Self-Government for Schools (1996)

This White Paper was published in June 1996, when Gillian Shephard was Secretary of State for Education and Employment in John Major's Conservative government.

The complete document is presented in this single web page. You can scroll through it or use the following links to go straight to the various chapters:

Summary (page 1)
1 Introduction (5)
2 Developing local management (9)
3 Developing the GM schools programme (21)
4 Choice, diversity and specialisation (36)
5 The role of LEAs (48)
6 Self-governed schools in Wales (58)
Annex: LMS framework (62)
Glossary (64)

The text of Self-Government for Schools was prepared by Derek Gillard and uploaded on 2 February 2018.

White Paper: Self-Government for Schools (1996)

London: Her Majesty's Stationery Office 1996
Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen's Printer for Scotland.

[title page]

for Schools

Presented to Parliament by
the Secretaries of State for Education and Employment and for Wales
by Command of Her Majesty

June 1996

Cm 3315London: HMSO9.00

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1. Over the past decade the Government has introduced a wide range of reforms to raise standards in schools. Many of these reforms have been based on two key principles - that parents should have more choice in deciding the education they want for their children, and that schools should have more freedom to run their own affairs.

2. Much has been achieved. Grant-maintained schools, City Technology Colleges, Technology and Language Colleges, and the Assisted Places Scheme have greatly enriched the diversity of schooling available. Publication of performance tables and independent inspection reports has helped parents exercise real choice. Schools have been given far more freedom to make their own decisions, with incentives and powers to respond to local needs.

3. We now need to build on that progress. This White Paper proposes new measures to extend self-government for all schools, by giving them more power to decide how to spend their budgets, and by giving grant-maintained schools new freedoms to decide how they should develop. It proposes new ways of extending choice and diversity, by encouraging new grammar schools, by giving all schools more power to select pupils by ability or aptitude, and by helping more schools to specialise in particular subjects.

4. There are many good schools in this country, and many dedicated teachers. But there is a lot more that needs to be done to raise standards. The measures in this White Paper will make a powerful contribution to achieving a better match between what schools offer and what parents want - which is a good education suited to their children's individual abilities, interests and needs.

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1 Introduction5
2 Developing Local Management9
3 Developing the Grant-Maintained Schools Programme21
4 Choice, Diversity and Specialisation36
5 The Role of Local Education Authorities48
6 A Bright Future: More Self-Government for Schools in Wales58
Annex: The Current LMS Framework62

[page 1]


1. The Government's main objective in education is to raise standards in schools. The National Curriculum, rigorous testing of pupils, better information for parents, and new school inspection arrangements are crucial to achieving this. But the way schools are organised, governed and funded also plays an essential part.

2. The proposals in this White Paper build on some key principles underlying the Government's recent reforms:

a. Each school should take responsibility for achieving high standards, and should account for its performance to parents and the local community against the standards set by the National Curriculum. It should set targets for improvement and review its performance against them annually.

b. Within that framework, schools should have as much freedom as possible to make their own decisions, spend their own budgets, and plan their own futures.

c. Schools should use this freedom to build on their distinctive strengths, responding to the needs and wishes of local parents to provide more choice and diversity.

d. That will give a better match between what schools offer and what parents want - which is a good education suited to their child's individual abilities, interests and needs.

3. More self-government for all schools is central to raising standards and extending

diversity. Local management of local education authority (LEA) schools, and grant-maintained (GM) status for schools which want it, have already given schools far more independence. Schools value that, and have shown they can use it well. But there is room to do a lot more. Building on the progress made so far, the Government proposes a range of new measures which it would introduce once the necessary legislation was in place.

Extending Local Management for LEA Schools

4. Local Management of Schools (LMS) has given all LEA schools wide-ranging powers to manage their affairs, including deciding how to spend their budgets and selecting their own staff It has been a great success. The Government proposes to extend this in several ways:

a. By bringing new areas of school spending, particularly on school meals, within the overall budget total which LEAs must use to set individual budgets for schools. Spending on children with statements of Special Educational Needs (SEN) would be taken out of the total to ensure that their needs can still be individually met.

b. By raising to 95% the percentage of that overall total which LEAs must delegate to schools. Combined with (a), this will bring an extra 1.3 billion within the formal delegation requirement in England, equivalent to around 200 per pupil.

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c. By giving LEAs power, if they wish and in consultation with their schools, to delegate to schools other spending items which they may not delegate at present.

d. By simplifying the legal framework for LMS, making it easier for LEAs to change their delegation schemes, while still providing robust safeguards to ensure that schools get their fair share of resources.

Developing the GM Programme

5. Grant-maintained status offers schools more freedom to run their own affairs. There are now over 1,100 GM schools, including many of the most successful and enterprising schools in the country. Gl\Il schools are achieving high standards and delivering what parents want.

6. The Government remains committed to the growth of the GM sector, seeing it as the best way of running schools where that is what parents choose. The Government wants GM schools to enjoy the greatest possible independence. So it proposes a range of new measures, including:

a. To give GM schools more power to change what they do in response to local needs without having to get central approval. In future, GM schools would not normally need approval to open nursery classes or sixth-forms, to increase the number of places they have by up to 50%, or to offer boarding places. Existing funding controls would remain, and schools would have to consult locally before deciding to go ahead.

b. To give GM schools the right to take on services which LEAs currently carry out for their pupils, including home-to-school transport and arranging support for special needs pupils as set out in the statements drawn up by LEAs.

c. To strengthen the effectiveness and accountability of GM governing bodies. This might be done by identifying, within existing grants, funds for governor training and support; and by considering how parents could be given more say in selecting community governors when vacancies arise, in addition to their existing powers to elect parent governors.

d. To reinforce safeguards against abuse in GM ballot campaigns by providing, if schools wish, a neutral "ballot observer" to monitor campaigns.

Choice, Diversity and Specialisation

7. Children have different abilities, aptitudes, interests and needs. These cannot all be fully met by a single type of school, at least at secondary level. The Government wants parents to be able to choose from a range of good schools of different types, matching what they want for their child with what a school offers. The choice should include schools which select by academic ability, so the most able children have the chance to achieve the best of which they are capable.

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8. Independent schools, church schools and grammar schools have long offered choice for some parents. The Government has greatly expanded diversity through the Assisted Places Scheme, by setting up the 15 City Technology Colleges, and by giving all schools the opportunity to become grant-maintained. It has also encouraged schools to specialise in particular subjects such as technology and languages.

9. To extend choice and diversity, the Government proposes:

a. To encourage existing schools to put forward proposals to become grammar schools, with governing bodies having a right of appeal where their LEA opposes the proposal; to encourage promoters of new GM grammar schools; and, as a matter of general policy, to look favourably on proposals for change which increase diversity in the local pattern of schools.

b. To give the Funding Agency for Schools the power, wherever a new school is needed to meet a shortage of school places, to submit proposals for a new GM school - including a new GM grammar school - alongside any proposals from the LEA.

c. To give all GM schools the power, if they wish, to select up to 50% of their pupils by general ability, or by ability or aptitude in particular subjects, without needing central approval.

d. To give LEA Technology and Language Colleges the power, if they wish, to select up to 30% of their pupils by ability or aptitude in their specialist subjects without needing central approval, with governing bodies having a right of appeal where their LEA opposes using this power.

e. To give other LEA schools the power, if they wish, to select up to 20% of their pupils by ability or aptitude without needing central approval.

f. To require all school governing bodies to consider each year, in consultation with parents, whether to introduce an element of selection as a means of adding to the diversity of local schooling.

g. To extend the Specialist Schools Programme to cover Sports Colleges and Arts Colleges; to set up more Technology and Language Colleges; and to help existing Technology and Language Colleges to keep developing their specialist subjects.

h. To support the development of the existing state boarding schools, and promote public awareness of the opportunities they provide.

10. This pattern of diversity goes well beyond the outmoded division between grammar schools and secondary moderns. The aim is to encourage all schools to consider what special strengths they can develop to meet local needs, and so give more opportunities for young people to develop their varied talents to the full.

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The Future Role of LEAs

11. The Government intends schools to have as much independence as possible. The role of local education authorities will be to provide services which schools cannot carry out for themselves, and to support schools in their efforts to raise standards.

12. LEAs' functions will continue to include:

a. organising education outside schools (for example, units for pupils excluded from school);

b. planning the supply of school places, enforcing school attendance, and considering complaints and appeals from parents;

c. setting budgets and monitoring spending for LEA schools;

d. organising services for individual pupils, such as transport and support for special needs;

e. supplying support services such as training or personnel advice for schools to buy if they want them;

f. co-ordinating networks and new initiatives between schools.

13. Responsibility for raising standards rests mainly with schools themselves. But the LEA has a role in helping schools, by providing advice and support services; by circulating performance data as a basis for each school to set its own targets for improvement; and by working with schools identified as failing or seriously weak.

14. LEAs need to carry out these functions efficiently and effectively. The Government intends that there should be better mechanisms for assuring the quality of what LEAs do, including through inspections by the Office for Standards in Education (OFSTED) and the Office of Her Majesty's Chief Inspector of Schools in Wales (OHMCI). The Government will also consider how schools can be given a stronger say in the way LEAs carry out their tasks.

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CHAPTER 1 Introduction

1. This White Paper sets out the Government's proposals for extending self-government for schools in England and Wales.

2. Over the past decade schools have been given extensive new powers to decide for themselves how to spend their budgets, how to organise the way they operate, and how to develop to meet future needs. The benefits are now widely recognised. Few would want to return to the days in which LEAs took most major decisions on behalf of schools.

3. But there is scope to go further, building on the experience and confidence which

schools have gained in both the local education authority (LEA) sector and in the grant-maintained (GM) sector. The time is right to take the next major step in establishing a framework for the governance, funding and operation of schools which gives them power to run their own affairs, and which gives parents choice in deciding the education they want for their children.

Benefits of Self-Government

4. The Government's overriding objective in education is to raise the quality of teaching and learning in all schools, and so raise standards of achievement by all pupils.

5. One means of doing this is by reforming the structure for governing and funding schools.

Much else is needed as well, and many other reforms are in train. Schools' power to make their own decisions must be exercised within a framework which sets clear national expectations for what pupils should learn, and which holds schools accountable for their performance. But the right institutional structure can make a powerful contribution by giving schools opportunities and incentives to raise their standards, by encouraging responsibility, innovation and value for money, and by giving parents more choice.

6. In some respects, notably the curriculum and assessment, schools previously were left too much to their own devices. There was little shared understanding among teachers or parents about what children should be learning, the standards which they could be expected to achieve, and how one school's performance compared with another's. The National Curriculum, and the linked requirements for regular testing of children and publication of performance data, now provide a common framework of expectations about the outcomes which schools should be seeking to achieve. But within that, schools should have maximum freedom to decide how to attain those outcomes.

7. The Government has already introduced a range of reforms to achieve this. Every school must now have a governing body representing parents and the local community, with powers to decide how the school should operate. LEAs must now delegate to governing bodies the power to manage school budgets. LEA schools now have the opportunity to

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opt out of LEA control and become grant-maintained, employing their staff, and taking full responsibility for their budgets and operations.

8. The Government wants to extend school self-government further because it brings important benefits:

a. In line with good management practice, it gives the power to take decisions to those directly responsible for providing the service. Decisions can be taken faster and in a way which reflects local needs.

b. It improves value for money by enabling schools to spend their budgets in line with their own priorities, and by giving them incentives to look for best value in buying goods and services.

c. Combined with external inspection, publication of performance data and reporting to parents, self-government makes schools directly accountable for their performance, and gives them the power to decide how to improve that performance. The sense of ownership can powerfully influence the motivation and commitment of staff, governors and pupils.

d. Over time, self-government gives schools opportunities and incentives to identify their relative strengths and build on them to develop a distinctive character, so promoting diversity between schools and greater choice for parents.

9. It is now generally accepted that effective management is part of the school's responsibility for educating its pupils. But the Government recognises that governors and staff will need clear guidance and support if they are to take on additional functions effectively and make best use of new opportunities. The Government will consider how that is best done.

Structure of the White Paper

10. The Government's proposals are set out under the following headings:

a. Chapter 2: extending Local Management of Schools in the LEA sector, by increasing the proportion of budgets which LEAs must delegate to schools.

b. Chapter 3: developing the grant-maintained schools programme, with new freedoms for GM schools to decide their future direction and take on functions currently carried out by LEAs, and new measures to strengthen GM governing bodies.

c. Chapter 4: extending choice and diversity by encouraging new grammar schools, giving schools more power to select pupils, and developing the specialist schools programme.

d. Chapter 5: defining the future role and functions of LEAs.

e. Chapter 6: how the proposals will apply in Wales.

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Evolution of the GM and LEA Sectors

11. Grant-maintained status is, and will remain, the most advanced form of self-government for state schools. It can benefit all types of schools, but is particularly attractive to the successful, enterprising and well-managed.

12. One of the successes of the GM programme is the effect it has had on the way LEAs work with their schools. Since 1988 schools have had the right to opt out of LEA control if that is what parents choose in a ballot. That has made most LEAs much more responsive to the needs and wishes of their schools. It has pushed them to delegate to schools a higher proportion of their budgets than they would otherwise have done and to improve the services they provide. As a result, LEA as well as GM schools have enjoyed more of the benefits of self-government, and LEA schools are better placed to progress on to grant-maintained status as and when they are ready.

13. Self-government for schools will continue to evolve in both the LEA and GM sectors. This White Paper will promote that process, increasing the autonomy of all schools but in a way which reflects their different circumstances.

Next Steps

14. Many of the proposals in this White Paper require new primary legislation. The Government intends to introduce that as soon as practicable, recognising the need to allow time for school governors and staff to prepare to take on new powers and responsibilities. Some of the items which do not require new legislation are dependent on, or linked to, those which do. In general, the Government therefore proposes to introduce them together. Other items, however, are more self-standing and can be separately introduced on a faster timescale. These include the new legislation to allow the Office for Standards in Education (0 FSTED) and the Office of Her Majesty's Chief Inspector of Schools in Wales (OHMCI) to inspect LEAs, and the extension of the Specialist Schools Programme to include Sports and Arts Colleges.

15. In developing these proposals and preparing legislation the Government will take account of the views of interested parties. Comments should be sent by Friday 4 October to:

in England:

Jane Whitfield
Department for Education and Employment
Location 3E4
Sanctuary Buildings
Great Smith Street
London SW1P 3BT

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in Wales:

Linda Poole
Schools Administration Division
Welsh Office
Cathays Park
Cardiff CF1 3NQ.

16. In line with the Code of Practice on Access to Government Information, the Department for Education and Employment and the Welsh Office may make responses to this White Paper publicly available unless respondents specifically state that they wish their comments to be confidential.

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CHAPTER 2 Developing Local Management

1. The foundations of Local Management of Schools (LMS) are simple:

a. each school in an LEA should get a fair share of the funds available, with budgets worked out by an objective formula;

b. the school's governing body should have the power to decide how to spend its budget so the school can match resources to its own priorities.

2. Some LEAs had started developing the principles of LMS before the Education Reform Act 1988 established a national framework. At the time, there were misgivings about making LMS a requirement. But few would now want to go back to pre-LMS arrangements. One effect of LMS is that schools are funded mainly on the basis of their pupil numbers. Combined with the requirements on schools to take all pupils who apply so long as they have places for them, LMS has strengthened the incentives for schools to respond to what parents want.

3. In some parts of the country, LMS has been embraced wholeheartedly, with schools given freedom to decide how to spend increasingly large proportions of their LEA's total budget for schools. The Government believes that it is now time for a further push to extend local management, with a new national LMS framework. It therefore intends to redefine the Potential Schools Budget (PSB) and to raise to 95% the proportion of that Budget which LEAs must delegate to schools.

4. This does not mean change overnight. If the legislation needed to establish the new framework was approved by the end of the 1997/98 Parliamentary session, the new requirements would apply for 1999-2000. This timetable would allow the Government to discuss with LEAs and schools the issues raised in this chapter. It would also give LEAs, governing bodies and school staff time to prepare for the new requirements.

5. The Government will consider what guidance and support is needed, particularly to help governing bodies make best use of the power which LMS gives them to improve the education provided for their pupils. This could include advice on existing good practice by schools and LEAs. Funds to support the work of governing bodies are already included within the Grants for Education Support and Training (GEST) programme. In deciding future GEST programmes, the Government will look at the level of funding needed for governor support in the light of the proposals in this White Paper, and whether those funds should be separately identified.

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LMS Current Practice

6. Box 2.1 summarises how LMS works at present, with a fuller description in the annex at the end of this White Paper. Chart 2.1 shows how the proportion of the PSB delegated to schools has risen in recent years. Chart 2.2 shows the difference between LEAs in the proportion of the PSB which they are delegating in 1996-97. It varies from 85% to 96%. Within these averages, LEAs tend to delegate more to secondary schools than to primary schools, and to spend more of the funds they hold centrally on primary schools.

Box 2.1 How LMS Works Now
  • Each year every LEA decides the total amount it will spend on its schools - the General Schools Budget (GSB).
  • From that it holds back money for "excepted items" which it manages centrally, such as building projects, home to school transport, premature retirement costs, and the educational psychology service.
  • The total amount left after taking away these "excepted items" is called the Potential Schools Budget (PSB).
  • The LEA can hold centrally money for further items within the PSB, such as central administration, some elements of special educational needs, and library and music services. But it cannot hold back more than 15% of the PSB - so at least 85% of the PSB must be delegated to schools (90% in Wales).
  • The total amount delegated to schools is called the Aggregated Schools Budget (ASB). Each school's share of the ASB must be worked out by a formula based 011 objective measures of need, particularly the number of pupils each school has.
  • Each school's governing body has the right to decide how to spend its delegated budget to meet the school's needs.

7. Charts 2.3 and 2.4 show the breakdown of the General Schools Budget and the items which LEAs hold back from delegated budgets. Chart 2.4 also shows the amount per pupil which LEAs spend on these items.

Future Delegation Levels

8. The time has come for a further increase in the control which schools have over their budgets. LEA schools generally should be given the responsibilities and powers currently held by schools in the highest delegating LEAs.

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9. This does not mean delegating everything. There are items which it makes sense for LEAs to manage centrally. But the Government's starting point is that it is potentially feasible for all LEAs to delegate to their schools:

a. items currently included in GM school budgets;
b. items which at least some LEAs already delegate;
c. any service which LEAs provide to support schools, so that schools can decide for themselves whether they value it enough to pay for it.
10. The Government intends to keep the distinction between the General Schools Budget, the Potential Schools Budget and the Aggregated Schools Budget, but to end the distinction between mandatory and discretionary exceptions.

11. In looking at the scope for increasing delegation, the key issue is what is inside the PSB (and therefore normally to be delegated) and what is outside (and so not subject to pressure to delegate). Leaving an item of spending outside the PSB does not mean that it may not be delegated if an LEA, in consultation with its schools, considers that feasible.

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12. As shown in Chart 2.4, there remains outside the PSB a block of school-related spending, covering building projects, transport, specific grants and other items. The Government will monitor levels of expenditure on all items managed centrally by LEAs. It does not expect these to rise at the expense of schools' delegated budgets. It proposes to include in the new LMS legislation a power to allow the Secretary of State to specify, if that is judged necessary, a proportion of the GSB which LEAs must allocate each year to schools through their delegated budgets.

Special Educational Needs within LMS

13. The Education Act 1993 introduced a new national Code of Practice on the Identification and Assessment of Special Educational Needs (SEN) (1). The Code distinguishes between the school-based stages of SEN (stages 1-3), and the statutory assessments (stage 4) and statements (stage 5) which are made by LEAs. The Government considers that LMS funding for mainstream schools should mirror this distinction, so that responsibility and funding for a function go together. It does not propose to change existing LMS arrangements for special schools.

1 The Act required the Secretary of State to issue a Code of Practice giving guidance to LEAs and schools on their responsibilities towards children with SEN. The Code, which was approved by Parliament, came into effect on 1 September 1994. It sets out 5 stages for addressing the different levels of SEN. Stages 1-3 are school-based, with support from specialists from outside the school at stage 3. Stage 4 involves the LEA considering the need for, and if appropriate making, a multi-disciplinary assessment of the child's needs. Stage 5 involves the LEA making and monitoring a statement of SEN.

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14. Schools are responsible for assessing, and meeting the needs of, pupils at stages 1 and 2 of the Code. Consistent with this, LEAs already delegate much of the relevant funding. The basic funding allocated through LMS for all pupils includes some SEN funding. LMS formulae may include factors to reflect the fact that some schools have more pupils with SEN than others. Schools should know what funds for SEN are included in their budgets, and how they have been calculated.

15. Schools need outside support to meet the needs of children placed at stage 3 of the Code. At present some LEAs hold back resources centrally for this. The Government believes that in future schools' budgets should generally include all the funding to meet pupils' needs at stages 1-3. Where this is not already the case, schools will be able to take their own decisions about the type of outside help needed for stage 3 pupils, and where to get it from. This could include buying the help from their LEA or elsewhere.

16. There may be cases where unexpected demands are placed on a school. A stage 3 pupil might need expensive equipment or staff support to participate fully in school life. In such exceptional circumstances, LEAs would be able to use centrally held contingency funds. LMS schemes should specify the circumstances in which such funds would be available. When such contingency funds are allocated, the school should be free to decide how to spend them, so that, as for all other pupils at stages 1 - 3, the school can select the best way of getting the support needed.

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17. Pupils who are the subject of statutory assessments (stage 4 of the Code), and those who have statements (stage 5), may require significant expenditure beyond that already included in schools' budgets. The Government intends that spending on the educational psychology service and the administration of SEN statementing should continue to be outside the Potential Schools Budget. LEAs will still be able to choose, in consultation with schools, to delegate funds for the extra support needed to fulfil pupils' statements, or to devolve earmarked funds to schools. The Government would welcome this. But since LEAs rather than schools are responsible for making statements and (subject to the proposals for GM schools in chapter 3) arranging provision under them, LEAs will in future be able to hold the relevant funds outside the PSB.

Other Items Currently Outside the PSB

Meals and Milk

18. The Government considers that funding for school meals and milk should be brought within the PSB. GM schools already have funds for meals and milk included in their budgets, and make their own arrangements. Meals and milk can be organised in various ways, and it should be left to each school to decide what best suits its needs. That includes continuing to buy catering services from the local authority if that is what the school wants.

19. At present, LEAs must by law provide free school meals to pupils from families on income support. They may also provide and charge for meals for other pupils. The charges can be set to cover the full cost, or the LEA can subsidise the service. The Government proposes to amend the law so that, where spending on meals and milk is delegated to schools, the relevant duties and powers will transfer to school governing bodies. The Government will discuss the implications of this with LEAs and others, including the link between delegation of meals and milk and the requirements on local authorities to put school meals services out to competitive tender.

LEA Initiatives

20. LEAs have been allowed to hold some funding outside the PSB for "LEA Initiatives". This has covered new developments, for example in the curriculum or management, for which no funds are available from other sources. The principle of self-government implies that schools should decide what projects of this kind they want to get involved in. The Government therefore proposes to include this funding within the redefined PSB. LEAs and schools will continue to receive funds from the Government through the Grants for Education Support and Training programme to support development projects and new national initiatives.

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Other Items

21. The Government proposes to leave other items currently outside the PSB where they are. The main ones are:

a. Capital. This includes repaying debts outstanding from previous building projects. The Government will, however, review the mechanisms for funding school capital projects to see whether there are ways of delegating to schools some or all capital resources, so as to give better incentives to make good use of capital assets and funding.

b. LEA contributions to specific grants. These grants are paid by the Government for particular purposes. The Government will continue to require LEAs to pass on to schools a high proportion of funds allocated under the Grants for Education Support and Training programme.

c. The educational psychology service and SEN administration costs - as discussed in paragraphs 13-17 above.

d. The education welfare service. This needs to remain outside the PSB because it links to LEAs' legal duties for enforcing school attendance. The Government will, however, explore the scope for giving GM schools the option of taking over responsibility for some attendance and welfare functions (see chapter 3).

e. Home to school transport. The Government intends that LEAs should remain generally responsible for this, both for pupils in their own schools and for pupils in GM schools which decide not to make their own arrangements (see chapter 3). This does not rule out delegation where LEAs, in consultation with their schools, conclude that transport can be organised effectively by schools themselves.

f. Pupil support. LEAs have powers to pay grants for clothing and shoes, boarding, and maintenance grants for post-16 pupils, in cases where pupils would otherwise have difficulty getting access to educational opportunities. As with transport, delegation of funds to LEA schools is not ruled out, and the Government believes that GM schools should in principle have the option of taking on responsibility for some or all of these grants themselves (see chapter 3).

g. Contingencies. In both the GM and LEA sectors, some funds need to be held centrally to meet emergencies. But that should not become a pretext for holding back funds unnecessarily, or cushioning schools from responsibility for sensible forward planning. LEAs should set out clearly in LMS schemes the criteria for allocating contingency funds. The Government proposes to limit provision for contingencies to a maximum of 1 % of the GSB, in line with what most LEAs already do.

Items Currently Within the PSB

22. The Government considers that, except for spending on pupils with SEN statements (paragraph 17 above), all the items within the Potential Schools Budget should be delegated to schools, either in whole or in large part.

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23. Educational support services include peripatetic music and other staff, library and museum services, curriculum resource centres, and outdoor activity centres. Decisions on the nature and level of service should be made by schools themselves.

24. Premises services cover insurance of school buildings and contents, and non-capital repair and maintenance of buildings. LEA holdback varies from zero to over 4% of the PSB in 1996-97 for repairs and maintenance. This suggests scope for a substantial increase in delegation. Schools should have maximum control over this expenditure, as GM schools already have. But the framework of responsibilities for school premises in the LEA sector is different from that in the GM sector, and the Government will discuss the implications of enhanced delegation with interested parties.

25. For example, the treatment of repairs and maintenance in LMS schemes for voluntary aided and special agreement schools differs from that for county and voluntary controlled schools. The governors of voluntary aided and special agreement schools are responsible for the repair and maintenance of some parts of the school and can claim grant direct from the DfEE or the Welsh Office to support their spending. This is one of several aspects of the funding of such schools which the Government has been reviewing. The Government will explore these issues with the local authorities and the voluntary aided sector to see whether the law could usefully be changed in this area.

26. Staff-related services include cover for long-term staff absences and locally funded inservice training. These items are largely paid for by GM schools from their normal budgets, and should be capable of delegation to LEA schools, with the possible exception of supply cover for long-term staff absence in small primary schools.

27. Advisory and inspection services. The role of LEAs in promoting higher standards and intervening where schools are failing is discussed in chapter 5. All spending in support of schools' own improvement activities can in principle be delegated. Specific grants are paid to LEAs through the Grants for Education Support and Training programme to support work on school effectiveness.

28. Management and administration services cover items such as payroll, IT services and professional, legal and financial advice. The level of central holdback for these services varies from under 1% to over 4% of the PSB. High spending LEAs should, at the least, be able to reduce spending on management and administration to something much closer to the levels of the lowest spenders. The Government will look again at the definition of this item to ensure that it covers all relevant spending.

A New Delegation Requirement

29. The Government proposes to redefine the Potential Schools Budget to take out spending on pupils with SEN statements in mainstream schools, and to bring in spending on school meals and milk and LEA initiatives.

30. Given that all the items within this redefined PSB are capable of delegation, a higher national requirement can be set. The Government does not intend to specify which services currently held centrally within the PSB must be delegated. Some LEAs might

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decide to continue to manage some of these centrally; for example, supply cover for small schools, parts of repairs and maintenance, or some management and administration.

31. The Government wishes to apply a challenging but realistic minimum requirement for delegation, and proposes to set this at 95% of the redefined PSB, compared with the current requirement of 85% (90% in Wales). This would bring an additional 1.3 billion of school spending within the formal delegation requirement in England, representing some 200 per pupil; and an additional 600 million, or 90 per pupil, compared with what LEAs are in practice now delegating.

32. The Government has considered whether different arrangements should apply to primary, secondary and special schools. Arguably, the management structures within secondary schools make it easier for them to undertake the extra work which greater delegation brings. On the other hand, primary schools now have at least two years' experience of managing their own finances under LMS and special schools are now doing so. They should not be denied the benefits of increased delegation. Large primary schools are little different from small secondary schools in this respect; and the GM sector has shown that small schools are well able to take greater control of their budgets. So the Government proposes that the 95% delegation requirement should apply to schools overall. LEAs can decide whether they wish to set a higher level of delegation for secondary schools so that, as now, they can devote more of their centrally managed resources to primary and special schools.

Future Policy on LMS Formulae

33. From the start of LMS, the Government's policy has been that the bulk of the funding delegated to primary and secondary schools should be allocated on the basis of pupil numbers weighted by age. At present LEAs must distribute at least 80% of the Aggregated Schools Budget for primary and secondary schools on the basis of schools' pupil numbers (although only indirectly for some types of SEN funding). The Government will look again at the scope for simplifying the details. But it remains determined that schools' budgets should be based primarily on their pupil numbers. That gives a clear and objective basis for calculating budgets. It also gives schools incentives to ensure that what they offer reflects what parents want, since the size of their budget is directly linked to their success in attracting pupils.

34. There continues to be debate about the treatment of teachers' salaries under LMS. At present, schools must be charged the actual cost of the salaries of their teachers, whereas LMS formulae reflect average salaries across the authority. The Government has reviewed this issue several times. It is a fundamental principle of LMS that governing bodies should take responsibility for the financial implications of their decisions, including deciding what to spend on teachers' salaries. The problems of schools that inherited high salary costs when LMS was first applied should now have been resolved through the transitional mechanisms built into LMS schemes and normal staff turnover. It remains open to LEAs to adjust the budgets of small schools to reflect their actual salary costs. So the Government does not propose to change existing policy in this area.

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35. LMS formulae vary a lot between local authorities. Many are complex. The introduction of the Common Funding Formula (CFF) for most GM secondary schools in England has shown that it is possible to allocate funds between schools on the basis of simpler formulae. The Government looks to LEAs to simplify their formulae so that governors, headteachers, and others can understand how they operate and why they give the results they do, and can take account of this in their future planning.

Role of the Secretaries of State

36. The Secretaries of State for Education and Employment and for Wales continue to be involved in the details of LMS schemes through approving new schemes and "significant variations" to existing ones.

37. Each autumn and winter the DfEE and Welsh Office have to process a mass of proposed variations to formulae, submitted by most LEAs and intended to take effect from 1 April. This level of scrutiny was important in the early years ofLMS, but seems much less so now.

38. There are two kinds of variation:

a. significant variations which the Secretary of State must approve, and about which the LEA must first consult schools.
b. minor revisions which do not need the Secretary of State's approval and are not subject to a consultation requirement.
39. "Significance" has nothing to do with the amount of money which the proposed change would redistribute between schools. Rather, the test is whether the change is consistent with the LMS principle of objectivity. As a result, new factors, often with marginal effects, must be approved by the Secretary of State. But changes to existing factors do not require approval, because those factors have already passed the objectivity test.

40. So LEAs must consult on, and submit for approval, a proposal to introduce, for example, a mature trees factor (as happened in the last approvals round). But they need not consult on, or seek approval for, big changes in weightings applied to pupils of different ages.

41. The Government proposes to reduce the role of the Secretaries of State by removing the requirement for them to approve changes to LEAs' formulae. LEAs' duty to consult would be extended to cover all changes to formulae - those which currently count as minor revisions as well as significant variations. LEAs would be required to consult the Funding Agency for Schools and local GM schools, as well as LEA schools.

42. LMS formulae would have to conform with national requirements to be set out in legislation, as discussed below. Subject to that, LEAs should in general be responsible, and accountable locally, for the formulae they use for their own schools, and for the effect of any changes they make in redistributing funds between schools. The Government will consider whether it is a sufficient safeguard against abuse for decisions taken by LEAs about their formulae to be subject to the general requirement for LEAs to behave reasonably, or whether any more specific protection is needed.

43. There are concerns among grant-maintained schools about the scope for LEAs to manipulate their spending in order to disadvantage GM schools whose budgets are

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calculated by reference to LEA spending. One of the attractions of a national funding formula is that it would resolve this. Meanwhile, the FAS and the Welsh Office have powers to disregard LMS formulae in calculating GM budgets, where they consider that changes to the formulae are unfair to GM schools. The Government will consider whether the safeguards for GM schools need to be strengthened.

A New LMS Framework

44. A new LMS framework would require new primary and secondary legislation.

45. LEAs would still be required to have LMS schemes, and to get them approved by the Secretaries of State. But schemes would be limited to specifying the items of spending to be held centrally by the LEA, and the rules that governing bodies must follow in managing their budgets.

46. Instead of being required to allocate school budgets in accordance with formulae set out in schemes, LEAs would be required to do so in accordance with regulations made by the Secretaries of State. These would define the Potential Schools Budget and the minimum proportion that LEAs should delegate to schools. They would also set conditions governing the nature of allocation formulae, for example:

a. That they should be based on objective factors.
b. The proportion of funds to be allocated on the basis of pupil numbers.
c. The "menu" of methods which LEAs could use to allocate the remaining funds. This could include, for example, numbers of places in SEN units and nursery classes; the relative size of schools' buildings or grounds; special facilities such as swimming pools; a lump sum to cover expenditure incurred by all schools regardless of size; the number of pupils with SEN; and payments based on indicators such as the number of pupils entitled to free school meals.
d. To reflect any conclusions from the current Government review of the scope for achieving greater consistency in the approaches for funding 16-19 education and training across school sixth-forms, further education colleges and work-based training, including the possibility of performance related funding (2).
47. Existing regulations on the content and format of LMS financial statements would be strengthened. For example, budget statements would need to be expanded to include full descriptions of LEAs' formulae. To give schools and others a clear picture of how the money is being spent, both budget and outturn statements would continue to include all school-related spending by the LEA over and above the budgets delegated to schools.

48. The auditing of financial statements would be extended to ensure that they give a fair and accurate picture of how funds are being allocated, and that the allocation complies with the regulations.

49. The Government will consult interested parties before drawing up detailed proposals.

2 See chapter 4 of the White Paper "Competitiveness: Creating the Enterprise Centre of Europe" (Cm 3300) published in June 1996.

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CHAPTER 3 Developing the Grant-Maintained Schools Programme

1. Grant-maintained status is the most advanced form of self-government for state schools. GM governing bodies have full responsibility for running their schools - for deciding how to spend their budgets, for employing their staff and (in most cases) owning the school premises, and for deciding what changes to propose to the school's character and admission arrangements.

2. GM status has been available to larger primary and secondary schools since 1988, to smaller primary schools since 1991, and to special schools since 1994. The 1993 Education Act also made it possible to set up new GM schools. Chart 3.1 shows the sector's growth.

3. There are now over 1,100 GM schools in England and Wales, educating some 700,000 pupils, and educating them well. As charts 3.2 and 3.3 show, GM schools achieve better results than LEA schools. The GM sector includes many of the best schools in the country, as reflected in the lists of outstanding and improving schools in this year's OFSTED annual report (see chart 3.4). National Audit Office reports have found that GM schools are generaJJy well-managed.

Box 3.1

In a recent report, the National Audit Office found many examples of good practice at GM schools, including:

  • many examples of schools striving to achieve greater value for money, particularly on indirect costs where schools have already realised substantial savings.
  • many examples of schools following good practice in preparing plans, such as in consulting thoroughly and undertaking careful analyses of the challenges facing them and how they should be addressed.
Source: Planning for Change: National Audit Office Examinations of Value for Money at Grant-Maintained Schools 1994-95

4. The Government remains committed to expanding and developing the GM sector. GM status can benefit schools of all types, and particularly the successful, confident and enterprising. Despite the difficulties schools sometimes face because of hostility from opponents of the GM programme, GM ballots are widely regarded as an important expression of parental choice. The main factor in the GM sector's rate of growth is parents' decisions in ballots on whether GM status is right for their school.

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5. This chapter sets out proposals for developing the GM programme in the following areas:

a. giving GM schools more power to develop in new ways without seeking central approval;
b. giving GM schools opportunities to take on services currently provided by LEAs for their pupils;
c. strengthening the governance of GM schools;
d. making sure that GM schools are fairly funded;
e. strengthening the procedures for becoming GM;
f. giving GM schools more opportunities for involvement in Pupil Referral Units, and developing GM special schools.

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Power to Change the School's Character

6. GM status gives schools more control over their own destinies. For many schools this means preserving established strengths and characteristics. The Government welcomes that, where a school is already providing a high and improving quality of education. But other schools want to develop in ways which would significantly change their character or size so that they can better serve their pupils and their communities.

7. At present GM schools wishing to make such changes have to seek approval in much the same way as LEA-sector voluntary schools. Their governing bodies must publish "statutory proposals" (3) if they want to make a significant change in the school's character, including:

a. selecting more than 15% of pupils by ability or aptitude;
b. opening or closing a nursery or a sixth form;
c. introducing or ending boarding provision;
d. expanding the school's accommodation by 25% or more.
8. Governing bodies are expected to consult locally on such changes before publishing proposals. There is then a statutory two month period for objections, after which the Secretary of State decides whether or not the proposals should go ahead. All this can be complex and time-consuming.

9. GM schools have demonstrated that they can be relied on to act reasonably and responsibly in deciding how to develop what they offer. The Government wants to encourage enterprise, responsiveness, competition and innovation. It therefore intends to reduce the range of cases in which GM schools are required to publish statutory proposals. Chapter 4 deals with selection. This chapter considers other types of changes.


10. The Government is committed to expanding nursery education through the voucher scheme, with a pre-school place, over time, for all four year olds. Many GM primary schools are well placed to help increase the supply of good quality nursery education. But the present controls mean that in practice it can be harder for a GM school to add nursery classes for 3 and 4 year olds than for an LEA school. Schools which admit children before their fifth birthday can normally extend what they offer to cover all four year olds without publishing statutory proposals. But schools must still publish statutory proposals where, by adding nursery classes, they would extend the school's age range by 12 months or more. The Government proposes to remove this requirement.

11. Where the new nursery could not be housed in existing premises, governing bodies would need to think how they would fund new building work, since there would be no guarantee of capital grant (see paragraphs 21-23 below). They would also need to consider the implications for running costs. The Government intends that from April 1997 the voucher scheme will operate throughout England and Wales. Voucher income

3 Education law sets out detailed requirements for the procedures which a school must follow when it wants to make a major change in its character, including the information which the school must publish, the consultation it must undertake, and the circumstances in which the proposals must be submitted for decision by the Secretary of State. These requirements are known as the "statutory proposals" procedures.

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will therefore be available to fund four year olds in GM nursery classes, both existing and new. For three year olds, schools would be able to apply to the Funding Agency for Schools (FAS) (4) for additional grant. As happens now, such grant would be provided automatically in cases where it can be recouped from the LEA. In other cases, the FAS would be able to pay grant. There would be a limit on the funds available, but the Government will aim to ensure that they allow GM nursery provision to continue to grow.

Sixth Forms

12. Three-quarters of GM secondary schools already have sixth-forms. Some of the rest may judge that, by introducing a sixth-form, they can better respond to local demand. The Government therefore proposes to remove the requirement for GM schools to publish statutory proposals before opening new sixth forms.

13. In considering this option, GM governing bodies will wish to ensure that their plans would add to local choice and diversity for post-16 year olds. They will also need to think about the quality and cost of what they could offer, taking account of the number of post-16 pupils they could realistically expect to recruit and how they could meet any capital costs (see paragraphs 21-23).

14. The running costs of GM sixth forms are currently met through recoupment from LEA funding. But when a new GM sixth form is set up, there is a transitional period before that recoupment can begin, during which running costs are normally paid by the FAS. The resources to meet such costs would remain cash-limited, but, as with nursery classes, the Government will aim to ensure that they allow continuing development.

Increasing Pupil Numbers

15. The Government wants to enable as many parents as possible to send their children to the school of their choice. Making it easier for popular GM schools to expand will help that. The Government therefore proposes to relax the controls so that GM schools could expand their capacity by up to 50%, rather than the current 25%, without publishing statutory proposals. Schools would receive funds for the extra running costs through recoupment from LEAs using existing procedures. Governors would need to consider the range of options for capital funding to provide any additional accommodation (see paragraphs 21-23).

Boarding Provision

16. Around 40 state schools offer boarding facilities. As discussed in chapter 4, the Government believes that boarding has a contribution to make to increasing choice for parents. At present a GM school which wishes to introduce boarding must publish statutory proposals. The Government proposes to remove that requirement. GM schools which took advantage of this new flexibility would, as now, cover the costs of boarding facilities through fees charged to LEAs or parents; under the proposals in chapter 4, tuition costs would continue to be free for aU UK and other European Union children.

4 The Funding Agency for Schools allocates recurrent and capital grams for all GM schools in England. GM schools in Wales receive their funding direct from the Welsh Office - see chapter 6.

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Single Sex Provision

17. The Sex Discrimination Act 1975 (SDA) places a duty on LEAs and the FAS to ensure equal opportunities for boys and girls. Changes made by individual schools can affect the balance of provision for single sex education - for example, introducing or ending selection at a single sex school, or turning a single sex school into a mixed school.

18. At present, any significant change of this kind requires statutory proposals. I n considering them, the Secretaries of State take account of their SDA implications for LEAs and the FAS because, if the proposals are approved, the LEA or FAS may have to make good any resulting imbalance. The Government will consider what approach will best balance the freedom of schools to determine their own future development with the continuing need to ensure that boys and girls have equal opportunities in their choice of school.


19. Deregulation will give GM schools more opportunities to respond imaginatively and flexibly to the developing needs of their communities. But that carries with it a responsibility to identify those needs carefully and to listen to local views. So regardless of whether statutory proposals are required, the Government will expect GM governing bodies to consult those who may be affected by the changes they propose, particularly parents and neighbouring schools, but also the FAS, relevant LEAs, the Churches (for voluntary schools), and, where changes to post-16 provision are proposed, local further education colleges and the Further Education Funding Council.

20. Where schools decide to close nurseries, sixth forms or boarding facilities, the Government proposes to remove the requirement to publish statutory proposals. But, because of the difficulties which may be caused for parents and pupils, governing bodies would still be required to give parents reasonable notice of their intentions.

Capital Funding

21. The Government wants schools to make best use of the space available to them. Some schools will be able to accommodate more pupils within their existing buildings. Others may need new accommodation or facilities. At present governing bodies are obliged to implement any statutory proposals which have been approved by the Secretary of State. This means that, if capital funding is needed, the Secretary of State must be sure that the school will have the necessary resources before approving the proposal.

22. Under deregulation, there could be no guarantee that funding would be available for every new initiative. It 'would be for the governing body, in working out its plans, to consider how best to obtain any capital funds required. Schools will still be able to apply to the FAS for grant to support building projects. But that funding will always be limited, so schools will also want to make best use of the flexibility provided by the various other measures in hand, including:

a. the formula capital grant which the FAS pays annually to all GM schools based on their pupil numbers. The Agency is committed to increasing the capital funds channelled through formula allocations, in order to give schools maximum discretion to plan ahead and make their own decisions about capital priorities;

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b. the new borrowing powers proposed in the Bill currently before Parliament;
c. the FAS "seedcorn" capital challenge fund, which provides grant to match funds which schools raise for themselves;
d. the Private Finance Initiative;
e. capital grant matched to private sector sponsorship under the Specialist Schools programme.

23. As noted in chapter 2, paragraph 21a, the Government will review the mechanisms for funding school capital projects. Taking account of the progress already made in allocating GM capital resources by formula, this review will cover ways of maximising the incentives for GM schools to make best use of capital assets and funding.

Giving GM Schools Choice in Pupil Services

24. LEAs are legally responsible for providing a range of services for pupils in GM schools, notably:

a. home to school transport;
b. organising the extra support set out in statements for pupils with special educational needs;
c. ensuring that pupils attend school, through the work of the Education Welfare Service;
d. making grants to cover clothing, boarding and other costs for pupils who would otherwise face hardship.
25. Some GM schools are satisfied with what is offered by their LEAs, and would not see it as part of their job to get involved in organising these services. But other GM schools believe that they could meet the needs of their pupils more effectively by providing some of these services themselves. The Government proposes to give GM schools the opportunity of doing so.


26. LEAs must provide free transport if they consider it necessary to enable a pupil to attend school. This includes pupils living further than the statutory walking distance from their nearest suitable school (GM or LEA), and many pupils with special educational needs. LEAs also have the power to provide free or subsidised transport for other pupils. LEAs must not discriminate between pupils at GM and LEA schools in organising transport.

27. The LEA's transport arrangements must reflect the pattern of each school's day and term. This means that, if a GM school decides to change the timing of its school day or term, the LEA is obliged to alter its transport arrangements to suit. This gives many GM schools as much flexibility as they want. But others may wish to go further and, like City Technology Colleges, take full responsibility for transporting their own pupils.

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28. The Government proposes to give GM schools this choice. Schools would still have to provide free transport for those pupils who qualify for it under existing law. Beyond that, schools would have discretion to provide free or subsidised transport for other pupils and to make whatever arrangements they judged most effective and efficient.

29. The funds to be paid to GM schools taking up this opportunity could be calculated and allocated by various means. The Government will consider the options separately with the interested parties.

Special Educational Needs

30. LEAs should remain responsible for making statutory assessments and drawing up and reviewing statements of SEN for pupils in GM schools. At present, LEAs are also responsible for arranging the provision specified in the statements. Some LEAs carry this out directly, by providing the equipment, teaching or other staff support required. Others supplement the funding of the schools concerned, enabling them to arrange some or all of the provision needed.

31. The Government proposes to give GM schools the option of taking responsibility for arranging the provision specified in the statement of any pupil they educate. A school's decision on whether to take up this option would cover the period until the next annual review of the statement, when the decision could be reviewed. A school would take this decision after consulting the child's parents. The school would need to know the level of funding which the LEA would allocate to support the provision specified. If the school chose to take on the responsibility for arranging this provision, it would get that level of funding. The school could then decide whether to buy any necessary equipment and support from the LEA or another source.

32. If a GM school took responsibility for arranging provision but the parents were dissatisfied with the provision made, they would complain to the school. Schools would need suitable procedures for this. In the last resort, parents who believed that a school was failing in its duty to arrange the necessary provision could complain to the Secretary of State. Parents' existing rights of appeal to the independent SEN Tribunal would remain.

School Attendance and the Education Welfare Service

33. Parents have a legal obligation to ensure that their children receive suitable education, at school or otherwise. Schools have a crucial role in monitoring and supporting regular attendance by their pupils. But LEAs are responsible, through their Education Welfare Service, for ensuring that the parents' duty is enforced. Education Welfare Officers are involved in various tasks related to attendance, ranging from home visits to taking enforcement action through the courts. They may also have other functions, including working with social service departments in child abuse cases.

34. LEAs must retain overall responsibility for enforcing school attendance in their area, because this covers children who are not enrolled as pupils at any school, and because it would not be appropriate to make schools responsible for taking legal action against parents. However, some GM schools may feel that they could carry out some attendance and education welfare functions more effectively themselves, and that this would make them better able to

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promote the welfare of their pupils. In principle, GM schools which wish to do so should be allowed to take on more responsibility for such functions. The Government will consider whether a workable division of responsibilities and funding can be identified to make this possible.

Pupil Support Grants

35. LEAs have powers to pay means-tested grants for pupils to cover a range of needs including clothing, boarding costs, and allowances for pupils over 16 who are in school. These are to help pupils take advantage of educational facilities without hardship. Some of these grants benefit pupils in GM schools. The Government believes that GM schools should, in principle, have the option of taking over responsibility for some or all of these grants. This would enable them to combine the funding with any other welfare funds they have, giving more flexibility to meet the needs of individual pupils.

36. Pupil support grant funding would have to be allocated to schools through a formula based on objective measures of need. Schools would have to publish for parents the criteria they would use in deciding pupils' eligibility.

Strengthening the Governance of GM Schools

37. The success of the GM programme depends heavily on governing bodies. They are responsible for the conduct of their schools. The great majority of GM governing bodies are working well, and making a valuable contribution to the high standards which their schools achieve. They deserve great credit for the commitment, time and energy they devote to the task. The proposals in this White Paper will extend the powers of GM governing bodies, and so increase the importance of helping them carry out their functions, and account for their performance, as effectively as possible. The Government proposes a number of measures to achieve this, taking account of the recommendations in the recent report of the Nolan Committee (5).

Selection of First Governors

38. GM governing bodies account for their performance in a wide variety of ways. But the new powers for GM schools proposed in this White Paper make it timely to consider whether there are means by which that accountability could usefully be strengthened.

39. When an LEA county school is in the process of be COIning grant-maintained, its existing governing body (including the LEA and co-opted governors) choose the people who should serve as the initial "first governors" (6) for the GM school. These arrangements will continue to apply. But when this group of first governors reaches the end of its first term of office, the Government considers that there may be a case for involving parents in appointing new first governors and re-appointing existing first governors. This could be done in various ways, and the Government will consider whether, and if so how, to

5 Second Report of the Committee on Standards in Public Life, chaired by Lord Nolan: Local Public Spending Bodies; published May 1996; Cm 3270.

6 The majority of the governors of a school which used to be an LEA county school before becoming GM are known as "first governors". They must include parents as well as representatives of the local community and local businesses.

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change the current procedures in the light of any comments received. One option might be for the parents to elect the new first governors from candidates nominated by the existing governors together with any other nominations put forward by parents.

40. Foundation governors of former voluntary schools are already appointed by, and answerable to, the Foundation which supports the school. The Government proposes no change in these arrangements.

Support for GM Governing Bodies

41. Given the importance of their responsibilities, GM governors need access to suitable training, development, support and guidance. At present, Special Purpose Grant (Development) can be used for governor training and support. But no funds are separately identified for this purpose, and some governing bodies are diffident about using school resources to meet their own needs.

42. The Government does not intend to earmark a specific sum which governors must spend on training and support, since that would cut across the principle that governing bodies should decide for themselves how to spend their overall budgets. But there may be value in separately identifying an element of Special Purpose Grant for governors to spend at their discretion on:

a. induction training for all new governors;
b. training for the whole governing body when the school first becomes GM;
c. ongoing training for governors, including whole governing body training in the school and attendance at outside events;
d. paying for an experienced clerk who can act as adviser to the governing body, particularly on legal and procedural matters; and training for clerks;
e. subscriptions to governor associations, advice helplines and other support for governing bodies.
Nolan Committee Recommendations

43. The Nolan Committee's report included a number of recommendations for strengthening the governance of GM schools which the Government proposes to accept.

44. The Committee concluded that the present division of responsibilities between the DfEE, the FAS and OFSTED created a risk that any major problems in individual GM schools would not be tackled as effectively as they could be. In practice the Department, the Agency and OFSTED already work closely together in the rare cases where serious financial or educational difficulties arise. Nonetheless, the Government accepts that weaknesses in governance, failures of financial control and poor educational performance can all be interlinked, and that any problems must be tackled vigorously. It therefore agrees that it would be helpful to extend the FAS's remit so that it will take the operational lead in supporting schools with serious problems.

45. The Government will also consider how best to promote conciliation and mediation arrangements for resolving disputes within GM governing bodies, or between governors

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and staff. Action is already being taken to introduce an independent member on GM appeal panels set up to consider dismissal or disciplinary action against the headteacher. In the light of experience with that, the Government will consider the Committee's recommendation that the principle of an independent element should be extended to all staff appeal panels.

46. Other Nolan Committee recommendations which the Government proposes to accept, in whole or in part, include:

a. Drawing up guidance on good practice in governance. The national governor organisations and other interested parties have been discussing such guidance for some time. The Government hopes that agreement can be reached soon and, if so, it will support dissemination of such guidance.

b. Lifting the restriction on non-teaching staff becoming governors. The Government will consider further whether it is better to allow non-teaching staff to become first governors or to extend the arrangements for teacher governors.

C. Reducing the term of office for first, foundation and sponsor governors to four years, to match the term of parent and teacher governors. The Government does not, however, propose to place any limit on the number of terms which an individual may serve, since it should be left to local judgement how best to balance the benefits of continuity of membership against the benefits of bringing in new blood.

d. Where the sponsors of Technology Colleges, Language Colleges or the new Sports or Arts Colleges (see chapter 4) appoint one or more sponsor governors, encouraging schools as a matter of good practice to report the amount of sponsorship in their annual report and accounts.

e. Replacing the title "first governor" with "community governor".

Failing GM Schools

47. The great majority of GM schools are successful, well-managed institutions which give their pupils a good education. But in a growing sector which already contains more than 1,100 schools, there are bound to be a few which run into difficulties. At the same time as extending freedoms for effective schools, it is important to ensure that there are mechanisms to identify, and tackle vigorously, the tiny minority which do not achieve acceptable standards.

48. Where GM schools are found to be failing, the Secretary of State can appoint additional governors, or replace some or all of the first governors of a former county GM school. The churches and other bodies which appoint the foundation governors at former voluntary schools can similarly replace those governors. This will usually be enough to secure the school's recovery. But in a few cases, such remedies may work too slowly. The Government therefore intends to introduce a last resort power enabling the Secretary of State, whether on the recommendation of the FAS or otherwise, to appoint a body on the lines of an Education Association to take over the management of the school and resolve its problems.

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Funding for GM Schools

49. The Government remains determined that GM schools should be funded on a fair basis that fully reflects their status and the extra responsibilities they carry.

50. Many GM schools see attractions in a national funding formula. One reason is so that their budgets can be set without reference to LEA funding arrangements and spending decisions. The Government sees national funding for GM schools as a long term objective. The DillE issued a discussion paper on 21 May designed to open up debate. The Welsh Office will issue a similar paper later this year.

51. National funding poses many challenges. Designing a formula which is fair, simple and caters for a wide range of needs will not be straightforward. Any new pattern of funding will produce winners and losers. These issues will need careful consideration. But they are not insurmountable obstacles. The DillE discussion paper describes a number of ways in which the formula and transitional arrangements might work.

52. GM funding cannot be debated in isolation. Changes to the present system will affect the relationship between LEA and GM funding. For instance, if a national formula were to apply to GM schools only, neighbouring LEA and GM schools could find that their budgets were calculated on a different basis. The Government welcomes comments from GM schools and local authorities on these issues.

53. Meanwhile, the Government will continue to develop the Common Funding Formula in England as a means of achieving greater standardisation in setting GM budgets and reducing reliance on LEA spending decisions. This already provides the basis of funding for GM secondary schools in 23 areas. The Government issued consultation papers in May about the coverage of the CFF in 1997-98, including its extension to primary schools. It will consult GM schools and LEAs about refining the CFF methodology.

54. GM schools outside the CFF areas have their budgets set by reference to the Local Management scheme of their former LEA. The Government will take into account the implications for these GM schools of the proposals in chapter 2. Meanwhile, there is concern that some LEAs operate their LMS schemes in such a way as to disadvantage GM schools. The DfEE and the Welsh Office are looking at whether some tightening up is needed in the way present arrangements account for two items (LEA spending on premature retirement compensation and capital expenditure funded from revenue) and will consult on their conclusions in due course. New procedures were introduced this year to tighten up the auditing of LEA spending as a safeguard against abuse, and the Departments, with the FAS, will keep this under close scrutiny.

55. The FAS is responsible for monitoring GM school spending and must receive the financial information needed to ensure that public funds are properly accounted for. But the FAS also wants to minimise burdens on schools. The Agency has adopted a twin track approach whereby schools with sound financial systems now submit returns once a quarter, while schools new to the sector or in financial difficulty submit monthly returns. The FAS will continue to look for ways of simplifying their requirements, including electronic transfer of data direct from schools' management information systems.

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Easing the Process of Becoming Grant-Maintained

56. The process of becoming GM is a voluntary one and dependent on the choices which parents make in ballots. But the Government is concerned that the debate in too many ballots is distorted by misinformation and intimidation. In such cases the balloting process can impose a heavy load on the school. Some schools which see attractions in GM status may be deterred by the difficulties they associate with ballots.

57. The Government proposes to give governing bodies the opportunity of seeking help from an independent ballot observer. These observers would be available on request to schools embarking on ballots. The observer's role would be to ensure fair play during the campaign. This could include:

a. screening and "kitemarking" documents produced by the various parties to ensure they are not misleading;
b. attending or chairing parents' meetings;
c. providing impartial advice on the requirements for the conduct of ballots;
d. investigating any complaints about irregularities in the ballot.
58. The Government will also review the publications and data provided to schools about the budgetary and other implications of GM status, to reduce the scope for misunderstanding and misinformation.

59. When a school becomes grant-maintained, the transfer of property from the LEA to the governing body can be complex. The Education Assets Board, who have responsibility for deciding what should be transferred, have set themselves new targets for completing the process, aiming to complete over 250 GM school cases by next March.

Pupil Referral Units and Special Schools

60. The Government is considering what action may be needed to raise the quality of education provided by Pupil Referral Units (PRUs) for pupils who have been excluded or are otherwise out of school. One option is that PRUs should have management committees representing local interests. GM schools may wish to be represented on such committees or to contribute more extensively to running PRUs in their areas. The Government will consider how to encourage this.

GM Special Schools

61. Wherever possible, the freedoms enjoyed by mainstream. GM schools should be extended to GM special schools. But there are differences in the funding of GM special schools and in the legislation under which they operate. In the light of the proposals in this chapter, the Government will consult GM special schools and other interests on:

a. allowing GM special schools, in defined circumstances, to make changes to their provision without reference to the Secretary of State;

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b. any further action necessary to allow GM special schools to take full responsibility for arranging provision specified in pupils' statements;
c. allowing GM special schools to charge LEAs fees for activities outside the scope of statements;
d. enabling promoters to propose setting up new GM special schools.

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CHAPTER 4 Choice, Diversity and Specialisation

1. Since 1979 one of the Government's main objectives has been to give parents more choice in deciding the education they want for their children, and to promote more diversity among schools as a means of broadening that choice.

2. Some forms of diversity are well-established. The independent sector continues to flourish, containing some of the finest schools in the country. The state sector has always included many Church schools, offering a distinctive ethos. At secondary level, grammar, single-sex and boarding schools have enriched the range of opportunities. But the 1960s and 1970s saw a drift towards uniformity, Direct grant status was abolished and technical schools largely disappeared. The generalist comprehensive became the predominant type of state secondary school.

3. There are 111any excellent comprehensives which serve their communities well. But in too many places a comprehensive is the only choice, and some have not succeeded in meeting the full range of needs. The Government does not believe that the varied abilities, aptitudes, interests and needs of children can be fully met by a single type of school.

4. So the Government has sought to increase choice and diversity:

a. The Assisted Places Scheme was introduced in 1981. Since then it has helped over 75,000 able children from low income families to attend top independent schools. The Scheme is being expanded by 4,000 places in 1996/97, and will include primary age children for the first time. Over time the total of some 35,000 places available in England and Wales will be doubled. The parallel Music and Ballet Scheme is also being expanded by 100 places, giving exceptionally talented pupils more opportunities to develop their potential.

b. The 15 City Technology Colleges (CTCs) were established, in co-operation with private sector sponsors, as independent but state funded secondary schools. The first opened in 1988. They cater for children of all abilities in urban areas, with a special emphasis on technological and vocational education.

c. The specialist school concept was developed with the Technology and Language College programmes, introduced in 1993. These help existing secondary schools to develop their strengths in technology, science and maths or modern foreign languages. There are now 151 Technology Colleges and 30 Language Colleges in England, with some 180,000 pupils.

d. All LEA schools now have the choice of opting out of LEA control and becoming grant-maintained. There are over 1,100 GM schools, including some 460 primary,

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some 660 secondary and 12 special schools, spread across England and Wales and educating some 700,000 pupils.

e. Since 1993 independent promoters, including existing independent schools, have been able to propose setting up new GM schools, including selective and denominational schools. Two Roman Catholic former independent schools, both single sex and selective, are now grant-maintained.

5. All state schools will continue to teach the full range of National Curriculum subjects, ensuring that all pupils get a broad and balanced education. But this does not prevent schools from developing strengths in particular subjects, or catering for pupils with particular talents, interests or needs.

6. The Government believes that greater diversity will help raise standards:

a. It can be difficult, at least at secondary level, for any single school to respond effectively to the full range of educational needs in the local community. Stretching the most able, supporting the least able, and developing pupils' diverse talents and interests are all challenging tasks. S0111e schools can do all of them well. But developing particular strengths and a distinctive identity helps schools to focus their efforts and resources, and gives staff, pupils and governors something they can take pride in.

b. It gives a better match between what schools offer and what parents want - which is a good education that suits the abilities, aptitudes and interests of their children. This strengthens the motivation and commitment of pupils and their parents.

7. Diversity and specialisation go well beyond the outmoded division between grammar schools for the few and secondary moderns for the rest. Our social and economic future depends on giving all young people opportunities to achieve their full potential. Parents throughout the country should be able to choose from a range of good schools of different types. Grammar schools and generalist comprehensives are important parts of the range, but choice should go much wider than that. Parents may be looking for a school with a particular ethos, a particular subject specialism, expertise in dealing with particular needs, or one that selects some or all of its pupils by academic ability. They may want that school to be mixed or single sex, day or boarding.

8. To encourage diversity and choice for parents, the Government proposes action on five fronts:

a. encouragement of new grammar schools;
b. greater freedom for schools to select pupils;
c. encouragement of new GM schools;
d. development of the specialist schools programme;
e. encouragement of state boarding provision.

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Grammar Schools

9. Grammar schools have a proud tradition of academic excellence. They have given children from all backgrounds opportunities to achieve the best of which they are capable. It is right to have schools which can focus all their efforts on stretching the most able. At present fewer than 5% of state secondary schools are grammar schools, and their national distribution is patchy. The Government wants more parents and pupils to have these opportunities, where there is a demand for them in the local community.

10. The Secretaries of State for Education and Employment and for Wales will, as a matter of general policy, look favourably on proposals which would increase the number of grammar schools. Such proposals may come from the GM or LEA sectors, and the Secretaries of State will continue to take account of the circumstances of each case in deciding whether to approve proposals. The DfEE and the Welsh Office will streamline the process for considering such proposals to ensure that a decision is reached as rapidly as the legal requirements allow.

11. The Government proposes to give the Funding Agency for Schools the power to put forward proposals to set up new schools in all areas where they are needed (see paragraph 26). This will in particular allow the Agency to propose new GM grammar schools.

12. It is open to promoters to propose setting up new GM grammar schools. Two such schools are already operating in England. The Government welcomes further proposals of this kind, and intends that the FAS should be able to pay grants to help meet the costs of potential promoters in drawing up proposals.

13. Existing GM secondary schools which want to become grammar schools are able to publish the necessary statutory proposals in their own right. In the LEA sector, voluntary schools can also publish statutory proposals, but county schools cannot. Where the governing body of a county school wishes to become a grammar school, the Secretaries of State will look to the LEA to pursue that constructively. The Government intends to give those governing bodies a right of appeal to ensure that reasonable proposals are not blocked.

14. Schools in both the GM and LEA sectors may want to introduce a significant grammar-school-type stream of high ability pupils in their intake, while still continuing to take other pupils by reference to different admission criteria. The proposals in the following section to allow schools to select more of their pupils without needing central approval would make it easier to do that, where it is what schools and parents want.


15. Selection is not limited to grammar schools. It can take many different forms. Some schools select all their pupils, some a proportion. Some select by ability or aptitude in a particular subject, some by general ability. Since 1993, for example, over 40 GM schools have introduced 10% selection by aptitude or ability in one or more of music, drama, sport, art, technology or foreign languages. Admission arrangements also take many different forms, with many variations in the criteria which admission authorities (7) use in

7 The "admission authority" is the body which has the power to decide what the admission arrangements should be for a particular school, For grant-maintained, voluntary aided and special agreement schools, the governing body is the school's admission authority; for county and controlled schools, the LEA is the admission authority.

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deciding which pupils to admit if there are more applicants than places. The Government does not intend to oblige any school to change its admission arrangements. But it wants to encourage more diversity in types of selection.

16. The Government takes the view that all admission authorities have the flexibility, under existing legislation, to select up to 15% of their pupils by ability or aptitude, either in particular subjects or by general ability, without needing to seek central approval (8). The Government intends to extend this flexibility through new legislation.

17. The Government looks to grant-maintained schools to take the lead in responding to local needs in innovative ways. To encourage this, it proposes to enable all GM schools, where they wish to do so, to introduce up to 50% selection, by ability or aptitude in one or more subjects, or by general ability, without the need to publish statutory proposals.

18. Schools which are designated under the specialist schools programme as Technology Colleges or Language Colleges (and, for the future, Sports or Arts Colleges) are not required to introduce selective admission arrangements. But in order to develop their specialist subject, they may wish to introduce an element of selection by ability or aptitude in the relevant subject, particularly where they have more applications than places. This would help schools ensure that their specialist facilities were available to those pupils who could get most benefit from them, including those living outside their normal catchment area. The DfEE is funding a project to review current practice in aptitude testing, and develop suitable tests for use in technology.

19. The proposals in paragraph 17 would allow specialist schools in the GM sector to introduce up to 50% selection without publishing statutory proposals. The Government proposes that specialist schools in the LEA sector should be able, if they so wish, to select up to 30% of their pupils by ability or aptitude in the specialist subjects without central approval. The LEA would remain the admission authority for county and voluntary controlled schools. But where any specialist school wishes to select, the Secretary of State will look to the LEA to respond constructively. As with schools wishing to become grammar schools, the Government intends to give governing bodies of specialist schools, where they wish to make use of this new power to select up to 30% of their pupils, a right of appeal to ensure that reasonable proposals are not blocked.

20. GM schools and specialist schools have a particular contribution to make to achieving greater diversity. But the case for schools introducing an element of selection as a means of developing a distinctive strength goes much wider. So the Government proposes that all LEA schools should be able to select up to 20% of their pupils by ability or aptitude without central approval.

21. All schools should review regularly what strengths they have, how best they can build on them to enrich the choices available to their local community, and whether selecting some of their pupils by ability or aptitude, in a particular subject or generally, would help

8 DfEE Circular 6/96, "Admissions to Maintained Schools", issued on 25 June 1996, says that selection of up to 15% of a school's intake is likely to be possible without the need to publish statutory proposals. The previous interpretation of existing legislation allowed up to 10% of pupils in a small number of subjects to be selected without the publication of proposals. Welsh Office Circular 33/96 offers similar guidance.

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the school meet parents' wishes and local needs more effectively. The Government proposes that the governing bodies of all schools should be expected to consider these issues annually, in consultation with parents.

22. The impact of changes in admissions will depend on the decisions of individual schools and LEAs, and on the choices of individual parents. A change at one school may have implications for other local schools, and conceivably for the overall match between the number of children and the school places available. This puts a premium on sensible cooperation between admission authorities, and the FAS where appropriate, so that parents are clear about their options and the procedures to follow in applying for a place. There are many examples of this already happening. Effective co-operation also implies local consultation before final decisions are taken by the LEA or school. This would become a legal requirement.

23. The Education Act 1993 put in place two reserve powers to tackle local problems:

a. LEAs, or the FAS in some areas, have powers to direct a school to admit a child who is without a place, subject to the school's right of appeal to the Secretary of State.
b. The Secretary of State has power to impose co-ordinated admission arrangements on an area. It has not yet proved necessary to use this power, showing that schools and LEAs can be relied on to co-operate reasonably.
24. Giving schools greater freedom to introduce selection would not require a major strengthening of these powers. But the Government will consider whether an additional reserve power is needed. A "call-in" system - where changes would continue to require the Secretary of State's approval - might be useful in tightly defined circumstances, such as where there was a clear local shortage of school places or where the proportion of selective schools or places exceeded a certain level.

25. So that as many parents as possible can get their first choice of school, schools which introduced partial selection would not be able to refuse admission to children if they still had empty places. Parents refused admission would continue to have the right to appeal.

New GM Schools

26. The Funding Agency for Schools has powers to propose setting up new grant-maintained schools. But it can exercise them only in areas where it has responsibility for planning the supply of school places - that is, areas in which 10% or more of the pupils attend a GM school. At present this applies in fewer than half the LEA areas in England. In other areas, only the LEA (or third party promoters of new GM or voluntary schools) may propose setting up a new school to meet a shortage of places. In order to encourage competition, the Government proposes to lift this restriction. In all cases where a new school is needed to meet demand for extra places, the FAS would be able to put forward proposals to the Secretary of State alongside any proposals from the LEA. In judging the two sets of proposals, the Secretary of State would give preference to those which would most extend diversity. The FAS would be required, wherever it proposes to set up a new school, to consider how it can best increase diversity, including by establishing new GM grammar schools.

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27. The Government would like to see more promoters of all kinds corning forward with robust proposals for new GM schools. Proposals must be based on careful investigation and research. FAS staff are ready to advise and work with promoters. As noted in paragraph 12, the Government proposes to enable the FAS to pay grants to help meet expenses incurred by potential promoters in drawing up a fully costed development plan.

Developing the Specialist Schools Programme

28. Specialist schools have proved popular with sponsors, parents and pupils. The 181 existing Technology and Language Colleges provide for some 180,000 pupils, and have between them raised some 18 million in sponsorship. Current budgets allow for the programme to expand to 250 schools. Because the programme has been so successful, the Government will be looking carefully at the possibilities for further expansion as resources allow.

29. Specialist school status is intended to bring about a long term change in the school, so that its specialist subject becomes solidly grounded as part of the school's identity. The Government is keen to put specialist schools onto a more permanent footing. As proposed in paragraph 19, specialist schools will have greater freedom to select pupils by aptitude or ability in their specialist subjects. The Government also intends that Technology and Language Colleges which have made good progress in developing their specialisms will be able to bid for continuing grant at the end of their initial three-year development period. Schools will need to put forward fresh development plans with rigorous new targets for raising their standards, showing how they intend to build on their achievements to date and share their experience with other local schools.

30. The Government proposes to extend the programme to help existing GM and LEA secondary schools to specialise in two new areas - sports and the arts (covering the performing arts, the fine arts, and the technology of the arts). These schemes would run on the same lines as the existing Technology and Language Colleges:

a. Schools wishing to apply would draw up a development plan with targets for raising their standards, and extending the range of what they offer, in the specialist area.
b. They would need to raise private sector sponsorship towards a capital project to improve the school's specialist facilities, and establish close and continuing links with those sponsors.
c. In return, successful applicants would receive a matching capital grant from the DfEE, and extra recurrent grant, to help them implement their plans.
31. Sports Colleges would build on the initiatives announced in the July 1995 policy statement "Sport: Raising the Game". Arts Colleges would be able to draw on a range of experience, including the British Record Industry Trust sponsored CTC in Croydon and the schools involved in the Music and Ballet Scheme.

32. One objective of the specialist schools programme is to promote close links between schools and their sponsors. Grant-maintained and voluntary aided schools can appoint additional governors to represent the school's sponsors on the governing body. Other

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types of school are not able to do so other than by co-opting governors as vacancies arise. The Government intends to enable all specialist schools to appoint sponsor governors.

Boarding Schools

33. There are some 40 state boarding schools educating around 4,000 boarders. The demand for state boarding places has been falling in recent years, partly because of lack of awareness of the opportunities available. But many of the schools achieve high standards, and the Government is keen to see this sector flourish so that parents whose children can benefit from boarding have that choice at affordable cost. Boarding provision meets the needs of many children, especially from families whose domestic or employment circumstances do not easily fit the patterns of day schooling.

34. The Government intends to strengthen this sector by:

a. Promoting public awareness of state boarding opportunities. The Government will support marketing activities at home and abroad through the State Boarding Information Service, which is being funded to produce a new information booklet for parents.

b. Reviewing ways of bolstering the schools' financial base. The Government will consider the case for enabling them to admit as boarders children from outside the European Union, and charge tuition as well as boarding fees for such pupils. This would put state boarding schools on a similar footing to independent schools and FE colleges. Tuition for UK and other EU pupils would remain free.

c. Considering the scope for paying additional grant to GM boarding schools to reflect the fact that, unlike LEA boarding schools, they have to pay VAT on the costs of boarding provision.

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CHAPTER 5 The Role of Local Education Authorities

1. Chapters 2 to 4 set out the Government's plans for extending self-government for schools, and for encouraging diversity. This chapter looks at the implications for the role and functions of LEAs.


2. The Government wants state schools to be as independent as possible. But they receive public funds to provide a public service. So there must be proper regulation and accountability. There are also some support services which are best carried out by an outside body. It is for the Government to keep under review how these services are organised, so that they provide effective support for schools and pupils.

3. That applies particularly to the role of LEAs. Before the 1980s, the LEA's role centred on the planning, control and direct administration of schools. Since then successive education and local government Acts have transformed what LEAs do, requiring a major shift in practices and attitudes:

a. All schools now have governing bodies responsible for overseeing the way the school is run. Governing bodies represent not just the LEA but the range of local interests, particularly parents. Schools account for their performance in various ways to parents and their communities. This has reduced the previous emphasis on local authority elections in securing school accountability.

b. The GM programme, and local management in the LEA sector, have shown that schools can run their own affairs successfully with little or no LEA involvement.

c. National specification of major aspects of school education, such as the National Curriculum, assessment and testing at each Key Stage, independent inspections, and the SEN Code of Practice, has removed much of the need for local prescription.

d. Nursery vouchers reinforce the power of parents to choose from the range of nursery education available, state and private, and give schools more incentive to provide what parents want.

e. Thanks partly to compulsory competitive tendering, many local authority departments have shifted from direct provision of services to ensuring the quality of services provided from various sources.

f. The former polytechnics and further and higher education colleges have been transferred out of the LEA sector, greatly reducing LEA involvement in post-school education.

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4. All this has prompted increasing recognition that it is not the task of LEAs to control or run schools. So far as possible, within the framework of the National Curriculum, schools should run themselves. That implies defining the LEA role mainly in terms of the contribution the LEA can make to helping schools work effectively. The ability of schools to opt for GM status has made LEAs more responsive to the needs and wishes of their schools. Some LEAs have worked hard to adjust, and have won the appreciation of their schools. Others have seemed more concerned to defend existing ways of doing things.

Role of the LEA

5. The Government sees a significant continuing role for LEAs. They have built up over many years experience and expertise in the administration of the schools sector. Their role should be to provide those services and undertake those functions which schools cannot carry out for themselves and which no other agency is better placed to carry out. This role should be tightly specified to the minimum consistent with the efficient and effective operation of the education service.

6. The Government considers that the main functions which LEAs should, or may, undertake are:

a. Organising forms of education which take place outside schools.
b. Planning the supply of school places, handling complaints and other regulation.
c. Allocation and monitoring of school budgets.
d. Organising services to support individual pupils.
e. Supplying support services for schools to buy if they wish.
f. Promoting quality in schools, complementing the responsibility of schools for their own performance and the responsibility of the national inspectorates for inspecting and reporting on that performance.
g. Co-ordinating school networks and developing good practice, particularly in carrying out national initiatives.
Education Outside School

7. Schools, further education colleges and universities are all self-standing institutions, with their own governing bodies and able to run their own affairs. But some forms of education do not have that institutional independence, and there is a role for LEAs (or other departments of the local authority) in providing them, either directly or through voluntary and private sector organisations.

8. They include:

a. Nursery schools.
b. Pupil referral units, catering especially for pupils who have been excluded from school.

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c. Other forms of "education otherwise", including pupils educated at home or during long stays in hospital.
d. The Youth Service.
e. Some forms of adult education, including leisure-related evening classes and other courses not leading to formal qualifications.
9. These forms of education could be provided in other ways. But many of them benefit from being organised by a local body which can draw on a range of premises, staffing and other resources, in co-operation with other local services.

10. LEAs also pay grants for further and higher education students. But now that the LEA role in providing further and higher education has largely ended, that function looks increasingly anomalous. LEA expenditure on mandatory awards is met by direct Government grant, and LEAs have little discretion over the level of awards. Since 1990, awards have formed only part of the funds available to students, alongside loans and access funds. The Committee of Inquiry into Higher Education, chaired by Sir Ron Dearing, is looking at the development of higher education over the next 20 years. The Government will consider LEAs' role in paying awards in the light of any relevant recommendations from the Committee when it reports next summer.

Regulation, Arbitration and Planning

11. The LEA's status as an elected, locally accountable body responsible for providing schools has traditionally brought with it a set of functions for regulating, planning and resolving disputes. These include:

a. Planning the supply of school places (with the governing bodies and foundations of voluntary schools), including decisions about setting up new schools, closing existing schools, and changes in school size, age-range and character.
b. Making school instruments and articles of government and appointing LEA representatives to school governing bodies.
c. Setting the admissions policy and managing pupil admissions for county and controlled schools; co-ordinating information for parents about admissions; directing schools to admit pupils for whom no other suitable place can be found; and policing school attendance, including prosecuting parents where necessary.
d. Considering complaints and appeals against the actions of individual schools, for example on pupil exclusions.
12. Over the past decade, these functions have evolved. The Funding Agency for Schools now has full or shared responsibility for planning school places in some 50 LEAs in England, and its role will grow as the number of GM schools rises. The Government intends that schools should have more power to make their own decisions, including on the admission and selection of pupils. So the LEA's role in this area will continue to reduce. Nonetheless, the responsibility of LEAs for making sure that there are enough school places to meet local needs implies a continuing role, with the FAS and voluntary bodies, in setting up, altering, and closing schools; in appointing governors for LEA

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schools; in making sure that children attend school; and in providing complaints and appeals mechanisms.

Allocating and Monitoring School Budgets

13. Until the 1980s, one of the core functions of LEAs was to decide how much should be spent on education, and how it should be distributed between sectors and between schools. Since then LEA discretion has been reduced, particularly by the requirement to set school budgets in accordance with LMS schemes.

14. Nonetheless, LEAs have an important role in school funding, linked to the local authority's powers to levy local taxes and decide how funds should be shared between services. This includes responsibilities for:

a. Setting the overall education budget each year.
b. Calculating school budgets in accordance with the LEA's Local Management scheme, and keeping that scheme under review.
c. Monitoring and auditing school budgets; and withdrawing delegated spending powers from schools if necessary.
d. Preparing bids to the DfEE to pay for school building works; and allocating capital funds to schools.
e. Preparing bids for education-related specific grants, including Grants for Education Support and Training; contributing to cross-service bids such as for the Single Regeneration Budget and the new Capital Challenge programme; and monitoring how the funds are spent.
f. Servicing historic commitments, such as capital debt charges and premature retirement costs.
15. The discretion to levy local taxes for education spending implies a continuing funding role for local authorities. And with over 20,000 LEA schools in England and Wales, allocating school budgets and monitoring their spending will remain a major task.

Pupil-Specific Services

16. There are some services where the needs of individual pupils vary so greatly that it may be difficult to allocate funds by formula; or where the interests of the school may conflict with the interests of the pupil. These services are:

a. drawing up statements of Special Educational Needs;
b. enforcing pupil attendance and running the Education Welfare Service;
c. organising home-to-school transport;
d. paying clothing grants and other allowances to help pupils who would otherwise face hardship.

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17. LEAs have traditionally had a role in assessing individual pupils' needs and allocating resources accordingly. Some have seen this in terms of advocacy of the interests of the pupil, ensuring that he or she can gain access to suitable schooling. Many schools do not regard at least the last three items as part of their core function, but more akin to social services. That is why LEAs retain responsibility for these services for pupils in GM as well as LEA schools. Chapter 3 proposes to allow GM schools to carry out some of these functions if they wish. But that will still leave LEAs with a major responsibility in these areas.

Supplying Support Services for Schools

18. There is a range of outside services which some or all schools may need to support their work, including:

a. Help in developing the curriculum, assessment, management of pupil behaviour, and other aspects of teaching and learning.
b. In-service training for teachers and other school staff, and training and advice for governors, whether provided by the LEA or by others.
c. Specialist teaching from peripatetic staff, such as instrumental music tuition.
d. Libraries, museums, outdoor activity centres and teachers centres.
e. Support for school administration and management, such as specialist advice on personnel (including the appointment, discipline and dismissal of staff), legal and financial matters, and IT support.
f. LEA-organised schemes which schools can buy into as a form of insurance against unpredictable expenditure such as supply cover for long-term staff absence.
19. Schools should decide what support services they want, and where to buy them. The experience of GM schools has shown that this ensures value for money, and makes suppliers more responsive to schools' needs. Schools should always be able to use private sector suppliers if they wish. The Government expects that such suppliers will meet an increasing range of schools' needs.

20. It is therefore not an inherent or necessary part of the LEA role to provide such services.

But at present most schools look to LEAs for this support. There is no reason to preclude LEAs from. offering these services, where schools want them, at full cost and in fair competition with the private sector. Schools may often prefer to buy some services from neighbouring LEAs, particularly in urban areas where small LEAs may not find it practicable to offer the full range of high quality, cost-effective services. The Government considers that the Local Authority (Goods and Services) Act 1970 allows LEAs to offer such services at full cost to GM schools and schools in other authorities.

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21. For some support services, it is sensible for LEAs to combine related items in a single package which schools can buy for a single annual fee (for example, a package of training, support and advice for governors). But packaging services in this way is not acceptable if done to discourage schools from shopping around to get best value. The Government will consider, in drawing up the revised LMS framework, how far the costs of different items within buy-back packages should be separately identified, to maximise choice for schools in deciding what services to buy.

Quality Assurance

22. There is a major issue about the part LEAs should play in promoting higher standards in schools.

23. Each school is responsible for its own performance. It is central to raising standards that the staff and governors of every school should feel that it is directly for them to monitor the quality of the education they provide, to identify ways of improving it, and to take the necessary action. There should be a presumption against any external intervention which detracts from that.

24. The Government's priority is to foster the internal will and capacity of schools to

generate their own improvement. The Secretary of State for Education and Employment recently announced her intention to consult OFSTED, the School Curriculum and Assessment Authority and the Teacher Training Agency about the form which such a system of self-improvement should take, and she intends to make a further announcement in the Autumn. Meanwhile, the objective of school self-improvement is being pursued through the Improving Schools programme in England, which includes action:

a. to give schools better "benchmark" performance data for comparing their performance with that of other schools;
b. to encourage schools to use those data to set themselves challenging, measurable targets, with deadlines, for raising their standards;
c. to build those targets into school development plans and post-inspection action plans, so that each member of staff knows what action is to be taken, by whom and by when;
d. to encourage schools to evaluate what they do against the criteria of the OFSTED Framework, bringing together internal and external quality assurance;
e. to improve teacher appraisal, encouraging better management and development of teachers linked to higher pupil achievement.
25. Every school in England is now inspected by OFSTED, and in Wales by the OHMCI, with a published report on its standards. The governing body must then draw up an action plan to address the report's findings. These arrangements, combined with national assessment and testing, annual performance tables, reports to parents, and pupil-led funding, create a framework in which every school's performance is externally assessed, and schools have obligations and incentives to act on the results.

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26. But these inspections have shown that some 2% of schools are failing to provide an adequate standard of education, and a larger group have weaknesses serious enough to suggest that they lack the capacity to improve under their own momentum. They cannot be allowed to carryon under-performing, so some external intervention is needed. Current arrangements already require intensive action to sort out failing schools. For schools whose weaknesses fall short of outright failure, re-visits by the Inspectorates and additional monitoring and support by the LEA (or the FAS for GM schools) are proving effective in restoring schools to health.

27. The Chief Inspector of Schools is consulting about new arrangements for OFSTED inspections in England once the first four-year inspection cycle is completed (9). He has proposed a more targeted approach, using available evidence to identify failing schools and those with serious weaknesses, which would be subject to more frequent inspection and more robust follow-up. Schools with serious weaknesses would be identified by inspectors.

28. The LEA role in quality assurance needs to be specified so that it complements, without duplicating or undermining, the responsibilities of schools and OFSTED/OHMCI. Unless that role is tightly drawn, there is a risk of wasting resources at best and at worst directly damaging standards by diffusing responsibility for school performance. The Government considers that the LEA role involves three main functions.

29. The first is direct intervention where a school is found to have major problems which it is unlikely to resolve quickly by itself Such intervention should be needed in only a small minority of cases, mainly where OFSTED or OHMCI inspectors find a school to be failing or seriously weak. But intervention may also be necessary where financial returns, complaints from parents or others, or analysis of monitoring data, show a serious problem in financial controls or in the management or conduct of the school.

30. The best form of intervention will vary. LEAs may often want to draw on expertise from beyond their own staff, including staff from good local schools. LEAs have powers, as a last resort, to withdraw delegated financial powers from schools and replace LEA-appointed governors. There may also be a case for LEAs to be able to issue formal warnings to schools, setting out the problem and the action needed to address it. If the school did not then take effective action, that could provide grounds for withdrawing delegation or asking OFSTED or OHMCI to carry out a full inspection.

31. The second quality assurance function of LEAs is to work with their schools in setting targets for improvement. Every school's governing body and senior staff should set, and keep under review, tough targets for raising standards. Each school should decide what its targets should be, and what action is needed to achieve them. But LEAs can help that by analysing and circulating the wide range of information available from National Curriculum assessments and tests, performance tables, OFSTED and OHMCI inspection reports, the Inspectorate databases, financial monitoring, and other sources. This will give each school a basis for assessing its current performance, comparing it with other schools, and deciding its priorities for improvement. Where a school is identified through

9 "Arrangements for the Inspection of Maintained Schools from September 1997: A Consultation Paper"; OFSTED, May 1996.

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inspection as failing or having serious weaknesses, the follow-up action should always include setting rigorous targets. All OFSTED and OHMCI inspections will look at the targets set by schools and their progress in meeting them.

Target Setting

Within the Improving Schools programme, OFSTED surveyed best practice in schools in setting and achieving targets for raising standards. Their report found some excellent examples:

Crossley Farm Infant School in Surrey assesses all pupils at age 5. The school informs parents about the assessment process as part of an introductory programme, during which parents and their children spend three mornings in school prior to formal entry. The teacher plans with the parents the contribution they can make to their child's future progress. At the end of the first term a written report indicates progress; this is followed up later in the year in the annual report.

Grove Primary School in Birmingham uses assessment data to identify and provide for the different needs of particular groups. Teachers log assessment data from the core subjects into the data base every term. They select "fast track" English and mathematics groups, and identify pupils with special educational needs.

Wakeman School in Shropshire sets targets in English as part of a wider concern to raise standards. Boys were doing less well than girls. They used a questionnaire, followed up by individual interviews, to examine attitudes to English amongst boys and girls. They used this to change the teaching and curriculum to support boys better. They also revised assessment procedures; grouped pupils so as to improve the gender balance; and mentored individual pupils in year 11.

32. The third quality assurance function for LEAs is to provide services to help schools carry out their own plans for improvement. All schools, no matter how high their current standards, have room to improve. But it should in general rest with each school to obtain the advice and support it thinks necessary, from LEAs or other outside sources. This may include, for example, in-service training, support for curriculum development, and access to resource centres. As well as providing such services, the LEA contribution could include leading projects with volunteer schools to develop good practice in areas which analysis of the Inspectorate databases shows to need improvement.

33. Save for the small minority of schools covered by paragraph 29, LEAs should not generally intervene in schools on their own initiative. The three functions described above do not require LEAs to carry out their own programme of regular monitoring inspections. In particular, the value of LEAs inspecting their schools on a general basis to prepare them for OFSTED or OHMCI inspections seems questionable. There are other ways in which LEAs can track trends in school performance between inspections, through better analysis of performance data, work on target setting and the other reports, information and contacts available to them. OFSTED will also consider ways of providing summaries of data from its inspection database, to help LEAs identify their priorities for

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selective monitoring of schools. OFSTED's summaries could be for the whole LEA, for a particular age group, or for groups of schools, and would be accompanied by comparative data for England, for similar LEAs, or for groups of similar schools. Parallel arrangements in Wales will be considered.

34. LEAs should operate selectively and at arm's length. But if they focus their efforts on the three functions identified above, they can make an effective contribution to tackling the problems of the weakest schools while supporting the rest in their efforts to improve.

Co-ordinating School Networks and Initiatives

35. Schools can, and increasingly do, set up their own contacts and networks. The GM sector has established various organisations for this purpose. With the creation of the National Governors Council, there has been a big increase recently in the number of local governor associations, which can playa useful part in sharing good practice and experience of problem-solving between schools. Home-school associations are widely seen as an important means of helping each school keep in touch with parents. Small schools may find it helpful to share services through clustering arrangements. The Government welcomes all of these initiatives.

36. But in carrying out the functions summarised in this chapter, the LEA will develop a range of links and contacts with schools and other organisations. That makes it well placed also to undertake various co-ordination and development activities, including:

a. servicing local networks for promoting contacts, such as arranging conferences for governors and headteachers;
b. implementing, often with funding from the Grants for Education Support and Training Programme, national initiatives;
c. co-ordinating projects to identify and develop good practice in the curriculum and other areas, such as the new literacy and numeracy centres;
d. organising Standing Advisory Councils on religious education;
e. representing schools on multi-agency groups such as for drugs, child protection and crime prevention, and linking the schools sector with other public services and agencies such as Training and Enterprise Councils.
37. LEAs may be able to include some of these co-ordinating activities in buy-back packages.

But in other cases it may not be possible to identify the costs, since the LEA's ability to undertake this function largely rides on the back of its other activities.

Assessing the Effectiveness of LEAs

38. The seven functions set out in this chapter give LEAs a significant continuing role. That needs to be carried out well. The past performance of LEAs has been uneven, particularly in promoting and assuring high standards in their schools.

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39. OFSTED/OHMCI inspections and published information for parents mean that the effectiveness of schools can now be assessed and compared. The Audit Commission already monitors financial regularity and value for money in local authorities. But better ways of assessing and comparing LEA performance are needed.

40. Some important initiatives are already in hand:

a. The Government intends to extend OFSTED's and OHMCI's powers to inspect LEAs' work in monitoring and supporting schools. It expects to bring the necessary legislation before Parliament later this year.
b. OFSTED is developing arrangements for pilot reviews of LEAs, focused on their support for school improvement. Each review will select a number of themes, and will gather evidence through school visits, discussions with school staff, governors and LEA personnel, and possibly questionnaires. The first review is under way in Staffordshire, and one is planned for Cornwall.
c. The Standing Conference of Chief Education Officers, with the Society of Education Officers, is developing a framework for all LEAs to use in reviewing their performance.
41. The Government will keep the progress of these initiatives under careful review, with a view to promoting over time the development of robust mechanisms for assessing, and improving, LEAs' performance.

A Stronger Voice for Schools

42. The measures in this White Paper are intended to promote a further shift in the relationship between LEAs and schools. That will be done mainly through changes in the funding structure, by giving schools more power to decide which LEA services they wish to buy. But the relationship between LEA schools and the LEA goes well beyond that between customer and service provider. Although in some major respects, such as setting and monitoring budgets, the LEA is responsible for controlling and regulating schools, many LEA activities are more in the nature of a partnership with schools. LEAs already have a wide range of mechanisms for keeping in touch with schools. But the Government believes that it may be helpful to reinforce these so as to give schools a stronger say in how the LEA carries out its functions.

43. This could be done by various means. One option would be to encourage or require local consultative groups, bringing together representatives of the LEA and schools (governors and staff, including from GM schools) to discuss how LEA support services are delivered. Another possibility is to review the way schools' views are represented on local authority education committees. The Government will consider the options, taking account of any comments received.

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CHAPTER 6 A Bright Future: More Self-Government for Wales

1. "A Bright Future", published in 1995 (10), sets out a comprehensive programme to raise educational standards for pupils of all abilities in all schools in Wales. It is part of the "People and Prosperity" action plan to improve education and training across the board. The purpose is to ensure that pupils and students, of any age, are equipped to find personal fulfilment and to make their way successfully in an increasingly competitive world. Wales has an excellent track record. Its economic base has been transformed and new, exceptionally large, and high quality investment attracted. This progress can be sustained only by developing to the fullest all the talents in Wales, upgrading the number and level of qualifications attained, and equipping the population with the skills needed in business, employment and life.

2. Part of the Bright Future programme sets out measures to meet the national targets for education and training endorsed by the Government for the UK as a whole. At its heart is the requirement for primary and secondary schools to set targets for all taught subjects and activities so as to beat their previous best, year by year. Schools bear the principal responsibility for driving up standards for pupils. The Bright Future programme gives a clear direction about the outcomes to be achieved. If the programme is successful, then, for example, by the year 2000:

a. 50% of all 15 year olds in Wales will achieve A*-C grades in GCSE mathematics, science, English Of Welsh (first language);
b. standards of teaching and learning assessed by OHMCI will be satisfactory in 95% of classes (as against 75%-80% now), and 50% will be good or better (against 25% now);
c. 90% of 15 year olds wiU achieve A*-G grades at GCSE; many more than the current 41 % will achieve 5 GCSEs at Grades A *-C; and the overwhelming majority of pupils will achieve the standards of literacy and numeracy expected of them at 7, 11 and 14;
d. all school development plans will provide a clear picture of how schools intend to improve their performance and to focus staff development in order to achieve better results for pupils.
10 "A Bright Future: Getting the Best for Every Pupil at School in Wales" and "A Bright Future: The Way Forward" (Welsh Office, April and December 1995).

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3. It is for schools to work out how best to contribute to achieving these outcomes in the light of their own circumstances - building on their strengths and tackling weaknesses with the support of governors, parents, employers, LEAs and all who can help to improve educational standards in Wales. Schools' achievements are now made plain in published annual performance tables, in governors' annual reports to parents and in school prospectuses. These documents give clear pictures of schools' progress and a balanced view of trends, and the Welsh Office is currently consulting on measures to make them even more user-friendly.

4. As schools press ahead, they will have guidance from the Curriculum and Assessment Authority for Wales (ACAC). ACAC will, amongst other things, set benchmarks to lift the numbers of pupils achieving at the levels expected of the majority following statutory assessment at 7,11 and 14. As well as data on statutory assessments and public examinations, schools also have the annual report and survey results published by OHMCI. All this information can help them compare performance between departments within their schools, and between schools, so as to identify ways of lifting attainment year on year. That will apply as much to vocational qualifications, where the work of the National Council for Vocational Qualifications (Wales Office) provides support for the development of General National Vocational Qualifications.

5. Raising standards requires that teachers have the best possible training throughout their careers. The Teacher Training Agency will establish a Unit in Wales this year. Working to a remit provided by the Welsh Office, it win ensure that this is done successfully to meet Wales' distinctive needs and circumstances.

6. Schools are centre stage. If they are going to rise to the challenges before them, they need the maximum flexibility to manage their affairs, control their budgets and develop and implement solutions. The proposals in this White Paper to give schools more responsibility to manage their affairs will provide that flexibility.

7. Local education authorities can help schools improve. Following Local Government Reorganisation in Wales there are now 22 unitary authorities, each one of which has a much smaller number of schools to deal with than was the case for the former counties. The first obligation on LEAs is to avoid consuming resources that better belong to schools, and to ensure that schools are free to solve their own problems and reach higher standards.

8. In Wales LEAs are required to delegate 90% of the Potential Schools Budget to schools, and a number of them already exceed that level. Schools are making good use of this level of delegation and most would welcome the fullest possible scope to determine priorities to meet their needs and circumstances. It is therefore proposed to increase the required level of delegation to 95% as soon as possible. To that end, the Welsh Office will review with LEAs and schools the operation of the current and the proposed new arrangements set out in this White Paper, including those for the redefinition of LMS budget headings. As now, the intention would be to allow LEAs to decide, following consultation with schools, on the right balance of delegation in LMS schemes for different types of school, recognising the different circumstances of secondary, primary and special schools, and different sizes of schools, not least the very small primary schools of which there are a significant proportion in Wales.

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9. A high quality LEA service that holds its own against competition in the open market will earn its place as a useful support to schools. There should, however, be no question of services being provided on compulsory terms, which deny schools real choice and the ability to tackle individual issues as they see fit. For the future, the roles and functions of LEAs need to be clearly recognised and identified: the proposals set out in chapter 5 of this White Paper apply equally in Wales.

10. The Welsh Office recognises the concerns expressed by schools and others about the degree to which LEAs are currently required to pass on to schools grants received under the GEST programme in Wales. The Department will consult about how, and how far, the present level of devolution of GEST grants can be increased. There will continue to be consultation each year about the overall shape of the programme in Wales.

11. All schools in Wales are inspected on a 5 year cycle. Every inspection is followed by an action plan. The Bright Future programme provides that OHMCI will give additional, regular attention to schools in which fewer than 2 out of 10 pupils achieve 5 GCSEs at grades A *-C, or which in other ways give special cause for concern. Where inspections show that schools are not meeting acceptable standards, they are expected to put matters right swiftly, with agreed targets for improved performance. There is special emphasis on improvement in the basic skills of literacy, numeracy, science and information technology. Where action plans following inspections fail to feature targets or propose insufficiently challenging ones, OHMCI requires schools to reconsider and agree new, more testing ones. LEAs can playa role in support of schools, for instance, by establishing local benchmarks and facilitating inter-school comparisons and sharing of good practice. LEAs in Wales have already played a part in the shaping and implementation of action plans where schools have been found by OHMCI to be failing to provide a satisfactory standard of education for their pupils.

12. OHMCI already takes full account of LEAs' contribution towards raising standards in schools, in inspection reports on individual schools and general surveys. It also identifies and disseminates good practice by LEAs. It is proposed that OHMCI's formal powers of inspection should be extended to include the work of LEAs in monitoring and supporting schools.

13. Increasing parental choice and diversity of provision is a priority in Wales. The grant-maintained schools in Wales are prospering, with rising pupil numbers and standards. The GM route is a natural one for schools which wish to take full responsibility for their affairs on behalf of their pupils, parents and communities. The proposals in respect of GM schools and the acquisition of GM status set out earlier in this White Paper will apply equally in Wales.

14. For grant-maintained, voluntary and county schools in Wales, choice and diversity are strengthened by the Popular Schools Initiative (PSI) which provides additional funding to enable popular, over-subscribed schools to take more pupils. Nineteen projects have already been approved, which will provide an additional 1,500 places, and more successful projects will be announced soon. The number of places available under the Assisted Places Scheme in schools in Wales will be doubled from September 1996. The Technology Schools Initiative (TSI) and the distinctive and larger Welsh GNVQ Development Scheme, involving 45 schools, will allow schools to develop more specialist options for pupils, assisted by the proposals to allow schools to select by aptitude or ability within the limits set out in chapter 4 of this White Paper.

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15. A number of Welsh schools are already securing partnerships and sponsorship with the private sector to build on their strengths and raise standards. The Welsh Office will continue to encourage this, as well as reviewing the operation of the PSI and the TSI from September 1996 to consider future options and arrangements for promoting choice and diversity. As part of that review, the Welsh Office will look at the scope for further specialisation in schools in Wales, including opportunities for extending private sponsorship.

16. Funding of GM schools in Wales remains the responsibility of the Welsh Office, though the Secretary of State has the power to establish a Schools Funding Council for Wales, with powers and functions equivalent to those of the FAS in England. The Secretary of State will keep under review, in the light of the development of the GM sector in Wales, the case for establishing such a Council.

17. At present, all GM schools in Wales are funded by reference to LEAs' LMS schemes. The Welsh Office will consult later this year on proposals to develop a national funding formula for GM schools in Wales.

18. The proposals in this White Paper complement the Bright Future programme by extending the responsibility of individual schools and clarifying the role of LEAs. It is essential that the work of all the public bodies with responsibility for supporting schools in raising standards is focused effectively and sustained. The momentum of the Bright Future programme must be maintained to the year 2000 and beyond. With that in mind, the Welsh Office will be publishing a consultative document in the autumn setting out the next phase of the programme and inviting comment and contributions. This will take account of the substance of this White Paper and give due weight to the roles of governing bodies, headteachers and their staffs; and all the public bodies, including LEAs, with responsibilities for raising educational attainment in Welsh schools.

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ANNEX The Current LMS Framework

1. Local Management of Schools operates as follows.

2. Each LEA decides how much to spend each year on its primary, secondary and special schools. This amount is known as the General Schools Budget (GSB).

3. An amount is deducted from the GSB for "mandatory exceptions". These are items of expenditure which LEAs are not allowed to delegate to their schools. The main ones are capital expenditure and debt charges; premature retirement compensation; the educational psychology service and the administrative costs of preparing statements for children with special educational needs (SEN); the education welfare service; and specific grant-supported expenditure.

4. Amounts are also deducted from the GSB for items known as "discretionary exceptions outside the Potential Schools Budget". These are items which LEAs may delegate if they wish. The main ones are home-to-school transport and school meals. Other smaller items include: LEA Initiatives (restricted to 0.5% of the GSB); pupil support and welfare grants (eg for school uniforms); and a reserve for contingencies.

5. The Potential Schools Budget is the GSB minus these mandatory and discretionary exceptions. LEAs must delegate at least 85% of the PSB to their schools (90% in Wales).

6. Items of expenditure in the PSB but not delegated are known as "discretionary exceptions within the PSB". The proposals in this White Paper for increasing delegation largely focus on what these are, and how many may be capable of delegation in practice.

7. The total amount delegated to schools is known as the Aggregated Schools Budget. This must be allocated to schools on the basis of a formula. The bulk of the funding must be allocated by pupil numbers. The remainder must be allocated so fur as possible on the basis of objective factors. This means factors based on measurable characteristics of schools and applied consistently across all the LEA's schools, as distinct fi-0111 subjective judgments about their relative needs.

8. Subject to these general principles, LEAs have a lot of flexibility as to the number and types of factor used in their formulae. LEAs decide how much money is distributed by reference to each factor (subject to the overall pupil-led funding requirement), and the actual cash amounts applied to each one.

9. The LEA must include a description of its formula in its written LMS "scheme". The scheme also defines the spending items which the LEA proposes to retain centrally, and lays down rules that schools must observe in managing their delegated budgets. The Government has sought to ensure that these rules are the minimum needed to safeguard the LEA's legitimate interests, particularly in financial propriety and value for money.

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10. The Education Reform Act 1988 required all LEAs to submit their schemes to the Secretary of State for approval. This also applies to the new LEAs created by local government reorganisation. Schemes must be published once they have been approved.

11. The LEA must seek the Secretary of State's approval for any amendments to its approved scheme which rank as "significant variations". These are defined in law. "Significance" has nothing to do with how much money would be redistributed between schools as a result of the change. Rather, significance applies to any changes which might run counter to the key objectives of LMS. For example:

a. the introduction of a new discretionary excepted item or the extension of an existing one. This could run counter to the objective of increased delegation of resources to schools;
b. the introduction of a new, and less objective, basis for allocating funds through the formula.
12. Other changes are known as "minor revisions". These do not require the Secretary of State's approval. But minor revisions can redistribute a lot of money between schools. They include, for example, changes in the weightings applying to pupils of different ages within the formula.

13. Before submitting schemes or significant variations for the Secretary of State's approval, LEAs must consult all their own schools, and also local GM schools.

14. LEAs must publish annual budget and outturn statements in a form laid down by the Secretary of State. These must provide information about the LEA's expenditure on each mandatory and discretionary exception. The budget statement must show how the ASB has been allocated between schools on the basis of the LEA's formula.

15. These statements are also used to work out the budgets for GM schools.

16. Under the Education Act 1993, the Secretary of State may direct LEAs - individually or collectively - to submit their budget or outturn statements to their auditors, so that the auditors can certify that they are accurate. This requirement has been applied for all LEA outturn statements for 1994-95 and their budget statements for 1995-96, and the Government plans to retain this coverage. The instructions to auditors will be kept under review in consultation with the Audit Commission and the Funding Agency for Schools.

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ASBAggregated Schools Budget
ACACCurriculum and Assessment Authority for Wales
CFFCommon Funding Formula
CTCCity Technology College
DfEEDepartment for Education and Employment
FASFunding Agency for Schools
FEFurther Education
FEFCFurther Education Funding Council
GCSEGeneral Certificate of Secondary Education
GESTGrants for Education Support and Training
GSBGeneral Schools Budget
HMCIHer Majesty's Chief Inspector of Schools in England
LEALocal Education Authority
LMSLocal Management of Schools
OFSTEDOffice for Standards in Education
OHMCIOffice of Her Majesty's Chief Inspector of Schools in Wales
PRUPupil Referral Unit
PSBPotential Schools Budget
PSIPopular Schools Initiative
SDASex Discrimination Act
SENSpecial Educational Needs
TSITechnology Schools Initiative