PLC Public Sector reports:
The government appears to have learnt at least one lesson, it is not a good idea to air dirty linen in court. Following the rather embarrassing defeat for the Education Secretary, Michael Gove, in the High Court for a failure to adequately consult before taking the decision to scrap the Building Schools for the Future programme, the government seems to be set on avoiding another date in court with local authorities unhappy about the its handling of a school funding issue.
The dispute on this occasion relates to the way that local authority budgets have been revised to take account of the removal of some schools from their control due to them becoming academies. The Department for Communities and Local Government (DCLG) had agreed to transfer the funding for newly created academies from the local authorities that used to have responsibility for them, to the Department for Education, from where it would be distributed directly to the academies.
This seems sensible and a necessary outcome of the government’s push to create far great numbers of academies. However, in January 2011, numerous local authorities claimed that the amount taken from their budgets was based on the sums that the academies will need to purchase their own resources and not what the local authorities were actually spending to meet those needs. As academies operating independently are generally likely to need larger sums than local authorities buying on behalf of numerous schools, this has meant a disproportionate drop in local authority budgets. A refusal by Eric Pickles (Secretary of State at the DCLG) to change this approach led to more than 20 local authorities issuing a claim for judicial review in May. The action was primarily based on an allegation that the approach taken by Pickles was in breach of the “new burdens rules”, these require any reduction in local authority budget as a result of funding going back to central government to be based on the savings that local authorities would make from the reduction in responsibility. For good measure, it was also reported that the claim included, the now standard, claims that there had not been adequate consultation and that the decision was taken in breach of applicable equality duties.
The government had indicated it would defend the proceedings as any other approach would lead to double funding. However, possibly mindful of the fact that the authorities have the same representation as those authorities that successfully challenged the BSF decision, the government has softened its stance, with Gove recently stating that the government would be reviewing the way that school funding had been calculated.
However, in doing so he reiterated that double funding was something that should not be contemplated. The problem with this approach appears to be that the roll out of the academy system, with schools having individual responsibility for purchasing, inevitably leads to exactly that. This very issue is something that the government has recognised with the recent announcement that, wherever possible, central government procurement of certain commodities will be centralised to reduce costs. The problem for the government is that rolling out this methodology to the public sector as a whole may well be in direct conflict with both its localism and education agendas, as this current dispute highlights.
Which brings us back to the task facing Messrs Pickles and Gove. Aside from throwing extra money at the problem (which seems very unlikely in the current economic climate), it is difficult to see an easy resolution. The problem is further complicated by the fact that many academies will actually buy some services back from local authorities, which may account for some local authority shortfall. However, there is no guarantee that this will happen, as academy spending will ultimately be driven by the readiness of the private sector to deliver services and the rates that local authorities seek to charge. Coming up with a formula that factors in all of these issues upfront sounds virtually impossible and, despite its best efforts, it appears that the government may have to have its day in court after all.