Waddell (1978)

Notes on the text

Part I

Preliminary pages Contents, Membership
Chapter 1 Introduction
Chapter 2 Educational matters
Chapter 3 Structure of the examining system
Chapter 4 Cost
Chapter 5 Conclusions
Appendices

Part II

Preliminary pages Contents, Membership

Report of the Education Study Group (ESG)

Glossary, Introduction
Chapter 1 Feasibility of common exam system
Chapter 2 English
Chapter 3 Mathematics
Chapter 4 Science
Chapter 5 History
Chapter 6 Geography
Chapter 7 Modern languages
Chapter 8 Classics
Chapter 9 Commerce
Chapter 10 Social science
Chapter 11 Religious studies
Chapter 12 Craft design and technology
Chapter 13 Technical drawing
Chapter 14 Home economics
Chapter 15 Needlecraft and dress
Chapter 16 Art
Chapter 17 Music
Chapter 18 Further work
Appendix A List of witnesses
Appendix B Questions
Appendix C Statistics
Appendix D Joint examinations

Report of the Cost Study Group (CSG)

Chapter 1 Introduction
Chapter 2 Costs in 1976
Chapter 3 Costing a common system
Chapter 4 Changeover costs
Annexes

Report of the Steering Committee established to consider proposals for replacing the General Certificate of Education Ordinary Level and Certificate of Secondary Education examinations by a common system of examining

Chairman: Sir James Waddell CB

Presented to Parliament by the Secretary of State for Education and Science and the Secretary of State for Wales by Command of Her Majesty July 1978

London: Her Majesty's Stationery Office 1978
© Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen's Printer for Scotland.

Part I: Cmnd 7281-I
Part II: Cmnd 7281-II

Part I

Chapter 4 Cost
[pages 28 - 34]

Introduction

87. In addition to seeking a clearer picture of the likely administrative structure for a common system, the Secretary of State asked that further effort should be made to establish the transitional and recurrent costs which could arise. It would, theoretically, have been open to us to consider first questions of feasibility and administration and then seek to identify the cost implications of our findings on those matters; in practice the time available did not allow us to approach the issues one after the other and we therefore established the Cost Study Group to undertake its work in parallel with our own and that of the Educational Study Group, but with the help of broad guidance as discussion of educational and administrative matters developed.

88. The Cost Study Group's membership is set out in Appendix B. The Group's chairman and three of its members were also members of the Steering Committee; its remaining membership included, among others, a representative each from the GCE and CSE boards. We are especially indebted to these board representatives and to the staff of all the boards for the help which was given in assembling and analysing information about the cost of examining.

89. Information was not available about the expenditure of the boards under the present system on a consistent basis and there was therefore no ready starting point for consideration of the impact of a common system. Nor was it possible to foresee in detail the educational and administrative character of new arrangements and the Group made a range of differing assumptions about each possible aspect of a common system that would have a major effect on costs. On the other hand, their task was to some extent simplified by the fact that they were asked to consider only the effect of a common system on costs and were not called upon to assess other factors which will influence the cost of examining - most notably the number of pupils who will present themselves and the number of subjects for which they will enter. With this in mind the Group's study of examining costs was based on a comparison between the expenditure on the present dual system in a recent year and the expenditure that might have been incurred had a common system then been in operation.

Costs of operating a common system

90. The Group's task fell into three main parts. The first, and most substantial, was to consider the cost implications for the boards of running a common as opposed to a dual system - whether it would cost less, about the same, or more. The Schools Council had already undertaken a considerable amount of work on cost. This suggested that a common system, operated under one of the four administrative structures described in the report of their Working Party on Administration, would cost much the same as the present dual arrangements, The Council noted, however, that their calculations rested on a large number of assumptions and that these were therefore somewhat insecure. Since the Council had encountered particular problems in relying on the boards' income as a proxy for costs, the Group started by collecting detailed information from the boards about their present costs in a standardised form, so that the various cost elements could be isolated and considered separately to see how they might be affected by a common system. The information related to 1976, the most recent practicable year, and the costs are accordingly expressed in terms of 1976 prices in the Group's report.

91. The collection of the data was a considerable undertaking because the boards do not keep their accounts in a uniform manner; even their accounting years vary. The Group therefore arranged for a team of accountants to visit all 22 boards. The team was led by a member of the Department's professional staff and included two accountants with local authority experience, with the participation of an independent firm (Peat, Marwick, Mitchell & Co.) on a consultancy basis. The team helped the boards to complete a questionnaire, which categorised the expenditure in a number of different ways. Initially direct expenditure (on the actual process of examining) was separated from indirect expenditure (on the overheads of the boards). The direct expenditure, which might be expected to vary most with the introduction of a common system, was then broken down (i) between the elements of expenditure on examining such as salaries and wages, computer costs, payments to and expenses of examiners and teachers, printing and stationery, postage, etc.; and (ii) between the main activities involved in examining, ie devising syllabuses, conducting the examinations, marking, grading and issuing results.

92. The pattern of board expenditure which emerged is summarised in the table below, which is reproduced from the Group's report. This excludes GCE board expenditure on examinations other than O Levels, although the apportionment of GCE boards' indirect costs between O Level and other activities is a notional one, based on the ratio between direct O Level and other costs:

Table

93. The Group then reviewed the impact that a common system would have had on the various cost elements had it been in operation in 1976, the year concerned. They described the effects that would have been felt irrespective of the precise administrative and educational character of a new system. The 'double entry' of candidates, for O Level and CSE in the same subject, would have disappeared and brought about some reduction in expenditure. On the other hand winter examinations, at present available only to O Level candidates, would probably have been taken by more candidates and have caused an increase.

94. In keeping with our own approach to administrative matters, the Group assumed that a new structure would have involved the boards in working together in groups, tending to result in standardisation of staff salaries and wages and of payments to examiners and teachers. In such situations there are normally pressures to standardise at higher rather than lower rates and the Group made estimates of the possible overall increases in expenditure that would have resulted. They then identified two possible educational features of a common system which might affect expenditure substantially, The probability that an element of school-based assessment would form part of more examinations in a common system than at present would have tended to increase the overall amount of payments by boards to teachers. Some reduction in board costs would, however, have followed the decrease in numbers of syllabuses which might be expected in an administrative structure based on groups.

95. In order to estimate more closely the likely effect of a common' system on numbers of syllabuses and on administrative expenditure by the boards and to test the usefulness of having assembled cost data in relation to examining activities and type of expenditure, the Group at our request looked more closely at three possible administrative models for a common system. These were:

(i) a structure involving groups of boards, each of the latter continuing to offer its own examinations in a full range of subjects, the Group having some central coordinating machinery. It was assumed in this model (and in (ii)) that there would be five groups, one of which would cover Wales;

(ii) an integrated grouping of boards with stronger central coordination, central processing of candidate entries by the group and a measure of financial interdependence. It was assumed that there would be a considerable reduction in the total number of syllabuses developed for a common system;

(iii) a structure involving fewer boards than at present. It was assumed that the 15 largest boards would remain in being.

96. Not surprisingly, model (i) of itself had little impact on cost; the need for some central coordinating machinery would have been a small additional extra. Model (ii) seemed likely to involve more substantial expenditure on central machinery but with a counterbalancing saving on staff costs; the smaller number of syllabuses assumed to be on offer would have involved substantial savings in running costs. Model (iii) produced the largest notional reduction in expenditure but this finding should be treated with extreme care, since no account was taken of the geographical distribution of the 15 largest boards or of the cost implications of closing 7 boards. We found model (iii) useful in illustrating the Group's approach and in indicating the difficulties to be encountered in any attempt to assess the implications of a reduction in number of boards; but, for the reasons given in the preceding chapter, we do not put it forward as a possible form of administration for a common system.

97. The Group did not attempt to make precise estimates of the impact which these various possible features of a common system would have had on costs, had such a system been in operation in 1976. But in order to provide some indication of the cost of operating a common system they calculated the maximum and minimum changes of cost that would have been incurred on the basis of a series of different assumptions. The Group considered (and we agree) that the extreme figures are very unlikely to be realised, but decided to include them in their report in order to show the range within which the cost implications of a common system are likely to be found. The Group made estimates which took account of the various factors summarised in paragraphs 93 and 94 above and then went on to estimate the additional effect of adopting each of the models described in paragraph 95. They took the view that the effect on annual costs, if a common system had been running in 1976 on the basis of model (ii), would have been to produce a change somewhere in the range between a saving of £0.5 million and an addition of £3.5 million.

98. It is essential to recognise that the minimum and maximum figures quoted rest respectively on a combination of all the most and least 'favourable' cost assumptions. By far the largest contribution to the difference between the minimum and maximum arises in respect of payments to teachers and examiners: the maximum figure assumes all such payments will be levelled up to the highest rates now paid. We considered this element with special care because of its size. The highest rates at present are paid by two CSE boards with distinctive styles of examining. It is unreal to assume that their styles would become general throughout the system and that their costs should be taken as a norm for a common system. In our view therefore the establishment of rates below these higher rates is very probable, and this would of course reduce the maximum additional costs given above.

'Hidden' costs

99. The second aspect of the Group's work was concerned with costs not met by the boards, the so called 'hidden' costs of examining and some relatively minor overt costs such as costs of materials met by schools for some practical examinations. The 'hidden' costs are not costs in an accounting sense since they do not appear in the accounts of boards or local education authorities. They arise mainly in schools and the largest single element is the 'cost' of that teacher time which is not paid for by a board, or for which the board's payment does not reflect the economic cost. Typical examples would be time spent at board subject panel meetings or in preparation of school-based syllabuses. It is clear from the Group's report that this time is substantial. On the other hand, account needs to be taken of the fact that a common system would spare teachers the need to enter pupils for different examining systems as at present.

100. In order to help the Group form some idea of the significance of 'hidden' costs, the team of accountants and members of HM Inspectorate paid visits to 23 schools of varying types in all the CSE board regions. They distributed standard questionnaires which were completed by all the heads and 290 other teachers. The findings from this exercise have no statistical validity, but lend some support to the view that Mode III examinations place a higher demand on teachers' time than others. Visits were also made to 20 local education authorities and, while it is clear that 'hidden' costs are incurred by them - for example through the involvement of officers with the work of the boards - it was not possible to make an estimate of their amount.

Changeover costs

101. The Group's final task was to consider the once and for all cost of changing over to a common system. Their report dealt with this under three headings. The first concerned the net additional cost of developing new syllabuses for a common system, that is to say the expenditure over and above that ordinarily incurred by the boards on syllabus revision and development from year to year. In making their estimate (again in terms of 1976 prices) the Group took into account a range of numbers of new syllabuses likely to be required, the differing complexity of syllabuses by subject and the numbers of syllabuses presently offered by the boards. The most important factor in determining the likely overall cost of developing new syllabuses for a common system was their number; as a basis for calculation it was assumed that administrative model (i) would involve 1,200 new syllabuses; model (ii) 800; and model (iii) 600. After study of reported present board costs the Group took £3,500 as the average cost of developing a new Mode I syllabus; the cost of a Mode III syllabus appeared to be much smaller, indeed negligible in terms of board costs although clearly more substantial in terms of 'hidden' costs.

102. The range of estimated net additional costs for new syllabus development was wide. At one extreme, if the relatively small number of new syllabuses assumed for model (iii) was developed over a 5 year period, the extra cost would be minimal. The highest estimate which the Group saw as well founded, at least in theory, was £0.5 million (at 1976 prices) per annum, relating to the development of all the new syllabuses required under model (ii) over a period of 3 years. In practice it seems to us improbable that so large a number of new syllabuses could be developed in 3 years and we doubt whether it would be thought necessary to attempt to do this. As suggested in Chapter 2, priority will need to be given to examinations for certain main subjects, while others, such as those attracting candidates from a limited range of ability, could be developed subsequently. In our view the additional cost of devising new syllabuses is likely to be substantially less than the maximum figure quoted above would indicate.

103. The Group made no estimates in relation to the other features of a changeover seen as having possible cost implications, but noted them as matters requiring attention in future. They concern staffing. Models (ii) and (iii) seemed to the Group likely to involve in the long run some reduction in the number of permanent staff in the boards, not because of changes in the nature of examining under a common system but because of grouping or reduction in the number of boards. In the short term, during the period of preparation for the introduction of a common system, the boards appear likely to need all their experienced permanent staff to prepare the new syllabuses and examinations. Thereafter (as will be seen from Chapter 5 we are here looking to the mid 1980s and beyond) the demands of 16+ examining on senior board staff might be expected to decline with corresponding savings in expenditure by the boards on salaries. On this time scale it should be possible to avoid the need for a substantial number of redundancies by taking advantage of natural wastage. The coming decline in the size of the age groups from which candidates are drawn, which will continue to fall from a peak in about 1980 until at least the mid 1990s, is likely in any case to have an effect in due course on staffing levels. However, we believe it right to call attention to the possibility that a small number of senior permanent staff might eventually become redundant as a result of introducing a common system administered by groups of boards. These are people whose experience will be needed in preparing for a common system, and who by the time of its introduction may be at an age where transfer to other employment would be difficult. The position of such staff will need sympathetic consideration by the boards concerned. We recommend that they give this matter early consideration, perhaps jointly, once the future administrative structure for a common system has been settled in outline.

104. Finally, the Group drew attention to the extra pressure on teachers in helping to devise a large number of new syllabuses over a relatively short period, to the possibility that new syllabuses will lead to pressure for increased expenditure on new textbooks and other teaching materials, and to the need for in-service training programmes to take account of the change to a new system.

Our approach to the Group's report

105. The possible increases in cost discussed in the Group's report are very small in terms of overall expenditure on schools. But they should also be seen in relation to the cost of examining. The boards' expenditure on all activities, including A Levels and overseas examining, amounted to about £21 million in 1976 (the year to which the Group's report related), the CSE boards accounting for £6.5 million and the GCE boards for £14.5 million. On the basis of the assumption described in paragraph 92, the boards' expenditure on O Levels and CSE only was £13.5 million (CSE £6.4 million, GCE £7.1 million).

106. It was not practicable for the Group to attribute precise costs to the operation of a common system or to the changeover from the present dual arrangements. This reflected our aim which was not to prescribe a detailed pattern of examining and administrative structure for a common system which could, at least in theory, have been costed) but rather to reach general conclusions and make broad recommendations. Despite limitations which we have thought it right to stress, the Group's findings provide helpful reassurance in certain respects. Taking account of all the factors considered, and using model (ii) as a basis for estimate, the Group found at one extreme that a common system could have cost about £500,000 less than the dual system to operate in 1976; and that, at the other extreme, it could have cost £3.5 million more (both figures at 1976 prices). As the Group explained, the maximum and minimum estimates did not in themselves represent likely outcomes; the actual cost changes would have been likely to fall well within the extremes of the range. It would be a mistake, however, to take it that any extra cost would have fallen around the mid-point between the two figures; there are too many uncertainties still to be resolved to allow for a conclusion of this kind.

107. Although the Group necessarily made their estimates in relation to 1976 a common system may not be fully operational, as Chapter 5 explains, until the mid 1980s. It should not be assumed, whether or not a common system is introduced, that the various factors affecting costs will have remained constant in the meantime. The influence of falling secondary school rolls on candidate numbers, continued changes of emphasis as between the various modes of examining and pressures of an economic character on the rates of payments by boards to teachers and examiners, are amongst the major factors which are likely to have an effect. We believe that it is important to see the estimated range of possible additional costs of operating a common system, as quoted above, in this context. Even if a common system were not to be introduced it is likely that the cost of examining will change markedly over the next four years; if a common system is introduced some at least of the possible additional costs identified by the Group will be subsumed in the effect of other changes which are taking place.

108. In addition to having narrowed down the range of uncertainty that existed previously about the cost implications of a common system, we believe that the Group's work will be useful in a number of ways following a decision by the Secretary of State, if that is in favour of a common system. The information they have collected and the techniques employed in attributing board costs to the various activities that make up examining will enable others to make more precise estimates of the costs of a common system as its character takes on clearer definition. We believe that this will be helpful, not only to the Secretary of State in reaching any later decisions about the new system, but to all those who will be concerned with the establishment and operation of groups of boards, particularly the local education authorities and universities with their special responsibilities for board expenditure. The Group's report should enable them to identify more clearly the cost implications of the decisions yet to be taken about the structure of groups and the conduct of the examinations under a common system and to take any steps that may be necessary to minimise additional costs. The information collected by the Group is summarised in their report and is freely available to the boards themselves.