Taylor (1977)

Notes on the text
Preliminary pages Membership, Preface, Contents

Chapter 1 Introduction
Chapter 2 Present arrangements for school government
Chapter 3 A new approach to school government
Chapter 4 Membership of the new governing bodies
Chapter 5 Communication and cooperation
Chapter 6 Curriculum
Chapter 7 Finance
Chapter 8 Appointments
Chapter 9 Other functions
Chapter 10 Training the new governors
Chapter 11 Procedural arrangements
Chapter 12 The government of voluntary schools
Chapter 13 Recommendations and implementation
Summary of recommendations

Notes of extension and dissent, minority report

Appendix A Evidence
Appendix B History of school managers and governors
Appendix C Visits
Appendix D Education Act 1944: selected extracts
Appendix E Administrative Memorandum No 25 (1945)
Appendix F Letter to parents
Appendix G Aims into practice

Index

Report of the Committee of Enquiry appointed jointly by the Secretary of State for Education and Science and the Secretary of State for Wales under the chairmanship of Mr Tom Taylor CBE

London: Her Majesty's Stationery Office 1977
© Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen's Printer for Scotland.

Chapter 7 Finance
[pages 63 - 69]

7.1 In this chapter we deal with the financial responsibilities of school governing bodies, first in general and then, more specifically, in relation to the use of the resources allocated to a particular school and also to building work. We begin by reviewing practice as it has developed since 1944 and summarising the evidence we have received.

The 1944 arrangements

7.2 In 1944 it was expected that governing bodies would have a significant financial role. The White Paper said:

'The practice will no doubt generally obtain by which governors prepare estimates covering a suitable period and submit them to the local education authority. Within the broad headings of the approved estimate the governors should have latitude to exercise reasonable discretion. It may be desirable that a small margin for contingencies should be allowed, particularly under the heading of 'Books, apparatus and stationery'; in any case the allowance under this heading, which is commonly calculated on a capitation basis, should not be too rigidly defined and a school should be entitled to present a case for a higher rate to meet special difficulties and developments. There is general agreement that the school library, the special needs of which have often been overlooked in the past, should be given a separate allowance'.

'a. The Governors shall in the month of in each year submit for the consideration of the Local Education Authority an estimate of the income and expenditure required for the purpose of the school for the 12 months ending in the following year, in such form as the Local Education Authority may require.

b. The Local Education Authority shall consider the estimate and make such variation in it as they think fit.

c. Where the Governors are empowered by the Local Education Authority to incur expenditure they shall not exceed the amount approved by the Local Education Authority under each head of the estimate in any year without the previous consent of the Local Education Authority.'

7.4 At the time Baron and Howell conducted their study they found that of the then 159 local education authorities slightly more than half (41 county councils and 43 county borough councils) had followed the model, in some cases with additions. There were eight authorities which limited governing bodies to making proposals for special expenditure and gave them no say in the preparation of estimates. One authority omitted the financial clauses altogether. In addition, there was the substantial number of (mainly county borough) authorities which had adopted grouping arrangements, which afforded little, if any, scope for decision at the level of the individual school.

7.5 In those areas where the articles gave the governing body some financial responsibility, practice did not always conform with the theory. Even where governing bodies were encouraged to scrutinise the estimates and to put forward their own suggestions, they were liable to find that the estimates they had put forward, whether in their original draft or in a revised form, were liable to be revised further by the education committee with little, if indeed any, opportunity for reference back to the governing body. In other areas, the governors' role in preparing and submitting estimates sometimes amounted to no more than 'rubber-stamping' draft estimates which had been drawn up by officers of the authority, either on their own or in consultation with the head teacher. Some authorities dispensed altogether with the submission of estimates for individual schools.

7.6 The position in primary schools was very similar.

7.7 The reasons for this state of affairs are not far to seek - the facts that by far the greatest part of any school's expenditure is on salaries and wages, that rates of pay are determined on a national basis and standards of staffing on an area basis; a succession of shortages of one sort or another and the consequential need for the determination of priorities necessitating at least some degree of central control; the development of centralised budgeting and accounting processes and techniques; and also, owing to the timing of the determination of the amount of rate support grant, the exigencies of authorities' financial timetables.

Evidence

7.8 It was generally accepted throughout our enquiries that overall responsibility for the financing of schools must remain with the local education authority. At the same time, there was a widely expressed opinion that more discretion in deciding the use of the resources made available to schools by the local education authority should be allowed at the school level. There were differing ideas as to the extent to which, in practice, such discretion might be exercised and by whom, but the majority view was that control of the allotted resources, insofar as there was scope for variation in their use, should be exercised by the governing body, in consultation with the head and staff.

7.9 Various arguments were put forward in support of this approach. Some witnesses suggested that such financial responsibility would help to give governing bodies a feeling that they were serving a useful purpose. Others argued more strongly that it would not be possible for the governing body to make a reality of their plans for the school unless they had a real measure of responsibility for the disbursement of at least some of the resources made available by the local education authority. Those who thought it desirable for governing bodies to have this responsibility had differing views about the way in which it should be exercised. Many felt that the governing body should be responsible not only for the preparation of draft annual estimates for submission to the local education authority for approval but also should be able to exercise virement between the various heads of the approved estimates, provided the total sum authorised by the local education authority for spending by the school was not exceeded.

7.10 Our attention was also drawn to certain recently introduced schemes which are designed to give schools the opportunity not only to consider how they should spend their capitation allowances on minor equipment and materials but also to look at such matters in direct relation to expenditure on, for example, extra teaching hours for small groups, new curriculum projects, additional clerical support etc. Such schemes generally distinguish two kinds of expenditure. First, that which must in the local education authority's view be handled centrally and therefore remains the responsibility of the authority; second, that which is capable of being deployed in different ways to suit the particular requirements of individual schools. In deciding on the resources to be made available in the latter category, the authority remains free to discriminate between schools according to their special needs. Within the overall sums made available and subject to certain restrictions, the individual school can vary the use of the resources in this category and can make plans in advance to ensure their most effective use.

7.11 Representatives of some local authorities with whom we discussed schemes of this kind during our visits said that, although they accepted in principle the advantages to be gained from increasing opportunities for school-based initiative, they would have reservations about introducing such arrangements at present since the difficult economic situation made it necessary, in their view, to have a greater rather than a lesser measure of centralised financial control. Head teachers with whom we discussed these schemes also had differing views. Those who had experience of their operation were generally in favour of them. Others, who had no such direct experience, were doubtful whether the benefits to be obtained from a limited power to reallocate resources would compensate for the additional responsibilities and problems involved in administering the arrangements at the school level.

7.12 Nor did all those who believed that some measure of financial responsibility should rest with the individual school agree that this responsibility should lie with the governing body. A minority argument, which was presented with some force, particularly by some head teachers, was that there were practical difficulties which militated against the direct involvement of governors in this field. Their meetings were regarded as too infrequent and there were doubts about their being in a position fully to appreciate the educational implications of expenditure decisions. It was therefore suggested that the governors should act in a supervisory capacity, and that the head teacher, in consultation with the staff, should be responsible for the detailed administration of capitation and other funds made available by the local education authority.

The Committee's views

7.13 We regard it as axiomatic that power to control expenditure overall must, in the last resort, remain with whoever is responsible for financing the expenditure and this means the local education authority. We therefore take it as given that the local education authority must, even if only in the last resort, be in a position to exercise effective control over the levels of expenditure by governors. We recognise that each year the local authority must balance the needs of the education service in its area against those of other services for which it is responsible, and must divide the global sum available for the education service between the various branches and stages of education. But having said that, we regard it as important that at the right time each year governors should spend time in carefully considering an estimate of the financial needs of their school for the coming financial year. The governors will add to, subtract from, or otherwise amend, the estimate as they think necessary and then submit it for approval by the local education authority, supplying such additional information on the special needs of the school as they may wish to bring to the attention of the authority. In the light of the total resources available to the local education authority and in accordance with their judgement on priorities in the allocation of resources between schools because of differing needs, the authority should amend this estimate, approve it, and return it to the governors with authority to incur expenditure accordingly. This procedure, which was envisaged in the 1945 model articles, is at present not widely followed. We think it should be, in order that governors become more fully informed of the economics of education and exercise a more effective control over the management of the school for which they have responsibility. In wishing to see the extension of the practice envisaged in 1945, we recognise that a phased operation may be necessary in view of the additional work which will be involved initially in introducing this procedure. We therefore RECOMMEND that provisions corresponding to those in the 1945 model articles on the submission of estimates should be applied to all schools as soon as this is practicable.

Capitation and other school allowances

7.14 In our view, it is in determining the use to be made of the resources available for individual schools, capable of being used for different purposes that there is the greatest scope for governing bodies to play an effective and worthwhile part. In theory, they might be allowed entire discretion limited only by the local education authority's ultimate power to dismiss them if the discretion were flagrantly abused. In reality few local education authorities, probably, would consider that this power was reliably available to them in practice or sufficiently effective to ensure proper control of expenditure in ordinary circumstances. These arguments have additional force in the light of our proposals for the constitution of governing bodies under which the appointment of the majority of the members is effectively outside the control of the local education authority.

7.15 We have assumed therefore that most local education authorities would wish to exercise some control over the structure of the school's budget and place some standing restrictions on the uses to which resources allocated to the school might be put, so as to ensure that basic standards of provision are maintained. They would necessarily have to ensure that the school complied with any relevant national or local agreements regarding the terms and conditions of service of staff; they would presumably wish to stipulate that the school's general financial policies should, especially in time of great financial stringency, conform with those of the local education authority's education committee, and they would presumably also take steps to ensure that no decision entailing the use of resources was taken without regard to its future implications, particularly in the case of those involving continuing expenditure. The school's basic establishment, which accounts for much the largest part of its expenditure, must clearly continue to be a matter for the local education authority to decide.

7.16 We consider, however, that every local education authority should keep to the minimum necessary the restrictions which, for financial reasons, they impose on freedom of action at the school level. Indeed, we believe that authorities should encourage initiative and independent action to the utmost extent that is compatible with their own education responsibilities. We RECOMMEND that they study the possibilities of making financial arrangements to facilitate this. At the very least, those responsible at school level ought, in our judgement, to be given, wherever possible, a choice between alternative ways of achieving a given object. We hope, however, that authorities will find it possible to go further in many respects, that their general approach will be positive rather than negative and that their guiding principle will be to encourage independence of thought and action wherever there is no need for restriction. We are convinced that such a policy would have advantages which would more than outweigh the additional administrative costs that this might involve. We also believe it would lead to a continuing pursuit of economy and ways in which savings could be beneficially redeployed. We consider too that a more effective use of resources would be secured by locating decisions with the users in the schools and that this in turn would foster a sense of responsibility in heads and senior staff and help to ensure that all the various interests involved in the running of the school were engaged in a constant examination of the school's needs and ways of meeting them effectively and economically.

7.17 A detailed examination of the various procedures at present used by authorities would be necessary before firm conclusions could be reached about the advantages and disadvantages of particular allocation systems and related discretionary procedures and precise recommendations made. We have not been able to undertake such a study. Nevertheless we are satisfied that there continues to be a very wide variety of practice in the arrangements made by authorities for the allocation of capitation allowances to schools. Some authorities have highly centralised systems of control and very little discretion is allowed to the schools. Other authorities, as we have noted in paragraph 7.10, have introduced schemes (admittedly in certain instances on an experimental basis) which are specifically designed to give schools greater opportunity to determine for themselves how best to deploy, and get the best return from, the resources placed at their disposal by the authority.

7.18 This state of affairs was first investigated by the two Central Advisory Councils - see the Plowden (1) report of 1966 and the Gittins (2) report of 1967. The most recent review was by the Bullock Committee (3) which reported in 1974 on the development of language and the teaching of reading. They concluded that the whole question of determining the allowances for schools and the ways of distributing them needed detailed examination. We believe this is a matter of continuing general concern and with the present economic difficulties has become very urgent. We therefore RECOMMEND that early action should be taken by the Secretaries of State on the Bullock Committee's proposal that a joint working party of representatives of the Department of Education and Science and local education authorities should be established to investigate the whole question of determining the allowances for schools and the ways of distributing them.

7.19 Though for these reasons we have not felt able to recommend any particular system for the allocation of resources to schools, we consider that the principles we have recommended in paragraph 7.16 should be applied by local education authorities so as to give governors the power of virement between the various heads of the approved school estimate. To exercise such a power effectively, the governing body will need to draw up its draft estimate and after consideration and approval by the local education authority, the approved estimate will become the working budget for the school. At the same time the governing body will also need to ensure that there are arrangements for the collection of the various facts (rate of consumption of materials, equipment needs etc) which will assist in the preparation of the draft estimate and which can also be drawn on readily when decisions with resource implications have to be made. This information will also be useful to the governing body whenever the need arises for that body to review the financial situation or prepare a general report to the local education authority on the school's progress towards its overall aims and objectives.

7.20 When the draft estimate has been submitted, the governing body will be able to make tentative plans for the use of the resources requested from the local education authority for the coming financial year. It is, however, in the nature of things that authorities will rarely be able to meet all the hopes and wishes of those responsible at the school level. The school's provisional budget will therefore need to be reviewed as soon as the local education authority's decisions on central resource allocation have been announced. In making these decisions, the local education authority will, we assume, have taken into account so far as possible the needs of individual schools as submitted to them by individual governing bodies during the early stages of the estimates procedures. We regard it as essential, therefore, that as soon as possible after the allocation for the school has been announced, the governors should meet to consider any changes that may have to be made in their plans for the use of the resources which will be available in the year ahead.

7.21 Once the budget has been finally agreed by the governing body on the basis of the resources that can be made available by the local education authority, we would expect the day to day decisions on school-controlled expenditure, within the limits approved under each main heading, to be made by the head teacher (subject to consultation, as appropriate, with the staff).

School building projects

7.22 A proposal submitted to us was that local education authorities should make funds available to governing bodies to meet the cost of small improvements to the school buildings. It was also suggested that individual governing bodies should be fully involved in discussions about proposed major building projects affecting their school.

7.23 These suggestions have to be considered against the background of the arrangements by which capital expenditure (4) is controlled by the Education Departments. The lump sum authorisations given by the Department for capital expenditure on school building include an element for minor works, which for this purpose are defined as building projects costing less than £75,000. Minor works (unlike major works) do not have to be submitted to the Departments for approval (5). This provides a measure of flexibility which we understand is highly valued by local education authorities.

7.24 It is evident that a local education authority will need to retain the power to determine centrally the proportion of the available resources to be devoted to minor works in its area. It has also been strongly represented to us, and we accept, that the allocation of the monies to be spent on minor works must also be determined centrally, with due regard, of course, for the needs of individual schools.

7.25 Responsibility at the school level for expenditure to be met from the authority's revenue account on minor repairs and other small building jobs could well be considered on the same basis as school allowances and capitation grants. We return to the question of minor repairs in chapter 9.

7.26 In any event, we RECOMMEND that local education authorities should see that there is the maximum possible consultation with individual governing bodies before decisions are taken about building work, major or minor, at their schools, and also that the governing bodies are consulted about developments during the subsequent planning and building stages.

Conclusion

7.27 The financial responsibilities we have proposed for governing bodies should be considered not in isolation but in relation to their other functions since most, if not indeed all, of the decisions taken in the exercise of these other functions, will have resource implications. The financial responsibilities of governors are, therefore, both necessary and important and, although they may add to the volume of their work, they are in our view the minimum compatible with the role of governing bodies as we conceive it. The administrative work of the head teacher and other members of the staff may also be increased as more decisions are taken at the school level. We are confident, however, that these effects will be outweighed by the benefits foreshadowed in paragraph 7.16.

Footnotes

(1) See footnote to 3.25.

(2) See footnote to 3.25.

(3) Department of Education and Science. A Language for Life. Chairman Sir Alan Bullock, FBA. HMSO 1975.

(4) i.e. expenditure on major and minor school building projects which is not met from the authority's revenue account as are the sums allocated through the capitation allowances.

(5) It should be noted, however, that the Departments' approval is required for minor projects at aided and special agreement schools for which the managers or governors are responsible.