by the number of children on the roll, so that has an impact on the school’s budget.

Chair

And the impact of a lower school roll in a local authority-maintained school presumably has an impact on local authority budgets. Do you want to explain that?

Peter Colenutt

Yes, although the actual revenue budget—the local authority acts very much as a passport for revenue, in that the funding comes in and we pass it straight out to schools, so it is more on the schools forum pool of overall resources that is made available to those schools.

Bridget Phillipson

In terms of the new programme and the school that was built, were additional contributions required from other sources to meet the needs of the school—outwith the original build?

Phil Keay

It is fair to say that there were additional costs. Obviously, the new school building comes as a building that is networked and cabled, but it has nothing in it. We were very reliant on the local authority to help us for the final three or four years of the previous building, with significant additional capital spending that we did not have in school. I think the school got about £17,000 a year, but we’re talking about a lot more than that to keep the previous school going. Then we were having to decant all our current equipment, furniture and so on, and to move old desks, old tables, and computers that were four or five years old into a brand-new building was not what we wanted, so again the local authority stepped in and helped us significantly. So there were a lot of additional costs, and I think that ongoing there are as well.

Craig Knowles

Absolutely. These were costs that were not budgeted for, which were down to design inadequacies or for things that just had not been foreseen but in fact are crucial to the successful day-to-day running of the school. An example is access—driveways, gates, secure access to different areas of the school. Those ongoing costs are something that has had to be borne by the school. I liken it to the idea that for any new build, whether it be a private property or not, the design sometimes builds in a contingency for those costs that are not foreseen; yet we seem to be bearing those costs as a school, and that has a direct impact on our ability to deliver. So, for example, we are currently looking at redundancies in the school, which is part of a wider issue, but the costs that we are having to put into the building itself have probably contributed to a number of those, and that is a deep concern for us when we are looking to move teaching and learning on.

Chair

And that is a big cost out of your first year revenue budget, presumably.

Craig Knowles

Absolutely.

Chair

What percentage, roughly—do you know?

Craig Knowles

I do not know the percentage. We are looking at something like two staff redundancies as a result of those ongoing costs.

Chair

Wow, okay. Mr Keay or Mr Knowles, whichever of you can answer, how much did the local authority spend on the new equipment that you have just described?

Phil Keay

From my memory it is £325,000, and that bought us a new computer system; it bought us new desks, chairs, tables, cupboards—the basics, really. The BSF scheme came with that, largely. This scheme, for obvious reasons, doesn’t, but the money has still got to be found.

Chair

Can I just ask the NAO, in the figures that you looked at for the total costs of school places, did it include those other items?

Laura Brackwell

No.

Chair

So that £325,000 looking at the square footage cost is above what was in the Report, just to be clear.

Laura Brackwell

That’s right.

Chair

Thanks for clarifying that. Mr Colenutt, one of the concerns about the condition of the school estate is that it is old and deteriorating—much of it built in 1976 or before then—so what are you and your colleagues’ biggest concerns when you look at how you manage that estate? We heard that big figure of nearly £6.7 billion to get schools up to satisfactory. How are local authorities and your colleagues managing that spend, and are you confident that with the funding issues coming down the line you will be able to reach that target with the funding available?

Peter Colenutt

In terms of capital maintenance, I think we have a challenge ahead of us and I think the EFA’s next condition assessment data will give us some information back, which should tell us how we are moving forward in terms of the work that has taken place and where we are going forward into the future. We would tend to have a view, actually, that there is a lot more to be done and that the liability of the built estate is increasing. One of the challenges I think we have had as we look through and talk about some of our types of buildings is that there are a number of local authorities that have a number of system buildings that were certainly built with a short lifespan. Those are definitely coming to the end of their useful life, now, and we certainly need to be thinking about how we address those specific types of buildings. I think, certainly, it would be very useful and interesting to see the next round of data that we get from the condition surveys.

Chair

Do you and your colleagues feel you have enough of an idea of the condition of the properties in your local authority area? Is there good and bad practice out there? Obviously the Department relies a lot on that to get its global figure.

Peter Colenutt

Absolutely. I think there are two things that local authorities do. We provide the data and the information in terms of school place planning, and the requirements; and then there is the condition data. The condition data—a lot of that, now, is being led by the EFA in terms of their national assessments, so that they are comparing like for like. The position in Hampshire, if you would like it, is that we receive around about £18 million a year towards our local authority built estate. We have got some 500 schools in Hampshire—70 secondary schools. Our liability is assessed currently to be £370 million.

Chair

Let us just be clear: give us the figures again to be absolutely clear on the contrast there.

Peter Colenutt

Our liability in Hampshire, if we were to put all of our school buildings into a good place, would be £370 million; and we receive £18 million a year.

Chair

Just to be clear for the record, is that one eight?

Peter Colenutt

One eight: £18 million a year. Obviously what that means is that we have to very carefully prioritise that funding. Obviously we do that, but one of the challenges that we specifically have in Hampshire, if I give you that as an example again, is that 40% of our built estate is in system buildings.

Chair

I grew up in Hampshire so I have an idea. So with that very small amount of money relative to your need, how do you prioritise managing and maintaining those old school buildings?

Peter Colenutt

Literally by assessing: by doing condition and risk assessments as to which are the buildings in the worst state, and which absolutely need—

Chair

Presumably with that amount of money you cannot replace an entire building; you are patching up.

Peter Colenutt

No—correct.

Chair

Is that common across your colleagues?

Peter Colenutt

It is. What we have developed across local authorities is an ability to put new jackets, if you like—new exterior cladding—on some of these buildings, which saves replacing the whole building. That is an economic way of addressing some of this liability that we have ahead of us.

Bridget Phillipson

I want to ask about the format under which the school was built and whether that is typical of other schools in the programme. What is the nature of the financial model under which the school was built, and what is the ongoing relationship?

Phil Keay

We are a private finance build—PF2, which I think everybody will be relieved to know is very much simpler than its predecessor but does come with its challenges. Obviously, we have an annual bill, which gets charged on the square meterage. For my former school of 900 places, it was around £80,000 a year. That is our bill for maintaining. From my point of view, it was a difficult dynamic to manage, certainly in the first term of running, because the EFA were working on behalf of the school—the EFA were, if you like, the customer—and the service was provided by the contractor, and we lay somewhere in the middle, as the daily user for whom things came up that needed correcting or altering or seeing to fairly quickly. It was quite a difficult process, really, to settle in. I guess you can speak a little bit more about whether that has settled, Craig.

Craig Knowles

I think it is fair to say that we have worked very hard to maintain a good relationship with the EFA. One of the issues that has made things more difficult is changes of contact at the EFA and whether previous communication is passed on so that everyone is as confident in dealing with our individual school’s issues, or with our batch issues, as the people who originally had those discussions. But not being able to talk directly to the contractors in most cases and having to go through various procedures before we can actually get some basic day-to-day running alterations made does cause—it is probably going too far to call it a bureaucratic problem, but it certainly causes a delay.

Chair

So, basically, you are not in control of the process.

Craig Knowles

That is exactly how it feels, yes.

Chair

Would you have preferred to be? I know that a lot of headteachers have become, effectively, development managers as they have had to rebuild a school. Would that have been preferable, even though that would have been quite a lot of work?

Phil Keay

Certainly in the lead-up to the opening, the headteacher does want that control on behalf of the governors and the community, and he is usually assisted by a school business manager. One of the biggest challenges—we cannot just call it communication; we have to drill down a little further. One of the biggest challenges was the various design stages we went through and the version control of those designs. I attended meetings and took notes, and I believed that we had agreed A, but we never really saw or had the chance to confirm that A was what we had all agreed in the meeting, and then B was the final outcome. I am not talking about something completely different, but I am talking about some quite subtle and important differences. We are now having to manage those and say, “But that’s not what we agreed at that meeting.” We can date it—we can say when that meeting was. We know it involved the EFA; we know it involved the contractor—and the subcontractors are key to this. The subcontractors did not always provide the value for money—this is a forum about value for money—or the quality of service and assurance of quality that we expected. That is my personal view.

Chair

That is very interesting. I want to ask you all whether you think the Department is providing enough support to local bodies to maintain schools well. If you had a wish list of two or three things to ask of the people who will be on the next panel—what would make life easier? We got a bit of a clue from you there, Mr Keay. Perhaps we will start with Peter Colenutt and work across.

Peter Colenutt

If I had the opportunity to say what we could improve upon—what we could do better that would make things move more easily—I would certainly make that point about LAs being able to set up schools, because I think that would help us with our school places problem. A really significant point that I would ask you to help us with is the pooling of developer contributions. In Hampshire, we will bring in £80 million over the next three years to support our school places demand. That money from developers is not stopping house building in Hampshire; it is solely money to mitigate the school places demand from their housing. The pooling of five will reduce our opportunity to collect that money. Developers are getting clever at how to play that game, by putting forward smaller developments until they get to the sixth, and then putting in bigger developments. We have tried to make a number of representations, and I know the DFE is also supporting us, on trying to reduce or abolish the pooling under CIL. That is a really significant factor. This comes back to the point that my two colleagues made about the fact that local authorities are contributing to a significant number of these projects. The audit Report identified that as key. With the budgetary pressures we have in terms of a revenue position on LAs, that will get harder and harder as we move forward. We need to recognise that there is an important place for the local authority in school place planning, because it works out what the local requirements are. It can also work out specific local needs in specific schools. Also you want those officers there to try to negotiate some developer contributions to support the public cost of schools.

Chair

So you can help to get it right, for relatively little cost.

Peter Colenutt

Absolutely. We are there to try to minimise the call on the public purse and to ensure we get the right school places at the right time.

Chair

Mr Knowles?

Craig Knowles

I will pass to Mr Keay.

Phil Keay

More widely, beyond the school that I led, for me it is about being receptive to the feedback process, in quite a quick feedback loop. Rather than going through priority schools, building one, getting the feedback and that then informing the next batch, there are so many stages of school design and build that at each stage, feedback is available to get it right for the other schools lagging by three or six months in that same programme. There are simple things—call them mistakes, design faults or procedural ways to tighten up—that, if fed back into the system a little quicker, would mean the overall output of that batch was of a better quality for all. I would focus on the feedback loop for all the schools involved in it.

Chair

Mr Colenutt, we have had quite a lot of evidence about the cost of free school sites from some of your local government colleagues and from MPs. Do you have an overview of whether sites for free schools have been purchased at an appropriate level and whether it could have been better value if the local authority had done it? That is one of the things that has been put to us.

Peter Colenutt

I do not have specific knowledge of individual prices and costs of land. I have heard the news stories and read the press. Again, in negotiations with developers to serve new housing, the LA can play an important role. That negotiation starts maybe four or five years before you ever think about a school being opened. In those very early discussions with the local planning authority, we must ensure we get land reserved. In some cases where you have to buy land—one assumes that land costs will be very high in the City of London, but I cannot answer more than that.

Chair

This is perhaps not your specific area of professional responsibility, but are there any issues for local authorities as a whole when any school—not just a free school—fails, and the local authority has to pick up the pieces? There is one in Southwark, for instance, that did not get to capacity, so the council had to find those 56 children a school place. Are there any issues around the costs to a local authority in time and money of picking up the pieces when something goes wrong?

Peter Colenutt

Absolutely. If free schools do not open on time, are not delivered or close, the local authority has a statutory responsibility to find school places. We will therefore have to find a solution, whether that be by a local school, hopefully, maybe modular buildings as a quick solution or transport costs if you have to transport pupils to different areas.

John Pugh

In your remark about planning gain, were you suggesting that were local authorities to purchase the land, whether for free schools or their own school, given that they understand planning gain, they could significantly defray the costs, rather than the Education Funding Agency or the Department finding the land?

Peter Colenutt

In a situation where land is required to serve a new development, to mitigate that new development, the local authority can play a very important role in those very early planning stages when negotiations start with developers and the local planning officers. In a situation where you have increased demand that is not to do with new housing but to an increase in births and suchlike, that is completely different.

John Pugh

Where the free school is thought to be necessary because there is a new development, you are saying that the local authority can conduct the process of capital purchase a bit more efficiently.

Peter Colenutt

Absolutely. We have some sites in Hampshire for our first free schools that will be opened. We have identified the land and we have negotiated it from the developer, if not for free, as in some sites, then with an educational land value rather than a residential land value.

John Pugh

Okay.

Chair

You named three schools where you have bought it—you have presumably then been hand in glove with the free school sponsors to develop the idea, the timetable and the build out.

Peter Colenutt

Absolutely right.

Chair

One of the other interesting things is that local authorities have a statutory duty to be responsible for places. When a free school arises, or any new school or academy—well, perhaps no longer academies—how well are free schools, academies and local authorities working together? How much influence do you have over the provision of school places given the plethora of providers now, a number of which report directly to the Department?

Peter Colenutt

I am very lucky to work for an authority that, as with many of the authorities that I have dealings with, looks at all schools and thinks, “They are all Hampshire children”—or whatever authority’s children—“and therefore we treat them all in the same way”. We absolutely accept that you can have a mixed economy of delivery of education, as I said earlier. We work equally with academies, free schools or LA-maintained schools. On top of that—we must not forget this in any of our discussions about new school places—there are special educational needs schools, but maybe that is another field.

Chair

Do they work well with you? You represent a wider body. Theoretically there could be a mad, bad and dangerous organisation that decides to go its own way and expand or contract without any consultation with the local authority. Is that just a fear or is it a reality? Or is it just never happening?

Peter Colenutt

It happens. Some schools expand of their own wishes to the detriment of other schools. In Hampshire we have a good relationship with all our schools. We agree and talk to them about any increases that they might make to their admission numbers or in their size. Of late we have seen more work from the DFE—certainly when free schools are being proposed—in that people come to talk to us and ask us what sort of impact that new school would have on the other schools in the immediate area.

Chair

So you have a good dialogue with the DFE in Hampshire?

Peter Colenutt

Yes.

Chair

Is that the same across the board?

Peter Colenutt

It has certainly improved. The free school proposals expressions of interest that local authorities were asked to make for SEN schools—we have recently done that—certainly clearly states in the guidance and documentation that the local authority will be a key partner in understanding the need for those school places. I can only hope that that continues, because it is really important.

Kevin Foster

In my experience, there can be differences between planning in a local plan, which is supposed to look forward many years, and the free school system, which is based on demand from parents to set up a school. How well do you think the information is working between predictions for the long term, in terms of the local plan to have a site, versus the demand from people for a school? Do you think that the information that local authorities get when they are setting a local plan is appropriate? How has it worked?

Peter Colenutt

Most local authorities produce a five-year plan for the new school places that they will need. Those are generally published documents, so the public can see and identify where new schools are needed and when. They can come forward with free school proposals, which is happening.

Kevin Foster

I question it because, with housing developments, sometimes the land can be first suggested for housing development 10 or 15 years before it actually pans out, and ditto, you can have changes or a sudden windfall when a factory converts to housing, where you would not have envisaged that happening initially. Is there any evidence that the process is working well? In the past, the local authority would set the local plan and have a site effectively reserved within a site for housing or whatever, and then deliver the school. Do you have evidence that the process is working well or badly, or is it still too early to tell because the free school programme has not been running as long as perhaps the local plans have?

Peter Colenutt

We absolutely still work in that way and identify land, as do most local authorities. Your point is absolutely right that the housing development can sometimes take a number of years to come to fruition, but as and when it does, providing you have a site reserved in the early days for that new school, then whether it is a free school or any other school, you have the land for it.

Kevin Foster

And do free schools tend to go to those sites? I am conscious that, in the old days, you could assign and then do the school. Of course, the free school programme could see someone decide to actually go somewhere else.

Peter Colenutt

As at a couple of years ago, when we identified that free schools would be a good route for securing basic need, there was much more engagement from the Department to work with local authorities to try to ensure that we use those as a vehicle to address some of these school place pressures. Where that was the case, we would try to identify and offer up land that we had already negotiated with developers.

John Pugh

You mentioned the word “redundancy” at some point. Obviously you are struggling to cope with your budget, as a lot of headteachers are at the moment. This development is a PFI, is it?

Craig Knowles

Yes.

John Pugh

So you have a fixed standing charge.

Craig Knowles

Yes.

John Pugh

Clearly you cannot do a great deal about that, in terms of efficiency savings—it is what it is, really. But you must have had a look at the new formula, as all heads have, and seen that in it there is an element for PFI in some form or other. Is that going to provide you with significant amelioration of your situation? Will it make things less taxing?

Craig Knowles

Not significantly, no. I will pass over to Mr Keay for a bit more detail.

Phil Keay

To my knowledge, the local authority makes a contribution to our overall bill based on what we would have been paying for repairs and maintenance in the old building, but it is detached from the point you make. We know that perhaps £20,000 or £30,000 out of £80,000 could potentially come from the local authority, so it helps a little bit.

John Pugh

They are not obliged to, presumably.

Phil Keay

No. It does seem to be common practice, certainly amongst north-east local authorities, to make some sort of contribution, regardless of the type of school. That is a schools forum decision; whether the school is a maintained school, an academy or a free school, the schools forum can make that decision to contribute to the school’s PFI bill. Obviously, with the original PFI, some of those annual bills are absolutely huge—for us, but not for you.

Chair

Thank you very much indeed for your clear evidence, and for travelling from Sunderland to see us. The transcript of this hearing will be available on the website and corrected in the next of couple of days; you will also be sent a copy. You are very welcome to stay for the next panel, if you want to see if they answer the questions you have posed and if we can help that along a bit—but if you need to leave, that is fine too. Thank you very much indeed. Examination of witnesses

Witnesses

Mike Green, Peter Lauener and Jonathan Slater.

Chair

Apologies, once again, that we are running behind, but we have had democracy in action today with some votes before the hearing. The witnesses in our second panel are Mike Green, director of capital at the Education Funding Agency; Jonathan Slater, permanent secretary for the Department for Education; and Peter Lauener, chief executive of the Education Funding Agency. I remind people who are following on Twitter that the hashtag is #schoolbuildings. I will hand straight over to Dr John Pugh to kick off.

John Pugh

My initial questions are on the subject of the maintenance of the existing estate. You have done two surveys of the estate—is that right?

Jonathan Slater

We did a detailed property data survey between 2012 and 2014, and we are just kicking off the next condition data survey.

John Pugh

Three surveys in all.

Jonathan Slater

Two surveys: one completed, one just starting.

John Pugh

I see; that’s what I thought it was. You judge—these are your figures as much as anybody else’s—that nearly £6 billion is needed, which is about the same price as it will take to do up the House of Commons, to bring all of the education estate up to a satisfactory condition. Is that right?

Jonathan Slater

I have no wish to comment on the cost of refurbishing the Houses of Parliament. The property data survey that was carried out between 2012 and 2014 identified that spending about £6.7 billion would have brought the estate up to a satisfactory condition at that moment in time. By the end of this Parliament, we will have spent about £14 billion since then on improving the estate. At the same time, of course, the estate does not stand still; it depreciates over time.

John Pugh

Okay. In terms of what that assessment measures, I think you are talking largely about the structural condition of buildings, aren’t you? As recollection has it—

Jonathan Slater

The overall condition.

John Pugh

The overall condition. I think the Department used to have two ways of valuating the unworthiness of buildings. One was in terms of their condition, and the other was a case of their suitability as a teaching environment, wasn’t it?

Jonathan Slater

This is an assessment of what is required to bring the whole of the estate up to a satisfactory condition to—

John Pugh

Yes, but the point I am making is that, historically, when we did the Building Schools for the Future report, there were two different sorts of categories of shortcomings, as it were. The building might be falling down, or it might be a wholly inappropriate or out-of-date environment for teaching children. The £6.7 billion doesn’t capture that, does it? There might be a lot of buildings outside that that are structurally okay but are outdated, outmoded or are inappropriate modern teaching environments.

Jonathan Slater

I can ask Mike to give you more detail on the property data survey if that would be helpful. It is simply seeking to address the condition of the estate.

John Pugh

Condition. I think in the report it says that it doesn’t take into account safety factors, either. The school could be in good condition but not a particularly safe environment, and it would still not feature in that £6.7 billion.

Jonathan Slater

It is important to recognise what the property data survey sought to do.

John Pugh

That is what I am trying to do.

Jonathan Slater

Absolutely. As you say, it is important to distinguish between those two things. For example, on something that you were discussing earlier, the responsibilities on the occupier or owner of a building in respect of the wiring or the management of asbestos go beyond what an overall condition survey like the property data survey would demonstrate. We need to do things over and above that to get into the question of asbestos and so on.

John Pugh

And the Department has done further work on asbestos, is that right?

Jonathan Slater

What we did in 2015 was to issue updated policy advice on how asbestos should be managed. We followed that up with a survey of asbestos in schools. Of the 25% of schools that replied, about 83% said they had asbestos, of which 98% said that they had the survey register and so on that you heard about from the local government colleague that you saw earlier. We followed up with the remaining 2% accordingly, but that is only 25% of schools. We need to get to the other 75% of schools, which we will be doing in the next round of survey work that we do.

John Pugh

As something of a guesstimate, which we certainly won’t hold you to, could you give some sort of figure for what it might possibly cost to address asbestos as well as all of the other problems outside the £6.7 billion? Have you any idea?

Jonathan Slater

That is not the basis on which we did the survey. Mike, do you want to explain in a bit more detail about how we do it?

Mike Green

Addressing asbestos is a very interesting question. The only way to truly address asbestos is to rebuild the building. The cost of rebuilding the estate is roughly £100 billion. Around 85% of schools in the survey had asbestos in them.

Chair

So it would be £100 million to rebuild the whole English school estate?

Mike Green

Billion.

Chair

I was going to say it seemed a bit low to me.

John Pugh

There was £55 billion for Building Schools for the Future; that was half of the estate.

Mike Green

The clear advice of the Health and Safety Executive is to leave asbestos where it is and manage it, because it is difficult to take out safely.

Chair

Can I just chip in there? We heard quite compelling and scary evidence from Craig about asbestos that is in situ and not damaged, but because of wind—

Mike Green

Agreed. I hope that is a reasonably unique situation. With asbestos like that, you would attempt to remove it or do something better with it. The majority of asbestos is within the structure of the building and best left alone. Where it becomes dangerous, of course you must deal with it.

Chair

Would you say that what we heard earlier is a rare thing? Or do you have an analysis of how frequent that happens, with asbestos tiles flapping loose?

Mike Green

As central Government, no we don’t. The management of asbestos is the responsibility of the building manager.

Jonathan Slater

As I was saying a little while ago, we got information back from 25% of schools—I will not repeat the figures—but we thought that it was important in the next survey that we do to get more detailed information about all schools, although, as you have heard, the Health and Safety Executive says this is a relatively low risk, because in most cases the best thing to do is to leave it alone.

Kwasi Kwarteng

I have a broader question about what this Report was saying about the condition of the estate.

Chair

Absolutely. We have got on to asbestos, which we might not leave otherwise, so go ahead.

Kwasi Kwarteng

There were three things that I was particularly worried about in terms of the Report; they are all linked, as you will see. One was that the local authority does not seem to have much incentive in actually keeping up the estate. There is huge pressure on them to find places, because that is something that parents are very concerned about, but according to the Report there is not so much incentive on them to keep up the condition of the estate. The second issue, which relates to the local authority’s incentives, is the fact that there is not much accountability. If something is going wrong, or badly, there does not seem to be much recourse, as people might say. The third thing, which is linked to both of the first two issues, is that of course information is very limited, as a whole. I mean, one might know locally, or hear anecdotally, about the state of schools, in terms of the physical infrastructure, but when it comes to getting a national picture of it, no one seems to know quite how bad or good the situation is. Those three things are pretty concerning for me as a member of the Public Accounts Committee.

Jonathan Slater

I think they were a concern to my colleagues a few years ago, which is why they commissioned that first ever property data survey between 2012 and 2014, which provided a degree of information of a sort that the Department had not had at its disposal previously. However, if you were just to do that one survey, you would not be able to get a sense of the extent to which local authorities or the other owners or governors of schools are taking their responsibilities as seriously as you rightly imply they should. It is important to carry out a survey on a regular basis and the standard advice would be to carry out a detailed conditions survey across the whole of the estate every five years or so, which is precisely why we piloted the next, more detailed survey last month, and it goes out into the field this month. That will give us, for the first time ever, really good information about the extent to which schools in particular areas and of particular sorts have or have not been managed well in that intervening five-year period. It will enable us—we definitely need to take advantage of this in a way that we have not done before, as you and the NAO rightly say—to be more challenging where local authorities or trusts have not managed their responsibilities as well as they should have, as well as being more supportive and encouraging to those who have. The NAO is absolutely right to identify this as a weakness in the system, as you have done yourself, and I am looking forward to the opportunity presented by the survey that we are doing out in the field now to get better at that.

Kwasi Kwarteng

This is what jumped out at me, and a system where you have no accountability, no information and no incentives does not give one a huge amount of confidence.

Jonathan Slater

I would not go that far—

Chair

I am sure you wouldn’t, Mr Slater, and perhaps you can tell us why.

Jonathan Slater

That is why, for example, we publish detailed score cards, local authority by local authority, comparing what they are spending in total unit cost, and the extent to which they meet the needs of their children by giving them their first choice or one of their top three choices. We are providing increasing amounts of benchmarking information. We look at how their costs of providing additional places compare with ours. I was just commenting specifically on the fact that we do not have as much information as we would like on the specific question of how well they are maintaining schools in the meantime, but we will be getting that data now.

John Pugh

On this point about information, if I can persist with it for a little while, I asked a question back in 2009 about how many buildings are of a particular era—how many were pre-war and so on. You gave me the figure then—this relates to 2006—that 71% were pre-1976. I do not know why people keep referring to pre-1976, but it is the magic number—

Chair

It is in the Report.

John Pugh

Yes, I know, but why? The figure now is that 60% are pre-1976. What has happened during that period? Have we actually replaced 10% of the schools, or whatever, or have we simply got more schools?

Jonathan Slater

I do not have the details of the answer to that question. I can come back to you.

John Pugh

But it is quite a dramatic change, over a period of eight or nine years.

Jonathan Slater

Of course, and both of the things you say will be contributory factors. I am very happy to check the detail and come back to you.

Chair

It would be helpful to know that.

John Pugh

Could you send it to us? I am persisting with this because the key thing was hearing what a lot of people who looked at schools for a while were bothered about: schools of a certain vintage last seemingly forever and schools built in, say, the 1970s, seem to fall apart almost at will. Are you picking up any particular problems like that? That is probably a question for Mr Green, anyway.

Jonathan Slater

I will ask Mike to comment on the opportunity that the Priority School Building programme has given us to really dig into that question. Obviously we are, as you say, rebuilding a number of system-build schools through that PSB programme, and that not only addresses the what has happened since 1976 point but also gives us the opportunity to test the extent to which system-build schools more generally are sustainable, which I guess is your question.

Mike Green

There are a few questions there. To answer the one about the change in the condition of the estate, if you think about the schools that have been rebuilt, there were the best part of 800 through BSF and we are doing the best part of 600 through PSBP. Of course, local authorities, which get the majority of capital funding, will also be doing similar work; so, yes, there probably is a significant change in the estate. As regards system-build and things like that, we have taken the opportunity because it is rare to be able to poke a building until it falls over and, of course, that is exactly what we are doing as part of PSBP. We had some concerns about system-build buildings, so we have started some destructive testing as we knock down the old buildings which means we can have a really good look at the forecast length of life left in those buildings. I have to say that the news so far is good, in that we do not have significant concerns. But we will continue to investigate buildings we knock down, as an opportunity to make sure that they remain that way.

John Pugh

The point I am making is that the date when a building is put up is a poor indicator. It is only a proxy for its condition.

Mike Green

Indeed. It varies immensely according to how well a building is looked after. To answer the earlier point about accountability, the property data survey and the condition data collection will work on three levels. It works at an overall level of the estate so we can go to the Treasury and say, “This is the amount of money we will need to look after the buildings”, but at the next level down it will work across a local authority or a responsible body, and we can see a change over time in the condition of their school buildings and how we have given them money, which will enable us to say, “Look, we’ve given you a load of money and the condition of your estate hasn’t changed. What are you doing?” It will enable more direct comparison and accountability than we have had in the past, but this is a difficult thing to do because there are a whole host of reasons why an authority like Hampshire, or Nottinghamshire, which is my own authority, might spend a little more money because they have a higher proportion of buildings with asbestos or built in a certain time. It is quite a complicated picture, but we will be able to tell the movement of the condition of buildings over time the more times we repeat the property data survey.

Chair

You say that it is quite a complicated picture, but if you know, for example, that a school was built in 1970 by a particular type of system-build, do you have an idea of how many schools around the country would have been built in a similar way?

Mike Green

Yes. We have started collecting those data.

Chair

You can extrapolate from one that you are working on—as you were saying, looking at kicking at the condition of the school—and know where the other ones of that type are built.

Mike Green

Yes, indeed, and as we travel and we do the data survey again, we are becoming quite data-rich, so we will be able to pinpoint with reasonable accuracy the condition of the estate and the type of building and know where we need to be looking when it comes to where best to spend our money.

Chair

How far does that go down? To the local authority or the school level?

Mike Green

When we did the property data survey the first time, we waited until the end to share the surveys. This time, the proposal is that they will be online within a few weeks of being done so that people can see them almost straightaway.

Chair

So if I was a headteacher of a school and I knew that one down the road was built like mine—I might not know as a headteacher, with all respect to headteachers, exactly the type of system used to build my school—how would you make sure that that information got to me? You say that the owner of the building is responsible for that.

Mike Green

The owner of the building can have the survey. We are not going to publish everyone’s survey to everyone, but if we picked up something that is particularly concerning, or trends, we would of course act on that.

Chair

So you would make sure that you had alerted every governing body and headteacher of that type of school, for example.

Mike Green

Yes.

Chair

And that would be automatic.

Mike Green

Of course.

John Pugh

Going back to the point Mr Kwarteng made about incentives, one of the great incentives there can be to get any school or local authority to do the building properly is to point to the full costs of a building over time, and the savings that can be made through, for example, good insulation, and so on. Is there anything in what you do that provides an incentive to actually build buildings that are going to last and be cheap to run?

Jonathan Slater

I will ask Mike to come in, but part of the thoughtful development of a national specification for the Priority School Building programme is to design into the standards precisely the sorts of features you describe.

Mike Green

Exactly right; so, yes, we have a facilities output specification, which specifies how well buildings will be insulated, how they will run and generally what a good school would look like. We spent many years putting that together.

Kwasi Kwarteng

The issue I have is this. I understand that budgets are tight, and obviously there are responsibilities for teaching. There are lots and lots of things that people are going to spend money on, but, with respect to this capital expenditure, to use a vaguely technical term—actual spending on things, buildings, and plant, as we would say—am I right in thinking that you essentially intervene on a kind of “needs must” basis, so that you are basically looking at urgent problems, when that is what is drawn to your attention? Am I right in saying that, or have I got it slightly wrong?

Jonathan Slater

The NAO Report identifies a number of different funding streams. One is this large Priority School Building programme, of which Hetton School was a recipient. That is a £5 billion two-phase programme.

Chair

That is figure 12 on page 36.

Jonathan Slater

That is designed to address the schools which need rebuilding the most; but in addition to that there is a condition improvement fund, of which every local authority in the country gets a slice—but those with the worst condition get a larger slice. Then there are a number of other different component parts.

Kwasi Kwarteng

Let me, if you will forgive me, ask the question a bit more directly. You have quoted the Report and I can quote it back to you. The sentence that concerned me, on page 38, in the paragraph headed “Incentives for spending on school condition are weak” says that “The Department uses condition funding to address urgent needs, rather than to undertake preventative work.” “Preventative work” in the jargon of a financial analyst is what one used to call maintenance capex—maintenance capital expenditure. That is an annual spend to make sure that the building, or whatever it is, is maintained at the level one would expect. According to the Report the suggestion is that you are more focused on urgent specific problems, as opposed to keeping an eye on keeping a good condition. That is the Report.

Jonathan Slater

The point that I was making: I will ask Mike to come in with more detail—I am not disputing that at all; of course, it is in the Report, and I agree with it, but if you just go back two pages, on to page 36, which the Chair was drawing your attention to, you will see that the condition improvement fund, to which you are referring, is the fourth one down—£440 million a year—plus the third one, school condition allocations. I was referring to the two above that, which are larger sums of money, which obviously by definition get you a new school to a high quality. You have got a number of different things going on, but certainly one of them is that we have got some significant amount of funding to tackle urgent needs.

Kwasi Kwarteng

Yes, but that is not what I am asking about.

Jonathan Slater

So yes—agreed.

Kwasi Kwarteng

Okay; but are you going to do anything to change that situation, or is that just something—

Mike Green

As you look at the maintenance of a building there are what I might term four different kinds of maintenance. There is the one you refer to, which is planned and preventative, i.e. you service your gas boiler, you paint your windows, which is normally a revenue stream. There is “Something is broken; come and fix it” kind of maintenance, which again is probably a revenue stream. There is compliance maintenance—“I need to check my gas cabinet”; legionella testing; electrical testing—which is also probably a revenue stream, unless you are replacing large bits of kit. Then there is the one we are talking about now, which is capital replacement, which might be the whole building, a new boiler or whatever. But the majority of planned and preventative maintenance is probably out of revenue, which is not dealt with in here.

Chair

The revenue is the per capita funding through the formula.

Mike Green

Yes. We publish guidance on “How to take care of your school” and we are about to publish guidance on “How to take care of your estate” so that people can see the kind of stuff they need to be doing and, to your point about accountability, “This is how you would look after a building well.”

Kwasi Kwarteng

That is what I am interested in—the accountability. We can play games as to what is revenue and what is capital expenditure—it is not as clearly defined in some instances—but I just wanted to ask about what you were doing in terms of tracking.

Jonathan Slater

I acknowledge absolutely that we would definitely benefit from having better data as to what is going on in practice, school by school, by way of preventative maintenance. What I am saying is that the conditions survey and its being repeated will give us data of a sort that we do not have, and we will be able to use those data to challenge people where they are leaving their buildings and not managing them properly. That is what we do not have, and that is what we will have. That is what I am saying.

Bridget Phillipson

Returning to the Priority School Building programme, the NAO Report shows such schools being replaced at a lower cost than under the Building Schools for the Future programme, but we heard from Hetton School about the contribution required from the local authority. Are you making any assessment or gathering any data around additional contributions that are being made to the programme in order to make the school functional, serviceable and a good learning environment?

Mike Green

The answer to that is no. This is very much a building programme. We do do fixed furniture and equipment—things like fixed benches or whatever. One of the criticisms that I heard about BSF was about people putting furniture that was in relatively good condition or new into a skip and buying a complete new school’s worth. We did not want to do that. We make an assessment of all the furniture we wish to move and so on. When a school expands, we do provide furniture and ICT equipment, but in the main, it being a building programme, we do not provide new computers or whatever. Anything that is fixed—wiring, benches and so on—we will provide as part of the building programme, but there are other budgets that schools should be providing that from. We certainly do not want to put anything in the skip that is still serviceable, and I am sure you would not want us to either. That does not mean that you get shiny new furniture in every single school—that is not why we are here.

Bridget Phillipson

But we are not really comparing like with like.

Jonathan Slater

No, we are not comparing like with like. Bringing down the cost per square metre by a third from BSF to PSBP was done through a number of means. One of them is a standardised specification in which, as the headteachers described, they are a user rather than directly in charge of having whatever they want. Another is that it is meeting the building needs, not—reference was made to the need to upgrade all the IT in that school. That is not what this programme does either. It is a different programme that is designed to get more schools rebuilt more quickly than the previous one.

Chair

But Mr Slater, IT might be considered quite a capital cost, because these days it is built in—whiteboards and so on are wired in. It sounds like an old school like Hetton—Ms Phillipson would know better than me—with asbestos dropping from the roof and the wind whistling through it is not a school you would have wanted to put modern equipment in. I think it would have been sensible to wait and build it into the new school, but it was not seen as part of the plan in this case. Is it never the case that you would pay for some of this? There is a lot of cost in the first year of a new school opening, as we heard.

Mike Green

There is, but of course schools will upgrade their ICT or not depending on whether they get a new school or not, so we did not see it as part of the programme.

Chair

My point is that in that particular school—in a building of that nature—it sounds like you could not invest properly in IT.

Jonathan Slater

I do not think that was the case that was put. It is the case that under the previous programme, you would have got it funded as part of the deal. As part of this programme, we identified—in answer to John Pugh’s question—which buildings are in the worst condition and how quickly we can replace as many of those as possible. That was what the programme was.

Bridget Phillipson

Although that programme has not been particularly fruitful, has it? There have been significant delays in pressing ahead. From the point at which the Priority School Building programme was first trailed to the opening of schools, it has not been a quick process. It is picking up pace, but it has not been quick.

Jonathan Slater

I agree. If you are the headteacher of a school in a poor condition, tomorrow is a day late. It is certainly a lot faster than the Building Schools for the Future programme would have been, where the average time from announcement to on-site was three years. For this, it is one year. Obviously, that is still one year longer than the headteacher would want. The programme was largely delivered in the first phase two years ahead of the timetable set, so it is a pretty good performance from a programme level, and faster than the previous one, because it is a smaller scale one. But as you say, from a headteacher’s point of view, it is longer than they want.

Bridget Phillipson

When you are in a position where schools were cancelled under Building Schools for the Future, only to then be put back into the Priority School Building programme, you are talking about schools opening three or four years later than they might have otherwise opened. Admittedly it is a different school, but there was a significant pause after the initial cancelling of Building Schools for the Future and before the PSBP was funded, because there was an issue with funding that programme.

Jonathan Slater

It certainly is the case that for a headteacher whose school is in BSF and then not, there is cause for concern while they are waiting to find out if they are going to be in PSBP, until they hear they are in. The fact that they were in BSF absolutely does not mean that the school would have been rebuilt any more quickly. In fact, on average the answer is more slowly, because the whole point of PSBP was to build the schools more quickly than previously. All that schools had been told up to 2010 was that they were in the programme, but not when.

Bridget Phillipson

In the case of Hetton School, I find it hard to accept that point, given that you are talking about a school opening six years after BSF was cancelled. Surely it should not take you six years to build a school, even under BSF.

Jonathan Slater

If we were still in BSF territory, we would be at early stages in the delivery of that programme, given its scale.

Chair

You mean you would be in the early stages of delivering Hetton School now?

Jonathan Slater

It is a question that neither of us can answer—how quickly it would have been done under the old thing. I am just saying that the fact it was in the BSF would not mean necessarily it would have been accomplished by now.

Bridget Phillipson

But there was a significant gap in one programme ending and the next one starting, which was a policy choice by Ministers.

Jonathan Slater

Yes, the consequence of the policy choice by Ministers to move from a larger scale programme to a more targeted one was that it took us until 2012 to put together the next programme. One of the consequences of that was that the schools were being rebuilt from 2012 much more quickly than under the previous scheme.

Bridget Phillipson

But you could have built them quicker still if Ministers had not rather hastily cancelled an existing scheme.

Mike Green

Between 2003 and 2010, there were 178 BSF schools. Then the announcement was made that it was closing down. After 2010, we still went on and built another 633. It did not stop. A lot of schools did get through after the programme was shut down, and that is what we were doing for a while, while the PSBP was speeding up.

Peter Lauener

That point is well drawn out in the National Audit Office Report, in figure 11. It is the difference between two programmes. The National Audit Office Report clearly shows that the Priority School Building programme is more efficient, quicker to site and a third per square metre cheaper.

Bridget Phillipson

To a point.

Peter Lauener

There is the issue about furniture and fittings, but that is a small proportion of the overall cost. For a school like Hetton, which has had to wait extra years, it is not comfortable. We heard about some significant maintenance problems. There are still schools like that. When I visit schools that are being rebuilt under PSBP, I quite often think, “It would have been much better if we’d been able to build that school more quickly.” We can only now build the schools as quickly as we can and target the money we have got as efficiently as we can.

John Pugh

On figure 12, as you said, Mr Slater, there is a list of various streams of funding. As Mr Kwarteng was saying, a lot of that funding has to be dedicated to ensuring that schools do not fall any further behind. Given that you are looking at a £6.7 billion backlog and that some of these pots are raided for other purposes than maintenance—for example, the Report says that some local authority money is used for finding additional places—and given that schools are under revenue pressures anyway and have all sorts of things they want to spend revenue on apart from maintenance, are you confident that the pots designated in that scheme are sufficient to ensure not just that the £6.7 billion backlog gets addressed but that schools do not fall further behind, causing the £6.7 billion to grow?

Jonathan Slater

We will be able to give you a much better answer to that question when we have the results of the condition survey that we have started.

John Pugh

When you have had that, you will know whether there is enough money in the pot to stop things getting worse?

Jonathan Slater

We will know how much schools have depreciated over the five years since the last survey, and if they were to carry on like that, yes, we would have much better data than we do at the moment. At the moment, all we can rely on is what local authorities tell us. As the NAO points out, about three fifths of local authorities told them that their estate had got better in the last five years, and a quarter said it had got worse, but that is not really very good data. If you compared with our private sector comparators, you would say that the backlog would be getting worse, but we will really know only when we are able to compare the actual condition in 2018 with the actual condition in—

John Pugh

These surveys are going to solve a lot of problems. I will just take a yes or no answer on this: the bid process is said in the text of the NAO Report to be conditioned sometimes by the skill of the bidders rather than the needs of the school. Presumably that will become less evident, or less possible, when you have a clear idea yourselves what schools are like.

Jonathan Slater

Absolutely, yes.

John Pugh

Okay. Will any preference be given to schemes coming forward that do two things? One is to address the fabric issue of the state of the school; the other is to create more places. Will those schemes be accelerated or prioritised above those that simply deal with a rotten building?

Jonathan Slater

They will each be considered on their merits. We have to do two things, don’t we? We have to ensure sufficient places, and we have to ensure a decent condition for the estate.

John Pugh

A scheme could do both.

Jonathan Slater

We have to do both, absolutely, but we have to balance a fixed sum accordingly. The more data we have, the better we can do that exercise.

Peter Lauener

Sometimes, when we are rebuilding schools under the PSBP, we will rebuild slightly larger if that helps meet a basic need problem in the local authority. It is not quite two separate parts; they do intersect.

John Pugh

Last question; I am sure the Chair will want to touch on this as well. If I want to open a free school and I have a building, is there any spec or requirement that building has to meet so you do not end up paying costs for repairing that building or maintaining it at vast cost? Are there any building criteria before you can accept a free school proposal?

Mike Green

Yes.

Jonathan Slater

Yes.

Peter Lauener

It is a similar spec to the PSBP and we achieve the same kind of cost savings, but there are a lot of different models in the free school programme. Sometimes we are building schools from new; sometimes we are refurbishing existing premises. There are examples where we have converted office—

John Pugh

How many proposals have you turned down for having an insufficient or inappropriate building?

Mike Green

We find the buildings, so we judge whether—

John Pugh

You find the building in every case?

Mike Green

Yes.

Chair

I want to move on to school places and the planning of those, but I just want to be clear before we finish questions on this section of the Report. The danger is that you wait until the school has got very bad before you put it into the new programme. How are you watching to make sure that maintenance is really being done at the right level to prevent the need for a rebuild where that is appropriate? We heard from one of our witnesses earlier about, for instance, finding different ways of dealing with system-build schools, like different types of cladding. That seemed one way of cutting the costs of replacing a school. I am not sure if it provides the same quality of school, but it is a way of mitigating the challenge of schools getting to the point of deterioration before they then get dealt with by the Department’s funding.

Jonathan Slater

I can give you more information if that would be useful. We obviously need to, and do, work closely with local authorities to share with them good practice and benchmarking data. As you would expect, Mike has a close working relationship with the officers’ group that you heard from earlier. We fund local authorities, explicitly and directly through the retained part of the education services grant, for their estate management duties. As in the answer to the previous question, as we get more data, we will use it to be more challenging than we can be without it.

Chair

We might come back to that in a moment. I want to move on to school places. The obvious question is: where is the control on school places with the changing landscape of different education providers? There can be too many in one place and too few in another.

Jonathan Slater

What is the question?

Chair

Where does control on school places rest? Its statutory responsibility is with the local authority, but they don’t control a number of the providers now, so who has the control?

Jonathan Slater

We set the overall policy and statutory and financial framework within which local authorities have to secure their statutory duties. We ask each local authority to tell us, about three and a half years in advance, how many school places they estimate they will need and compare that with how many they have. We will discount that gap by the extent to which we are building a free school in the area, so we then work out what the net number of places they require is. We then fund them to that number of places and hold them to account for delivering it.

Chair

Where does the control come? There may be areas that don’t need places and have free schools wanting to open, but there may be areas where there are an excess of places. Who is controlling what the total is? Local authorities have a statutory duty, but they do not now manage or own every provider, so they can’t make a free school or academy shrink or increase in size.

Jonathan Slater

Local authorities with no basic need don’t get any money and they don’t build any additional places. Where the local authority has additional need, as evidenced in the way I described, we will fund to meet that need.

Chair

To be absolutely clear, if you wanted to open a free school in an area where there was not a demand for extra school places, the Department or the Education Funding Agency would just say no? Is that a simplification?

Jonathan Slater

The free school programme has two policy objectives. One of them is to address—

Chair

We know the two policy objectives; one is choice, one is school places. Where does the balance come? Choice can mean there are too many school places, which can potentially be bad for all of the schools in an area. It could certainly mean a number, including free schools—we have seen a couple of examples—come under the total.

Jonathan Slater

This is a judgment that the Department makes. The Department is—

Chair

So the buck stops with the Department?

Jonathan Slater

The Government, and therefore the Department, are accountable for the free school programme as a whole. A local authority can propose addressing a basic need gap by proposing a free school. There was a name for that—

Chair

Mr Slater, you keep referring back to when they need more places. In a way, that is the easy bit, isn’t it? We heard about local authorities looking for sponsors to get new free schools going where they need places. What if there are a surplus of places? For instance, our former colleague in Essex often talked of the fact that one side of Essex had a surfeit of places and the other had a shortfall, so they were bussing children; the NAO Report talks about children being bussed from one area to another. If there is a surfeit of places, where does the buck stop with the cost of providing that? Who is ultimately accountable?

Jonathan Slater

The Department is accountable for the free schools programme; local authorities are accountable to us for the delivery of sufficiency of places.

Chair

When there are too many, who is responsible?

Jonathan Slater

Too many places or too many free schools?

Chair

Too many places.

Jonathan Slater

We fund local authorities deliberately to provide more places than are needed today; there is a 2% operating margin and planning error, which turns into about 5% across the piece. We then ask them to plan ahead for what is going to happen in the future, so we end up with, as the Report says, about 1 million places that are surplus to requirements at any particular moment. However, precisely because the population is increasing, we want local authorities to be careful before they take precipitous action. We are holding them to account for acting appropriately in making sure that there are sufficient places and that they are planning ahead, and that they take action where it is clear that that margin is no longer necessary.

Chair

You keep talking about local authorities being responsible for there being sufficient places. It is relatively easy, I would contend, for a local authority to go and seek a sponsor for a free school and say, “We want to find a free school sponsor because we need places and this is the only way we can get a new school.” Whether they like it or not, there will be a free school; they can get that put in place to provide spaces where there are not enough school places. What about where you have too many places and that is having an effect? Take Southwark Free School, for example. This was a new school that never filled up; there were 56 pupils in a 200-pupil school. Who ultimately bears the responsibility for such a surfeit of places that it makes any school, whatever type it is, not viable?

Jonathan Slater

Chair, I think we are switching—or I am switching; I can’t speak for you—between two different things in the same sentence and I am in danger of confusing the Committee. We have estimated a need for half a million places required this Parliament, of which about 57,000 are going to be delivered by free schools, so the meeting of the basic need is not primarily a free schools question, by definition.

Chair

You are going to expand existing schools.

Jonathan Slater

The way the best part of 90% of those basic need places are being delivered is through the expansion of existing schools and so on, as set out in the Report. And that is the accountability of local government. The accountability of central Government is for managing the free schools programme properly, so we are accountable in the Department. The Government is accountable for the fact that four mainstream free schools, of the 345 opened in the last Parliament, closed because they could not sustain enough children to keep themselves going. We are accountable for that, because we are the ones accountable for the free schools programme as a whole, so we looked really carefully at what it was that made those four schools, of which you have quoted one, not succeed, and the answer, I think, is that a huge effort was being made to get the programme going, to promote innovation—new approaches—and build momentum. It is not a coincidence, I think, that all those four schools—the mainstream free schools that closed—were ones that were approved in the first couple of waves. No mainstream free school approved since 2012 has closed, because, I think, the Department learned that going hell for leather, really building a sense of momentum, enthusing and encouraging was going a little bit fast in some cases and so some schools closed. We are accountable for that.

Chair

We are going to come back to free schools, but let me go back to the issue about school places. What level of spare capacity is going to be too high for you to tolerate? This is always a dilemma. You have to have a certain amount of room for movement; the Report is clear on that and you acknowledge it. But there is a danger with so many different providers. The local authority has theoretical responsibility—it is incredibly theoretical now: it is the actual statutory responsibility. If you have a lot of free schools opening in an area—they are the new schools, because they are the ones that would open—and you also have a council planning to expand its schools, you could end up with a surfeit of places. How much spare capacity would be too much for the Department to tolerate in an area, and what would you do if there were too many schools? How would you decide to manage that, or encourage the council to manage it?

Jonathan Slater

Inevitably, if somewhat frustratingly, the answer to that question is: it depends upon where the surplus places are, doesn’t it? So I do not think—

Chair

You mean geographically or—

Jonathan Slater

Geographically, and which phase, and what one expects to happen to the population over the next five years. We have all got burned into our memory in the Department the consequence of closing 200,000 primary school places between 2004 and 2010 because primary numbers were going down, and as soon as the numbers started rising again, in 2010, we had to build and build and build very, very fast. So you might have thought—

Chair

So what is the answer to my question about what extra capacity you would find acceptable? Where is the tolerance level on extra capacity?

Jonathan Slater

That is a decision that has to be made locality by locality. That is the reality of it.

Chair

So who will fund it? Let’s say that there is a maintained school, an academy and a free school and all of them have some free places—let’s say they are evenly spread, for argument’s sake. They are all below par and they all get less funding because they are funded per pupil. If you are thinking, “Actually, we need a bigger cushion because there is projected population growth in this area”—you have done some clever work in the Department or the local authority comes and tells you that—do you provide enough funding to make sure those places are maintained, those schools are viable, while you are waiting for that uplift in population, which could take some years to come through?

Jonathan Slater

It is our responsibility to make sure that local authorities have the funding they need to achieve the extra basic need places. As I say, we asked them to advise us three and a half years in advance, not just at local authority level but at a planning area level, so kids don’t have to travel too far. Then if they get it wrong and they have overstated the amount they need, at the point at which that place is required they do not get it a second time. It is our responsibility to fund them accordingly, and their responsibility to use those funds well.

Bridget Phillipson

But how do you square all that with the policy objective of opening 500 new free schools?

Jonathan Slater

We have been asked by the Government to do two things—I am not going to tell you what they are, because the Chair has already told me that you know. It is our responsibility for both of them. It is important to get perspective. It is 600,000 basic need places that we are building this Parliament, and it was exactly the same number, to within a thousand, in the last Parliament. The NAO identifies that it is about 113,000 free school places this Parliament, of which half are going to meet free school meals and half—about 50,000 or so—are going to provide additional choice for parents in support of manifesto commitments, which you will not be surprised to hear I am doing my best to deliver on a value-for-money basis. That is 50,000 out of 8.4 million—so, about half a percent are the additional school places we are building to promote parent choice as a consequence of a manifesto commitment. That is essentially the balancing act that we are doing.

Bridget Phillipson

You have always got the catch-all—in an area where you do not have a shortage of places, but Ministers are desperate to get to the 500 target, the pressure will come. There is an inevitable pressure in the system, surely, to start approving free schools, not on the basis of school places but on the basis that you have got to meet 500.

Jonathan Slater

In practice, the opposite direction has been happening, hasn’t it? In the first four waves of the programme there was no explicit criteria around basic need; since wave five of the programme, that has been built in. So the proportion of free schools being built in areas of basic need has been increasing as Ministers have addressed the need to achieve both those policy objectives at the same time.

Peter Lauener

May I give two examples that perhaps illustrate the point about improving choice and that it is not an either/or with basic need? These are from the post-16 area, where there is no significant increase in demand—numbers are still falling and have been for a couple of years. One free school that was opened, I think three years ago, was the Newham academy of excellence. It provided an education that was not being provided by other local, actually quite good college providers, and the results have been extremely good already. We have sixth-formers going from there to Oxbridge. Another, similar example is in Bodmin in Cornwall, where Callywith free school is due to open this autumn. It is being opened by one of the local colleges and will result in a much better sixth-form offer, in my view, than—

Chair

But there you are talking about diversity, and not the total number of places.

Peter Lauener

It is about places that improve choice for young people and parents, and they are under the free school programme. It illustrates how we are trying to—

Bridget Phillipson

Schools are facing a massive squeeze on their budgets—the work this Committee has done, driven by the work of the NAO, demonstrates the squeeze that they are facing. Most parents in a community such as mine would send their children to the nearest school, and what they want to know is that schools are being properly funded. There has not been a massive take-up of the free schools programme in an area like Sunderland. Surely the challenge is not just an arbitrary 500 target, which will cost—the free schools programme will be £9.7 billion by 2021. How do we reconcile that with the need to fund not only novelty—the novelty of opening new schools or parents having choice—but all schools in a way that satisfies the needs of local parents and the community?

Jonathan Slater

On the basis that you are not asking me to have a debate with you at this meeting about the benefits or otherwise of Government policy on free schools, what we are doing—

Bridget Phillipson

It is how we spend that money. Do we spend it on areas where these schools are not needed versus all communities where we need a decent level of education funding?

Chair

To sum it up, in Hackney South and Shoreditch there is a lot of choice, and in Sunderland there is not a lot of choice, but in Sunderland the schools need investment just as much as some of the schools in London. It is not an even spread.

Jonathan Slater

It is vital that we achieve not just two, but three things. It is vital that we are able to tackle the condition of existing schools; that we provide an additional 500,000 or so places every Parliament, because that is what the population demonstrates is required; and that we achieve the manifesto commitment of increasing choice. We have to do all those three things. That is why I referred to the £14 billion that we will have spent by the end of this Parliament on tackling the £6.7 billion gap that was identified in 2014.

Chair

But I think Ms Phillipson’s point was that choice depends on where you live. There is not a great deal of choice unless people from Sunderland fancy coming down to parts of London. I am being facetious, but there is not so much choice in some parts of the country, where they are just struggling to maintain the basic school estate, and the distances make it very difficult for young people.

Peter Lauener

In Sunderland—sorry, I don’t think this is in your constituency, Ms Phillipson; my geography of the area is not perfect—there is a good example attached to the Stadium of Light. A local trust is developing new provision for young people, with very strong ties into the community. I think that will be an excellent example of something that brings new choice and new opportunities alongside other schools.

Bridget Phillipson

I agree. I would just like all my schools to get a decent level of funding at the same time as money is being chucked at opening new schools elsewhere.

Jonathan Slater

That is why we need to do both things and why I was pleased that, in the Budget announcement last week, there was money not just for free schools, but for condition survey. We need to do both things.

Chair

In terms of school places, we have highlighted that there are other ways of funding them. We will come back to free schools, but the Report shows that over half of local authorities are creating new places by increasing primary class sizes. Are you monitoring that in the Department? Are you concerned about that?

Jonathan Slater

We certainly monitor it. There was an 11% increase in the number of primary school children requiring education between 2010 and 2015, and the average class size increased by half a child from 26.5 to 27.

Chair

Are you concerned that junior class sizes are increasing? The average of a half—it is a nonsensical figure. Of course it is an average, and of course it is true, but you don’t get half a child in a school; in some areas it will be one or two and in some it might be more, but the trend is upwards. Is that a concern for the Department or do you think it will be okay?

Jonathan Slater

I think it represents a very creditable performance by the school system in general to have accommodated an 11% increase in the number of primary school kids, going from 26.5 to 27 primary school children per class. That is not the only constraint. As you know, we require infant classes to be no greater than 30 other than by exception. We monitor that carefully, and we are pleased to see that the numbers have stabilised since 2014. As you say, obviously we have individual conversations with individual schools in individual circumstances, but across the school system as a whole, that is a good performance.

Sir Amyas Morse

I just wanted to ask Mr Lauener when he thinks free schools will have been running long enough to have reliable statistics to support claims of improved performance or attainment. I take it that you accept, despite what you said earlier, that we are really not in a position to do that yet, are we?

Peter Lauener

That is fair in terms of an overall evaluation. The thing that we look at immediately is the proportion of schools that are getting good or outstanding. We are reasonably pleased with where those figures stand. Obviously we will be tracking the exam results and other outcomes as the programme beds in. I mentioned one particular sixth-form free school where you get the exam results rather quicker, so we are able—

Sir Amyas Morse

Sorry, just to repeat the question, when will we start seeing consistent results that we can evaluate, so we can compare fairly?

Peter Lauener

Off the top of my head, I would say that must be three or four years down the track.

Chair

We need to press on, because we are not quite sure when the vote will be—we think it might be at 20 minutes past 6. I am just warning you that we might have to vote. A good point was made by the first panel about the contribution by developers to new schools. Mr Slater, what are you doing in the Department to ensure that housing developers are contributing their fair share to the cost of providing new places?

Jonathan Slater

As you heard, the Department and local authorities have a common interest to make progress on the issue referred to. That is a matter of cross-departmental discussion at the moment.

Chair

So you do not have an answer yet. When will you have an answer? When will we see any results of that discussion—with DCLG and the Treasury presumably?

Peter Lauener

I think there is due to be a policy statement by CLG in the summer—I cannot remember the precise date.

Chair

Maybe a change to planning guidelines or policy—will it be as definite as that?

Mike Green

We know that they are looking at the pooling issue that was raised.

Chair

Just at the pooling issue, okay. In areas like mine—Mr Lauener and I have had a number of exchanges of letters about valuable sites in central London that contribute a lot of money. I know that you will want them back with the Education Funding Agency, but there are also sometimes grounds for refocusing that money in the local area, because that very high cost of land is one of the problems that creates the high cost of housing.

Peter Lauener

A recent example is one case in Hackney. The Kingsland Fire Station went to planning and the community contribution was agreed, by the developer in that case—because it was a mixed use development—taking a reduction in its profit margin. That was a good outcome through the planning process. In other cases, if I may broaden it out, when we are looking for free school sites our starting point is to work closely with local authorities and seek peppercorn sites as far as we can—we have had more peppercorn sites since the free schools programme started than in fact we have had to purchase. Sometimes these peppercorn sites come from development deals done by local authorities, so it is important that we work closely together.

Chair

We will come on to the purchasing side of the equation. Finally on the places issues—we will then move on to free schools, just to alert you—why is it that funding allocations do not reflect the need for places in special schools? Is there any particular reason for that? Are there any plans to change that?

Jonathan Slater

We have been funding those special educational needs into mainstream schools through the mainstream funding. Over and above that we have opened 23 special schools so far in the free schools programme, and we have another 24 to come. We are rebuilding I think about 36 special schools under the PSB programme—

Peter Lauener

Thirty-four.

Jonathan Slater

Thank you, Peter, 34. What we have identified, though, is the need to go further and to have a specific stream of funding available to local government for special schools over and above everything I have just said. That was the £215-million capital fund that was allocated out to local government as per Saturday’s announcement, identifying an additional 5,000 places required between 2018 and 2020. There was a need to address that gap, and that is what that fund is designed for.

Chair

How do you plan for special schools, which will sometimes cover more than one local authority area because of the particular needs? Are you the arbiters? Obviously local authorities plan, but lots of local authorities might not plan for a specialism, a special school. How do you watch the overall distribution of those schools—so they are viable, planned well, and cover the needs not just of that local authority area but the surrounding area? For example, a specialist blind school or something quite specialist, or a specialist deaf unit in a school.