Cynulliad Cenedlaethol Cymru

Morning, everyone. Welcome to the Children, Young People and Education Committee. We've received no apologies for absence this morning. Can I ask whether there are any declarations of interest, please? No, okay. Thank you.

Item 2, then, this morning is our final evidence session for our inquiry into school funding. I'm very pleased to welcome Kirsty Williams AM, Minister for Education; Julie James AM, Minister for Housing and Local Government; Judith Cole, who is deputy director of local government finance and workforce partnership division; and Steve Davies, who is director of the education directorate. Thank you very much for coming. We're very much looking forward to hearing what you've got to say. If you're happy, we'll go straight into questions from Members. The first questions are from Siân Gwenllian.

Bore da, Siân, and thank you for the question. Undoubtedly, there are significant financial pressures in our education system and I wouldn't for one moment want to make light of that. Headteachers are having to make some difficult decisions. I'm clear that my job is to continue around the Cabinet table to press the case for education spending. Obviously, there is a debate about how that is best achieved, either by direct grants from my department into schools, or whether we can best support education spending by increasing the RSG as the main source of funding that goes into our school system. We have tested the asks of schools that are contained in our national mission against the budget that we have and we recognise that it is challenging but we believe it is possible. But, clearly, my job and my priority, as I said, is to press for additional resources for education and, for the resources that we do have in education in the round, ensuring that as much money of that as possible finds its way to the front line.

I've been following carefully what people have been saying to the committee. I'm looking forward to your recommendations. There are two issues, aren't there? Is the cake big enough? And we can have a conversation about whether the entirety of the cake is big enough, and there are difficult decisions for all political parties, because if you want to spend more on education, that money has to come from somewhere and those aren't easy decisions. And then, the cake that we do have, is that being spent to best effect and are we maximising the resources that are finding their way into individual school budgets to allow headteachers to do what they need to do on the ground? We align our resources to the plans in the national mission. I don't want to say that it is easy—it's far from easy—but I believe that the resources there can deliver the national mission, but it does mean individual headteachers are sometimes making very challenging decisions. 

Well, I think it's really hard to say, after nine years of austerity, that any public service has sufficient money to do anything, and I'd echo the comments that Kirsty just made, really. We work very hard with local authorities to ensure that they can get the best out of what is never going to be an easy settlement in the current circumstances. As you know, we've put a fully funded funding floor—that's really hard to say—in, £3.5 million, to make sure that no council in Wales takes a cut of more than 0.3 per cent, of course. But council are making difficult decisions, they definitely are.

Now, we have taken the view—and I fully endorse this—that local authorities are locally elected to represent locally the best interests of people. So, we have been trying to unhypothecate as much of the money that goes to local authorities as possible, so that they can make, locally, the right decisions for their local communities. As Kirsty said, it's a balance then between us, about how much of that is an unhypothecated revenue support grant, based on the formula that's agreed by the finance sub-group of the partnership council through the distribution sub-group. So, we have a big set of working mechanisms, fully supported by local authority partners, to work out how the cake, if you like, in the first place, is distributed, and we have taken the view that it's for local decision makers to make those decisions. We do have indicative indicator based assessments, as they're called, but then they should not be seen as spending targets. We accept that, locally, there will be certain circumstances that mean that different councils make different decisions. 

But what about the actual quantum itself, which has reduced—

The overall pie?

Yes—which has actually reduced 8 per cent in real terms since 2010-11. Are you worried that that has reduced to that degree?

Yes. I mean, it's reduced across all public services. It's reduced in our budget, it's reduced across all public services. After nine years of austerity, we are all struggling. There are no fatty bits left, we're all into the bone. I think to pretend otherwise would be a serious error. What we're trying to do here is make the best of what can never be a sufficient pot of money in the circumstances. So, we work very hard with the Welsh Local Government Association to understand the pressures and to try and get a system that distributes what we have got in the best conceivable way. And we work on a daily basis across the departments with the WLGA to talk about particular pressures, to talk about things like whether we—what goes into a specific grant and what doesn't, conversations that we reflect with the UK Government.

I'll just give an example. So, we have an argument with the UK Government quite regularly about the fact that they say they've given us a specific sum of money for something, whereas we can see that it's come out of the Barnett formula somewhere else. So, we have an argument then about whether that money exists or doesn't exist, because, spread across the place, we would say we got zero, the UK Government will say, 'You got this much for this, but it came out of the formula somewhere else.' So, we've been working hard with local authority colleagues to understand circumstances in which they feel the same way. So, we would say, 'Schools have been fully funded for the teachers' pay settlement', for example, and then we've sent a great deal of correspondence and conversation between us trying to explain how that's made its way into the revenue support grant, and which bit of the revenue support grant contains that money, and if there are cuts elsewhere, what the cuts elsewhere will do to the balance, if you like.

So, it's a really complex set of conversations around that and sometimes the specific grant system can make that process easier because it's really transparent. So, for example, on the teachers' pensions, it's just gone as a lump sum across to them. There's no argument that it's been set off somewhere else or anything. So, it's really easy. But local authorities want not to have it as a specific grant because they want the local flexibility to be able to do things differently in their areas. And so it's always a trade-off between, if you like, the obvious transparency of a specific grant and the need to allow local authorities to make decisions that reflect their local elected mandates and their local needs. So, it's a really complex—sorry for the long answer, but it's a really complex set of circumstances, in which, effectively, what we're doing is trying to ration not enough money in the first place. So, you know, that's the—.

Yes, I get that you're trying to ration not enough money in the first place. My point is: how robustly does the local government Minister and the education Minister make the case for school funding compared to what other Cabinet Ministers would see as their priorities? How much of a discussion is there in Cabinet around political priorities and that the money needs to follow those priorities?

Those discussions are happening all of the time—they're constant. So, for instance, most recently, we were able to make an announcement on teachers' pensions. We know that this has been a huge source of concern for the WLGA and individual schools about the consequences of the rise in teachers' pensions.

But with all due respect, that is one specific matter. I'm talking about in the general discussion about the budget at the beginning. When Government is setting the budget, how much of a discussion happens around political priorities and how much of an awareness is there that, maybe, it's time to start thinking about the Well-being of Future Generations (Wales) Act 2015 and about preventative measures that are being funded through the budget, which include education, of course?

We are duty bound by that legislation to have those discussions, and to consider the requirements of the future generations Act when setting our budgets. We also set those against the progressive agreement in the programme for government that we have. So, the programme for government says that we will invest £100 million in school standards. We're delivering on that commitment. We said that we will protect, maintain and increase, where possible, the pupil development grant. We have done that. So, obviously, those discussions happen all the time.

And the example of the teachers' pay, I think, is a really, really good example of how the Government works collectively to try and alleviate and respond to the concerns of schools and local government. We were able to get, as quickly as we could, a decision out with regard to the teachers' pension scheme—not just for schools by the way, but also for further education colleges, which, of course, are delivering education as well, and, in some cases, it's the only provider of post-16 A-level provision.

But also, for instance, issues around free school meals. We know, because of the issues around the implementation of universal credit that that has an impact on free school meals, and local government made that argument to us. In England, the Department for Education has had to find those additional resources from within the Department for Education. We were able to make the case to the finance Minister, and the additional £7 million that has gone to Welsh local government to support free school meal entitlement has come from the centre. It hasn't come out of the education budget. So, in England, they're having to find it themselves. We have been able to make a very positive case to the finance Minister, and those resources have been found.

But it's not easy. After all of these years of austerity, it's not easy. If you look at just yesterday, 1,000 councillors in England wrote to Damian Hinds saying, 'We need more money for education.' The real-terms cuts in the education budget in England are similar to the ones that you've had in your papers. Actually, they're doing that when they've got a rising roll as well. So, education is under pressure, not because of a lack of willingness by individual politicians, but because this is what austerity looks like. This is the face of it.

And if I just add to that, I think it's important to understand the ongoing nature of that. So, as we know that the education department in England is under pressure and being cut, if you like, we have to look all the time to see what will happen to the Barnett consequential as a result of that, so that we can be trying to anticipate what that might look like in the oncoming settlement, and start to make the arguments about where else we might need to fill up that. So this is the conversation I started by saying, 'When you look across the Barnett original formula, you have to then look to see what happens with the rest of it.' You have to anticipate those conversations.

So, you're saying that the Barnett consequentials make it difficult for Welsh Government to actually follow their own priorities politically?

Let's take the teachers' pension thing again, because it's just happened and so it's an obvious one. The money that came across to us originally was going to be nothing, because of the way that it had been funded in England. So, we had a long and difficult argument across several departments—myself and Kirsty and Rebecca Evans primarily, but across several departments—about what on earth we were going to do if that was what the decision was going to be, quite frankly. And schools will have written to all Assembly Members and everybody else saying the massive cuts that they were going to have to make if they had to find the pension money themselves. Local authorities, we know, were not in a position in-year to do that without drastic measures. So, we had a continuing argument about that, and eventually that got funded to 85 per cent—not 100 per cent.

At the same time, we were having the conversation in the Welsh Government about our priority, because we've given a continuing commitment to teachers that they will not suffer detriment as a result of the delegation to us of that, about how we would fund that either at 100 per cent or at whatever difference. So, we funded the rest of that—fully funded it—out of our money, and that money has come out of projects that were ready to go and which have now had to be pulled back on. So, we have a constant conversation in the Cabinet about, you know, 'If this money goes here, then it isn't going to go there.' So, it's just a constant conversation.

We have another one coming up now about the pay awards for public sector staff. Where is that money to come from? If the UK Government doesn't put that into consequentials because of the way they fund it, then we will have a continuing conversation in the Cabinet about where that money is to come from. We've made the commitment politically, rightly, and we make it here, that we will make sure that teachers are not disadvantaged by the delegation to Wales, but where is that money to come from if it's not put into the Barnett formula in the right way?

So, I can't emphasise enough that this is an ongoing and continuing process all the time, in which we are constantly looking at things that are committed, things that are not committed, where that money's coming from and so on. I've also made a new undertaking with the WLGA for as much transparency with them as possible. So, as we have those conversations, we want colleagues in the WLGA to understand what that conversation looks like, so that they don't feel that we're 'smoke-and-mirrors-ing' the settlement either, because otherwise we end up with a big argument at the end of every year about why particular bits of money are where they are. So, it's not a simple process and it's very difficult to explain it other than by going through those steps to understand exactly how that works.

I've got a couple of supplementaries now. Dawn, I don't want to go into the hypothecated versus, at the moment.

No, we'll come on to that. I just wanted to take it a step right back, really. Accepting that the size of the cake isn't big enough, have you—probably to Kirsty now—or your officials done any work on identifying, notwithstanding how much money is available, how much money you think would actually be needed? I'm thinking along the lines of what was done in the NHS in Wales with the Nuffield report, where there was an independent report undertaken about how much money the NHS in Wales would need just to stand still, and every year the funding formula for the NHS in Wales acknowledges that Nuffield gap—so that £200 million every year. Have you done any work in terms of how much you actually think you need to be able to run the education service in the way that you would like to see it run?

It was a stroke of genius by the then health Minister to commission that Nuffield report, wasn't it?

It certainly was. [Laughter.]

Because that is pulled out of the drawer or taken down off the shelf every time there is a discussion. We continue to test the amount of resource that is needed. One of the real challenges is, in a way, a slightly more complex picture, perhaps, in terms of identifying unit cost. Unit cost really is a challenge to identify. But in the local government distribution sub-group, there has been an agreement to start to look at whether you could do a unit cost or a bottom-up approach to the indicative budget allocation, to be able to get a better understanding of reflecting that in the formula. That work is starting. We're supporting that work in the local government department and in the education department, which potentially might influence IBA and might influence changes to the revenue support grant. So, we are constantly looking to see and to test whether the overall quantum is enough, and it's difficult, isn't it? Because we always have to have a decision about how best, then, and how efficiently that money is devolved down to schools. Is that more efficiently done if we do it directly and give that money directly to schools? Is it more efficient to do it via the RSG, given the fact that, actually, the statutory responsibility for schools' funding doesn't actually lie with the Welsh Government. Legally, the responsibility lies with local authorities. So, that's another added complexity, in a sense. Steve, do you want to highlight some of the work that we are constantly doing?

Before you come in, Steve, the Minister did say that you test whether you've got sufficient funding to deliver the items in the national mission, and we know that there are some big ticket items there—curriculum reform, additional learning needs, professional learning. Could you maybe tell us a bit more about precisely how you do test whether the resources are sufficient?

We test the resources that we put through grants in terms of sufficiency, because we test them against the—we set the ambition and expectations of the regions and the local authorities who own and run them in terms of what they need to do to enable schools to deliver on those initiatives. You mentioned the professional learning. The schools are leading—pioneer schools—on curriculum. We test that against their plans, we visit the regions on a quarterly basis, with the local authorities in the regions, to test the implementation of their plans and the impact of those plans. What we're not in a position to do is to look across the 22 local authorities, which have their own models to define how they spend their money, against which criteria they spend their money, to actually make an overall judgment that that is sufficient at that time. So, we support and challenge in terms of grants. We work with councils, with Estyn, in terms of reviewing through their inspections the allocation of resources and the impact of that, but we have not had a separate commission, as health has done, to be able to do that work across Wales for us. So, we haven't done it across the 22 councils. We've done it in terms of the investment of the £100 million.

Is that something you'd welcome, Minister—a kind of education equivalent of the Nuffield report?

It would certainly be an interesting piece of work to be undertaken.

Thank you.

I mean that is the tension, isn't it? You didn't answer the questions I was asking, really, because I'm after this tension within the budget between education, local government and health. And I'm asking: are the priorities correct in terms—do you think that they are correct in terms of how that is divvied up? And the Nuffield report maybe helps health to make that case, and it may be an idea to—.

Well, just to be blunt, we have a political commitment to keep health spending where it is. We were elected to do that. So, I make no bones about the fact that we were elected to do that, and so that's what we do. So, that's a delivery of our manifesto commitment. However, it's not just health. There are lots of other bits of the Government that spend money. So, you're not only testing it against the commitment to keep health spending where it is. We spend enormous amounts of money on all kinds of stuff. So, we are constantly in conversation in Cabinet about all kinds of other priorities, tested against need, effectively, because everybody will put forward a good case. And, as I said at the beginning, we're not cutting fat here. Nobody's cutting a programme that they think doesn't work; we're cutting programmes that we know do work in different areas.

The last thing I would say, though, about the—. I mean, who could not welcome something that looked to see whether a piece of work was sufficient? But, as we know from health, just because we know it's not sufficient, we can't—we're not printing the money round the back, like.

So, that report would be interesting, it would be useful, but, in itself, it does not create the money.

We already know that we're in a rationing situation of insufficient resource.

But it may mean that your next manifesto wouldn't have that commitment—

Well, it may well mean that.

It may shift towards more preventative work, which is—

Well, it may mean that. It may well mean that, Siân, but, if you talk to the WLGA, overall, they would say that there are a large number of other areas that local authorities also deliver that could also do with a Nuffield-style report. So, you and I have had lots of exchanges about lots of other areas in local authorities that are also struggling, so at what point do you—? You know, we could do that for every single service all the way down.

And that's a political challenge for everybody around this room, isn't it? Because it's not just a Liberal Democrat manifesto or a Labour manifesto, it's a Plaid Cymru manifesto or a Conservative manifesto. How do you respond to the strategic challenge of an ageing population, demand for those services that isn't going to go away, which, politically, week in, week out, the First Minister and the health Minister are challenged on? Nobody ever stands up in the Chamber, really, and says that they want less money spent on the NHS. In fact, it's very rare in the Chamber that party spokespeople from individual parties—gosh, and I've been there; I've played that game as well. Every week somebody gets up and says, 'I want more money for this', and 'I want more money for that'. It's very rare—

Is it a game?

No, no—we can't have everybody speaking now. Can we have a bit of order here?

But, you know, it's a strategic challenge for—it's a strategic challenge for politics in the whole, isn't it? We have an ageing population. We have a finite budget. We all want to protect our NHS. I don't think there's a political party that says they don't want to protect spending in the NHS. We all want to do that, and what does that mean? What are the consequences that that decision means for other services? And I think it isn't—it's not—. It's not necessarily a party political problem; it is a strategic challenge facing our nation and the delivery of public services—one that all political parties will have to grapple with.

Okay, thank you. Suzy, you had a brief supplementary. Because we've spent a long time on this first section.

All right. I'll just keep it very, very quick on this one, then. Steve Davies, you mentioned that the Welsh Government doesn't have this oversight of the 22 local authorities, in answer to Dawn's question. Can I just check that that's just literally a matter of capacity—you don't have enough staff to be able to do that—or is it a—?

Well, it's capacity, but it's also an issue of professional trust, isn't it? We are trying to build strong relationships with partners in local government. If we're to say all of the time, 'We're going to stand over your shoulder and watch all the time everything that you do and second-guess your actions', I think that makes it more difficult to have that relationship of trust. But it is also an issue of capacity—capacity for Welsh Government and officials in the education department. Also a capacity issue for local government. We've seen people in local government, staff in local government, be taken out as local government tries to invest in front-line services, so, again, sometimes I think there are issues around capacity in local government to constantly be responding to the e-mails and responding to the letters and the phone calls that Welsh Government might be putting in. So, I think there is definitely—there's a capacity element to that, but it's also about that professional trust between layers of elected politicians, but also professional staff.

Okay. Thank you. We're going to move on now to some questions from Janet Finch-Saunders.

Good morning. Really it's a question for you both, and it's a fairly straightforward one. How concerned are you about the number of schools facing budget deficits, when the Association of School and College Leaders project that 75 to 80 per cent of secondary schools will be in deficit at the start of the 2019-20 financial year?

Clearly, school deficits are of concern, and I think the latest data will say that 78 secondary schools will be in a deficit—

Seventy-nine.

Seventy-nine, sorry, schools will be in a deficit position. Clearly, there is a responsibility on the governors and the headteachers of those schools to manage that situation, and for local education authorities to support them in doing that. There is a difference, of course, between an unlicensed and a licensed deficit, because you could be in a situation where it is clear that there is a plan to move forward out of that situation. But, clearly, we need to work with local authorities to ensure that the resources that are going to schools are appropriately managed and governing bodies are doing just that.

So, on that point, we will be looking in the forthcoming local government Bill at changing the performance frameworks for local authorities, because we don't think that it's fit for purpose at the moment. It's both very draconic and not sufficiently detailed at the same time. It was done a long time ago. We've had a good conversation with the WLGA across the board about moving forward with that, and we've been moving to what this committee will be very familiar with the concept of: self-improving councils. So, we'll looking to see some councils having a lot less in the way of intervention and inspection. Others might have more in the way of support, because councils are not all in the same place. So, as Kirsty just said, with the 79 secondary schools, if they're in planned deficits, in the sense that we know what their roll will look like next year and all the rest of it, and the local authority are happy that that's fine, and we're happy that the local authority has good financial oversight, no need for worry. If there's no plan to come out of deficit, and the local authority don't seem to have a good intervention policy, and they're not managing their local governing bodies or school budget forums well, then we would like to have the power to offer support for that prior to an intervention, if you see what I mean—so, 'Why aren't you able to do this? What do you need by way of support?' At the moment, I would have to ask them to ask me for support, which seems a bit ridiculous. 

To be fair to them, authorities in that position are actually relatively easily persuaded to ask for support, but it doesn't seem a good system. So, what we're going to do is try to put a ladder of support and intervention in, because, at the moment, either I beseech them to ask me for support, or we've got a nuclear bomb, where we take the powers off them, and that's not fit for purpose any more. 

As we develop a set of professional arrangements with councils, where we know that well-managed councils don't require to be constantly—you know, we don't want to stand behind them all the time, and, frankly, they don't have to have their staff invested in constantly weighing the service, as opposed fattening it; we want them to be able to lighten the burden of that and put them into front-line services. So, we're trying to work with our partners to understand the needs of differing local authorities. You'll all be very aware that local authorities are performing at very different levels and in different sets of circumstances across Wales. We will be addressing that in the forthcoming Bill in a more global sense, not just for education. 

And, of course, what local education authorities do have is the legal power to intervene with regard to the management of individual schools' budgets. So, powers can be taken away from a school governing body if a council believes that that governing body is not managing those resources appropriately. And vice versa, actually: local government has the power to intervene if they believe that a school's reserves are too large. So, we do ask local government for evidence of how they're using those powers. Those powers are available for them, and we do ask local authorities to account for when they're using those powers to intervene in schools and when they're not.

Thank you. Janet. 

Thanks. Kirsty, turning to the opposite issue of reserves, can you give an update on action that you and your officials have taken to investigate and address, where appropriate, the number of schools holding reserves above the statutory threshold at which local authorities can intervene, following the undertaking you gave to this during the committee, during budget, scrutiny? Because, as of 31 March 2018, there were 501 schools that held reserves above the statutory threshold.

Yes, indeed. And it's ironic, isn't it, when we're having a discussion about education finance that we find ourselves in a situation, actually, where, in the last financial year, reserves, especially in the primary sector—not the secondary sector; I think there are different sets of issues going on in secondary. In primary, actually, reserves are going up. So, it seems counterintuitive, doesn't it, that we're all sitting here, the unions tell us there's a funding crisis, and reserves—. Now, there are sometimes very, very good reasons why a school might be in that position and have taken very rational decisions to build up the reserves to do something specific with, but we were in touch with all local authorities in October around these issues and we continue, at official level, to work with local authorities to challenge them on whether they are adequately working with their local schools to understand what the reasons are for those high levels of reserves, and whether those have been adequately tested, and what action they will take if they feel that those schools do not have a sound reason for having levels of reserves. Steve, perhaps you could give some greater detail. 

Only to add to that that we are now comparing what was projected in October against money that was going to be spent from those reserves into March and we will be reviewing that data with each of the 22 local authorities as we go through April.

Okay. Thanks.

Suzy's got a supplementary. 

Yes, just, again, a very short one on this. So, Welsh Government is prepared to, through the department, scrutinise councils on this particular issue, and actually take them to task on it, but they're not prepared to do that in a wider oversight role—the question I asked earlier?

What I'd add to what the Minister said—it's not just about capacity, it's about—

Why aren't you trusting them on this, then?

No, it's about complexity. If you want to look at how much it costs to have a proper education for every child in Wales, it's a complex question to ask and benchmark against. That's why they had a commission, and not a government or a local authority, to actually—

Do the work for the NHS.

—put that work through. I think it's something that it would be good to be able to do, but I think it isn't just about capacity, although it's a significant piece of work; it is about complexity. So, how much does it take to have a good education for a seven-year-old in Ceredigion against a seven-year-old in Blaenau Gwent—not an individual, but you look at the characteristics, so it isn't the case—. Doing the exercise we've just outlined is pretty straightforward. They have the data; it's allocated against an amount. They can look at it and get back to us in a matter of a week or so. The complexity of the task that you outlined is very, very large.

Okay, thank you. I didn't want to take too much time, but I appreciate your answer.

Thank you. Janet.

What are you doing to ensure that local authorities are making appropriate use of their statutory powers of intervention to address cases of excessive school reserves?

Yes, so it's the answer I gave earlier, really. What we're looking to do is have a proportionate intervention rate, so we know which authorities have good or bad records of intervention, we have discussions with them constantly, we know whether they need support or not, we know whether they're functioning well or not. We would know, for example, very swiftly whether schools have an understanding of their secondary deficits or their primary reserves or not. And then we escalate according to our feel for whether that authority has that in charge or not. And what we're trying to do is lighten that load. So, if we've got a set of inspectors who are saying, 'This authority has good corporate management systems and performance management systems in place, the information flows back to us regularly in good form and in good time, the finance and distribution sub-groups are not flagging up anything', then, fine, we can lighten off the load. If, constantly, the same council comes back as, 'This isn't adequate, people have had to chase, people have had to—', then, obviously, you start to put in heavier inspection and support, and I want to emphasise the support as well, because it's not about bashing them about. This is about trying to understand why they aren't able to do that and to put in the support systems necessary to do that. Sometimes we can do that just from Government official support. With others—you'll all be familiar with the fact that we've had to put improvement boards or support mechanisms in place for some authorities to get them up to being able to manage that. So, it's about having a proportionate amount of intervention.

Can I just say, Suzy raises a perfectly legitimate question: why ask the councils to look at this if you're not asking them to look at other things? We do try and respond to concerns that are raised in this kind of forum. So, these issues have been raised by this committee. I gave an undertaking that we want to do something about it. You have concerns about it. We try and listen to other voices to pursue this, but, obviously, deficit budgets aren't the only things we ask councils about. So, Suzy, you ask, 'What do we do about our powers of intervention if we've got a school in categorisation?' That is something where, as soon as we know that a school has gone into categorisation, we do write to the local authority, and we say to the local authority, 'Right, explain to us what your plans are going to be now to support that school.' We do that on a regular basis to keep in touch with local authorities and regional consortia as the school improvement service to say, 'What are you doing?' So, it's not a completely hands-off, 'We never ask the local authority about how they're running their education department.' But, in this case, we thought that it is an important issue. Why have we got those high levels of reserves? It was an issue of import to this committee, this committee raised those concerns, and we do try and respond to what this committee does raise.

Okay, thank you. We've got some questions now on funding for local government to finance schools from Hefin David.

How do you satisfy yourselves that local authorities are sufficiently prioritising schools in their budgets?

Well, we don't, really. We take the view that local authorities are locally elected and that they, inside the revenue support grant, have unhypothecated powers to come to their own conclusion about what the school funding should be in their area. And, as I said, we have a complex set of mechanisms around how the finance is distributed. We've had endless conversations—I know you will all remember them well—in Plenary about how the distribution formula works. We review that constantly. Since I've been the Minister, which is only four months, though it seems longer, we've had a couple of meetings of that group. We've agreed to meet much more frequently with the finance group and the distribution sub-group, because there are two lots, to understand better what people are putting forward. And, I think in response to Janet in Plenary the other day, I've been offering individual or group briefings to Assembly Members. We are also going to be offering those to councillors in various councils, because I've received quite a lot of correspondence of councillors, which has led me to be uneasy about the level of understanding of some of that that's out there in our councillor colleagues, because it's important not only that we have the thing right, but that people understand how it works. I'd just make the same thing again—if somebody wants to come forward with a suggestion for change to that arrangement, then we have a very robust system for testing through how that will work, because, obviously, in any change to the distribution formula, there will be winners and losers. So, you need to work it through the system and see how that works.

Inside the revenue support grant we have the indicative budget allocations, the indicative amounts, but we don't enforce that, other than to set out our priorities because we take the view that that's a local government mandate.

So, what's the point in IBAs?

It's the way the formula works, effectively. So, when we send out the revenue support grant, we indicate how the formula has worked to arrive at that amount. The IBA is not to be regarded as either a spending floor or a target. It is just to indicate to the authority how the formula has worked for that local authority.

But you still provide information on how each local authority spends on schools alongside the IBA. Why is that?

Well, because that's part of the reporting mechanism back in. If you believe in local democracy, as I certainly do, then that's what the local authority's done, and as Kirsty said earlier, they have the statutory responsibility for funding the schools, actually, so we would have to have a different conversation about changing the way that that legislation works. We have a constant conversation with local authority colleagues through the WLGA and with individual local authorities about whether things should be unhypothecated or hypothecated, and that's part of the conversation, because the local authority—I know that the WLGA evidence to you was that they would like to have as much of it as humanly possible unhypothecated, because they think that the local flexibility that that gives them would allow them to carry out a better service for their local citizenry. We are nervous about that.

It's not just a question of being nervous, is it? Quite rightly, local government colleagues say, 'Well, we're democratically elected and we are best placed to make decisions on behalf of our local communities.' But we're all democratically elected as well, aren't we? And we all stand on manifesto commitments. I stood on a manifesto commitment about pupil development grant, and so just like they are democratically elected to deliver on their communities, Governments are also democratically elected to deliver on their commitments and their promises that they've made. So, there is a, you know—. Who's right? Me, for saying I'm going to keep PDG, I'm going to passport all of that through to schools, because that's what I said I was going to do? But there are the democratically elected people in a council for whom that might not be a priority. Maybe that didn't feature in their thinking when they were getting elected. So, there's that balance.

What we do have is the WLGA saying they want to, within the resources that they have, protect social services and education and education funding. I think some of the data is really interesting about how they've been able to deliver on that in terms of social service spend and education spend. So, that's quite interesting, but like Julie says, we're quite happy to look at the data that's used for the IBAs and the data that is used in the funding formula, but there's no consensus, and the evidence that you've already received is that the WLGA say, 'We don't really want to go there. We don't really want to change the data. We're not particularly fussed on changing the funding formula.' So, there's no consensus about how this system should be changed, because in any funding formula change there will be winners, there will be losers, and in an age of austerity, how you will usually manage that situation is that you would put in a floor and you would have differential increases somewhere else, but that's really, really challenging to do in an age of austerity.

So, nothing's going to change because of all this.

Well, we're doing a few things that I think will be really important. The conversation that we had right at the beginning of this committee was about trying to give transparency to local authorities across all of the funding streams as early as possible in the system, so that they can see not only the revenue support grant indicative budgets, but actually as many of the specific grants, not just from education—this is right across the piece; there are specific grants right across the Government, right across the piece—so that each local authority can see as much of the entirety of its funding at the point that we expect them to set indicative budgets as possible. That's not always the case. It can be months in between.

And it's not a case of 'nothing is going to change'. As I've already outlined—

Maybe without the formula.

No, that's not true. As we've already outlined earlier, the distribution sub-group are already undertaking some work around the building blocks of the education element of that funding formula. That work is already happening. Change does happen within the formula. I'm not sure whether you're aware, just a couple of years ago there was a change to how social services funding was done in the local government formula, because the data suggested that the cost of delivering social services in a very rural setting was not adequately reflected. That data was worked on, looked at, put to the distribution sub-group. There were councils that lost out as a result of that, there were councils that won, but, actually, the sub-group changed the formula. It changed the formula. It brought it in over two years to provide some kind of stability, so that nobody was—. So, the idea that nothing can change in the formula isn't borne out by the evidence, because the formula does change, it can change. It's not easy to change, and it's certainly not easy to change in an age when there are difficulties within the budget, but change is possible. So, it's not, I believe, fair to say that nothing is going to change. Work is already under way. 

But also the other thing to bear in mind is the funding floor, because this year, we did agree to put the funding floor in. As you know, we put £3.5 million in to lift some councils back up to a 0.3 per cent effective overall cut. We could have not done that; we could have allowed them to take the distribution formula change and allow the winners and losers to work it out. We thought that that was too difficult for those five authorities to deal with in terms of the rapid change to their budget. But the distribution sub-group, the finance group, and the partnership council will have to look at at what point the formula is run in its raw state and those authorities do run with what the formula puts out, or whether that's so unfair that we need to change the formula to reflect it. We can't just constantly have a funding floor that damps out the formula, because if we have to do that, then the formula clearly wouldn't be adequate. 

But change is, clearly, then, incremental. It's not a long-term strategy, it's based on what you can do in a situation that is very difficult, with various levels of democracy and also levels of bureaucracy. But it still remains the case that the data in the funding formula is based on census data from 1991.

Do you want to pick that up, Judith?

Stop me when I get boring. 

Sorry?

Stop me when I get boring.

I'm not allowed to. [Laughter.] I'm not allowed to interrupt you. 

We get that thrown at us a lot, and I think I'd like to emphasise that that is not true for most of the data. So, for example, on education—. So, you divide the formula. It's not one formula; there are formulas for each of the major services. On the education formula, a large part of that is driven by pupil numbers, as you'd expect. So, the largest part of that bit is driven by pupil numbers, which were counted in January 2018, published in, therefore, July 2018, and drove the formula for education for the 2019-20 settlement. So, it's as up to date as we can for as many things as we can.

The 1991 that most people are aware of is the sparsity bit, where we're talking about the data we use from the census on populations inside or outside major urban centres. And we have looked at that, and we've taken it through the distribution sub-group. The DSG took the view that it wasn't a change that they wished to make at that time. We took that through, I think, then, to the political level, and they said, 'No, don't want to do it.' So, some things get changed and some things don't—

Why?

Because it made too big a change at that point. But, in all honesty, we have subsequently, as the Minister pointed out, also made a change on sparsity on social services, which did make a significant change and, at that point, DSG took the report to the finance sub-group, the FSG said, 'Yes, okay, we're doing it.' So, I feel a bit hurt by the 'Nothing's changing'. People work very hard on this. 

I'm sorry for upsetting you. Can I just ask the question: if we're ever going to achieve meaningful long-term strategic change, you've got to find some kind of consensus, and the problem is you've got the WLGA saying it's a distraction, because the cake is too small, and that's what we need to look at; you've got the Association of School and College Leaders saying we then need a national formula; NASUWT saying we need needs-based, not a national formula. Can't you just say, 'Right, we're going to tell you what we're going to do. This is how we're going forward'?

No, because we don't work like that. We work in social partnership across a range of organisations trying to reach a consensus view about the best way forward. 

But you can't find a consensus. 

Well, so where we are at the moment has the most consensus around it, and that's the point. 

Okay. 

These are highly, highly complex issues, aren't they? And, at the moment, the legal responsibility for the funding of schools lies with local authorities and that democratically elected part of our governance structure. To do something else, a national funding formula, for instance, you could have one figure and everybody gets that figure, but the diversity of our education system, I think, would make that really, really, really challenging, because how do you account for the very small rural schools? And the alternative to that very small rural school is putting a four-year-old on a bus and putting that child on a bus for maybe three quarters of an hour? What does that mean in terms of the well-being of that child? How do we account for the school I was recently at, where 50 per cent of the children had English as an additional language? What's the single funding formula for that school, or a school in a high level of deprivation where 50, 60 per cent of those children are on free school meals, and the impact we know that that has on their educational chances? Or the school that is providing a bilingual education, and two streams within that school? The system is incredibly, incredibly complex, and trying to encapsulate that in a single funding formula I think is a real, real challenge. 

Just before we move on, then, I understand all the arguments about social partnership and local democracy, but it is the case that some local authorities are considerably worse than others. So, there are some that get much more IBA allocation, yet spend much less than others. The examples that we've got are Carmarthenshire, Flintshire and Monmouthshire. Is there any challenge from Welsh Government to those authorities? Say you've got headteachers from those particular areas contacting the Welsh Government saying, 'We haven't got enough money'. Is there any discussion with local authorities that are consistently spending—Flintshire's been doing it for years—well below their IBA? 

Again, this comes back to the principle that the legal responsibility lies with those local authorities. Local authorities then are democratically accountable to the people that elect them for the decisions that they make. Within that structure of local government, of course, they are also supposed to be working in partnership with their headteachers. And in terms of budgets and budget formulas, that's another issue again, isn't it? So, you've got your IBA and your technical allocation to a local authority. It's then how that local authority themselves decides on their individual funding budget, and how that funds schools in their local area. So, that then is supposed to be—legally required to be—consulted with their school budget forums. There's a legal requirement to do that—to consult with their headteachers, with their school budget forums—and where there is a suggestion that that hasn't happened—and recently we've had a suggestion in one local authority that shall remain nameless that that hasn't happened—then we have asked that question, 'What have you done to comply with your legal requirements to consult with your headteachers and your school budget forum?'

Because then that's another added layer of complexity—the individual funding formulas local authorities then use to distribute their resources, which does lead to an incredibly complex picture. It can be confusing when you then add on top of that the grants that we're giving, and that's why we've tried to—although Suzy doesn't think we've done a good enough job on it—provide more information about how schools are funded, because we do get those questions from parents, from members of the public, even sometimes from members of the profession, because it's complex for them. We are trying to put that information out into the public domain. 

Okay, thank you. We've got some specific questions now on the way local authorities allocate funding within their areas, and those are coming from Suzy Davies. 

Perfect segue, Chair. I think some of the questions have already been covered, actually, so I'll ask those that are remaining. Just on this point of how local authorities decide how to fund schools, I've been listening to the evidence that you've given today and what we discussed in Plenary before now, and I accept that it is a very complicated picture at the moment. And I heard earlier Julie James say that local decision making is best for local communities. In principle, I don't disagree with that. But we're all aware of very—

But—

—yes, there's obviously a 'but' here—we're all aware of the disparity now between individual councils and the amount that they spend per head on a child, and that shouldn't be the main indicator, necessarily, of the quality of the education they're getting, but it is now very, very distinct. And what is want to ask you is whether—I think this is probably for Kirsty, if you don't mind—you are confident that every council is currently meeting the fundamental cost of educating a child to a standard that you consider at least appropriate. Do you have any evidence that the councils that are spending less per child—this is before the centralised grants, and things—that their standards are falling? I want to see whether the money matches the results here and if it's reached a stage where you're worried. It's not the size of the pie—I accept all that; it's what happens to that pie afterwards that has gone a bit out of control.

Okay. Can we draw direct comparisons between high-spending authorities and educational outcomes, I think is the crux of what you're saying?

Well, and high-spending schools as well.

The evidence is not clear on that at all. So, for instance, one of the lowest per pupil spends is the Vale of Glamorgan. The Vale of Glamorgan is a local authority that, if you look at certain sets of results, in some ways could be described as the highest performing local authority. So, in terms of that read across—. I declare an interest; I'm loath to mention a certain school where my daughter attends the sixth form, but of course there has been lots and lots of publicity about Crickhowell High School and funding levels at Crickhowell High School. I'm sure the headteacher would argue—and she would argue with some merit—that that is one of the highest performing high schools in the country. So, there are lots of reasons for that, aren't there? You can't just necessarily read across from spending through to results, whether that be in a local authority area, or on a school level; it's much more complex than that. Because, of course, educating children, we have to see those children in the context and the communities from whence they come. So, it's not as simple as saying, 'If you're a low-spending authority, or you're a school with a relative low spend compared to Welsh average, that necessarily means that your results are going to be less safe.' You can't make those comparisons.

Okay. Can I ask you, then, because if we just take—? You've mentioned two areas that would be considered relatively affluent—

Yes, exactly.

But there are other parts of Wales where there isn't such a level of affluence, but that is mitigated for in the education system by the provision of the PDG, for example, which is, as we've discussed before—I don't have a problem with the PDG—a very generous grant comparatively to other bits of public spending. And I would expect, then, those schools in those areas, for their overall results to improve because of the existence of the PDG. We're talking also about councils, though, that are also giving more per head, per pupil, as well as the PDG, and that's the kind of gap I'm trying to identify. Okay, you've got the affluent areas that don't need to spend an awful lot, you've got the poorer areas that are getting all this extra money from central grants. What about the ones in the middle who don't seem to be spending an awful lot per pupil, but also aren't getting the central grants to the same degree? How are they faring?

Well, again, there's no direct correlation, I don't think, that you can make at that stage. In terms of performance of local education authorities, of course, they are subject to scrutiny not just by us, they are subject to scrutiny by Estyn. We know in the past that we were in a situation where, literally, tens of thousands of Welsh children were being educated in LEAs that were in special measures, and none of us want to go back to that situation. We have seen a significant movement away from that. And, of course, it's not the only consideration that Estyn looks at, but Estyn does look at the financial management of LEAs and the robustness of that planning when they do inspect local education authorities. That's not the only thing they look at; they're looking at lots of other services the LEA provides. But you're right—what we do see in Wales, Suzy, I think, is different levels of delegation. I think that's an interesting issue to look at, where we see some local authorities that have very high levels of delegation, down to individual school budgets, and other local authorities that keep more of that money in a central pot. Now, again, there could be very good reasons for doing that—it might be the best way of delivering those services—but that is something that I know is a cause of concern.

Could I ask just on that one, then, is that something that your department has a bit of oversight on? Because that, again—a bit like school reserves—is a very easy thing to follow; it's not part of the major complexity. Is that something that you test councils on?

Certainly, given the feedback that we've had from e-sgol, and given the feedback that, already, this committee is beginning to—as I said, we're keeping an eye on the evidence—. I think I want bigger scrutiny on the delegation rates, especially for the grants that I'm responsible for, because I think there is a piece of work to be done there to clarify and to satisfy ourselves, on Welsh Government grants, how they are finding their way out of local education authorities and into individual schools and how they're finding their way out of regional consortia and into individual schools. It might be something that the committee might want to recommend, but I personally am very keen on this issue. I'm very keen on establishing greater levels of transparency for that delegation rate, certainly for central Government grants that we are giving to both regional consortia and schools.

Right, so you're happy to look at those, but you're prepared to trust local authorities. Okay, that's fine. Can I just ask you a final question, if you don't mind? This is about the prospects for three-year funding cycles. I know there's a difficulty here because everyone's annually funded, but this is a recommendation that goes back 13 years now, which was accepted at the time. Regardless of whether the money that goes into the Welsh block is cut in real terms, it always goes up in cash terms, so you can always anticipate that there will be money available for individual areas, even if you can't put a specific figure on it. At the moment, we've got one year plus an indicative year in our planning. Is it really too difficult to go into two years plus an indicative year? It's a genuine question. I want to know how difficult that is. 

I would love to be in a position, and I'm sure Julie would love to be in a position, where we can give longer term outlooks for services that we fund. The reality is Welsh Government does not know with any level of certainty regarding funding beyond 2020.

But it's never going to get less in cash terms, is it?

We don't know.

We don't know that. There's a comprehensive spending review coming this year. We still don't know what the arrangements for that are. There are plenty of rumours around when the UK budget might be set at the end of this year, but they're rumours. So, I have a constant conversation with the WLGA and local authorities, actually through the WLGA, about the trade-off, if you like, between being able to give some kind of long-term indication and then how accurate that is, because, frankly, that's a pessimistic long-term outlook because we have to be cautious about it. Actually, one of the complaints we get back is that they then planned on that cautious basis only for us to give them more money, which meant that all of their planning was wasted and they'd wasted a lot of resource. So, it's a constant trade-off, which we constantly discuss with them, about at what point in the year we can give them the best trade-off between certainty and longer term planning. I don't know what the answer to that is.

The earlier we give them the certainty, the more pessimistic the forecast, and then the more likely it is that they will end up with differential amounts of money afterwards. It's a constant conversation with them. What we would very much like, of course, is for the UK Government to give us that certainty so that we can pass it on. We do have that conversation on an ongoing and constant basis, about what the best cut, if you like, of that certainty versus—

That's really helpful, because, as I said, it's a genuine question. I don't know how it works.

We genuinely have that conversation all the time with them, about how we would forecast it, on what basis we would do that, what our planning assumptions would be, what we're asking them to do in planning assumption terms, and then what effect that has on their ability to plan for longer term strategies. It really is a trade-off between when we have certainty and how close to the budget setting that is. Because this last year, if we had waited until we had certainty, they would have had a fortnight to put their budgets into place.

Can I just have a quick supplementary on this, and then that'll be my last question? The Welsh Government now has got the facility to carry over budgets from one year to another, which it hasn't had for many years previously. Does that not ease this situation of avoiding giving either local authorities or schools money in the last fortnight, which they can't realistically spend efficiently, and allowing them to carry it over into the following years? That's permissible now.

Within certain parameters.

Within some parameters, yes. It will be factor in our discussions with them about how we can allow a greater sense of some certainty, but it's not across the board. It would take another 20 minutes to go through the complexity of how that works. 

I don't think we can underestimate the high levels of anxiety that some—

Judith is looking like she's going to explain the complexities.

No, no—perhaps we can do that outside.

Maybe we could have a note on it. I think that would be very beneficial to the committee.

I recognise it causes high levels of anxiety within the system. Goodness me, it causes me high levels of anxiety. The issue around teachers' pay is a classic example. The Westminster Government were absolutely adamant that there was no extra money coming for teachers' pay. So, we have to communicate that. We can't dissemble, we can't not tell people what we're being told. So, we've been told categorically, 'There is no extra money for teachers' pay. You're not having it. That's it.' So, we have to communicate that. That causes masses of uncertainty, anxiety, and people start making financial decisions on that basis. Then, we work really hard collectively with the WLGA and with the teachers' unions, and then we convince the Westminster Government that, actually, our arguments are the sound ones and there is legal responsibility on them to provide this money and they listen to that argument and that money then becomes available. You know, that's a really difficult way in which to run a service—when you are reliant on whether your arguments will win the day in the end. As I said, I recognise that causes huge amounts of anxiety. That's why we've tried to deal as quickly as we can with the teachers' pension stuff, because we know that certainty over that makes the difference whether some people will keep their jobs or some people will go into a redundancy situation. If Governments across the piece could find a better way of dealing with these issues, I think we'd all have our stress levels reduced significantly.

Okay, thanks. 

Did you want to ask another question? 

I have got another question, but I think the others have been dealt with that I've been given. I might save mine till the end, if there's time—my other one. 

Okay. Thank you very much. Okay, Dawn Bowden now on unhypothecated versus targeted funding—a thorny issue. 

And a lot of that has been covered in previous answers you've given, so I do appreciate that. I was just interested to get a little bit more from you about the factors that you consider when determining what should be hypothecated or not. So, am I reading into what you were saying correctly, that basically it's about the very specific manifesto promises that would be hypothecated grants as opposed to—? So, what are the—? Because you mentioned PDG. Are you thinking about the £100 million school improvement grant, which you've allocated as a specific grant through consortia? In the previous Assembly, that kind of school improvement money was given to local authorities as part of their RSG plus 1 per cent, wasn't it, so that they always had a little bit more than the block grant? So, you've moved away from doing that as part of the RSG and put that into a hypothecated grant now. So, I just want to understand what the rationale is. 

I'll start off and then Kirsty can talk about some of the specific grants. So, this is an ongoing conversation, as you can imagine, with the WLGA, across many different service areas. So, this committee will be aware, I'm sure, that we just changed the Supporting People grant into what's now called the mega grant and that's been split into two as a result of ongoing conversations. I use that as an example of what's a constant conversation between us and local authorities about the cost of administering individual grants, which have to be accounted for, which have to have parameters around them, which we then monitor to ensure that they have parameters around them. They have to have staff whose job it is to ensure that that happens, and we think it's about 10 per cent of the grant on average. Now, you can argue whether that's 6 per cent for some and 12 per cent for others and so on, but, broad brush, it's about 10 per cent of the cost of the grant to administer it in that way, in terms of staff resource and so on for us and for them.

So, you could start from the basis that if you unhypothecated everything, you would get back at least part of that 10 per cent, say, 9 per cent of it, you would get back, because clearly there would still be some admin and so on. And we set that against some of the pressures in local authorities and what they tell us about the difficulty of delivering some of the things that we're asking them to deliver, and we set it against third parties' interests in this. So, on the Supporting People grant, you will all have been extensively lobbied by housing associations and so on about, 'If that goes into the RSG, we won't be able to trace it', and so on.

Now, I'm having a conversation with the WLGA at the moment, since I came into this post, about whether in the future we need to have a one-size-fits-all, because this whole issue about the performance regime for local authorities and having a lighter touch for some and more support for others and so on is also tied up with this. And it is about trust. So, we do have professional trust. I don't want to be controversial with you, Suzy, but it wasn't as binary as you set it out. It's not that we trust them for some things and don't trust them for others. It's that some things are easier to monitor and have trust in and others are much more complex, and so you have a much more complex conversation with somebody about the basis on which you might trust them in the future, if I can put it that way. So, we are starting to move towards thinking whether we would try to give some authorities more flexibility, because they have higher performance thresholds, we have more certainty about where the money goes and the outputs, and this read-across, if you like, so their results across a number of services show us that they're performing well and we don't have too much to worry about. At the moment, we do a one-size-fits-all. So, if it's unhypothecated or hypothecated, it's unhypothecated for everybody or hypothecated for everybody.

Now, this the very beginning of this conversation with them, and when we start putting the local government Bill through the committees, I suspect we'll have a lot of conversations about whether the one-size-fits-all thing is or isn't a good thing. But we're in that conversation as we speak with them about what those frameworks look like, the cost of the administration of the hypothecation, whether it achieves the results that we want, and then, very crucially, in the context of the conversation we had right at the beginning of this committee, about trying our very best to give transparency across all funding streams to local authorities as early in the process as possible, so we don't do the revenue support grant followed two months later by specific grants from education, followed two months after that by specific grants from economy or whatever, because it's really hard for them to plan out across the piece. It's also really hard for them to work out whether we've given a hypothecated grant with one hand and cut the RSG with the other, which is the conversation we have with the UK Government all the time, and we're trying and very anxious not to have a similar conversation with local government. So, I have a lot of sympathy for them trying to work out how that worked when we have yet to tell them what the specific grant is.

Now, that's really easy for me to say, and the systems in the Government are not geared necessarily to doing that, so Kirsty's department, amongst many others, have agreed with me that they will try and back their system up so that we can get as much transparency as early as possible in the system, and then we can have a better conversation about the hypothecated and unhypothecated arrangement. So, we've got some work to do, I think, is the short answer, before we'd be able to transparently say that. So, going back to your question, it's a constant conversation about the cost of the hypothecation as against its result and my belief in local government and democracy and our manifesto commitments, and whether we can trace them through. So, that's the truth: it's an absolute constant conversation about it.

If I can give some detail. Sometimes, the situation we find ourselves in is historical. And if you were starting from scratch, maybe you wouldn't start from this point, but there's that historical legacy. But I think when we're considering whether we should use hypothecated funding or whether it should just go into the RSG, what we're looking at is what is the most appropriate mechanism for the delivery of the policy outcomes that we're trying to achieve.

So, we talked about the regional school improvement grant. School improvement services now operate at a regional level. The reason that they do that is because, as I said, we were in a horrible situation where many of our LEAs found themselves in categorisation for Estyn primarily because of their inability to run school improvement services. Nobody thought that was acceptable, and a regional approach and an increase in capacity was thought to be the best way to address that. So, we gave the regional school improvement grants to consortia to work on a regional basis, because that work is about school-to-school improvement and, actually, you may find that the school that you need to work with, to raise their standards, doesn't happen to be in the same local authority. It crosses boundaries. We need greater collaboration. So, in that case, it's appropriate that that goes to a regional body, because that's the most appropriate delivery mechanism to achieve the policy outcomes that we want to achieve. So, that's one reason why we do it: what is the appropriate delivery mechanisms for it to successful?

There are national priorities. So, PDG, closing the attainment gap is a national priority for me and for this Government. Therefore, that goes, as a national grant, out to achieve that. We also use it for risk and innovation. Actually, new policy developments, is there a different way of doing that? Well that's quite hard to test, isn't it, unless you can use it via a specific grant? So, for instance, if we look at the supply teaching pilot, we know that issues around supply are highly controversial and we're looking at new ways of doing that. It's quite difficult to dictate to a local authority to take the risk and to innovate. So, actually, Welsh Government provides that money as a pilot so that we can take the risk, we can look to innovate, and we can see if there's a better way of doing something. We evaluate that, and if it does prove what we hope it proves is a better way, then you can look to roll that out on a wider basis.

Who is best placed? So, in terms of teacher professional learning, I believe, in terms of being successful in professional learning, the people who are best placed to be able to decide what professional learning is needed are actually at a school level. It is the headteacher knowing their individual professionals. So, it's about primarily the appropriate delivery mechanism to get the outputs of that policy and that spend that we're looking for, that looks to drive some of this decision making. But those are some of the factors we've taken into consideration.

So, there is some correlation, then, isn't there, between what you decide to hypothecate with very specific Government direction and standard? So, acknowledging that the local authority has the responsibility to fund education, there are very specific Government schemes, pilots, objectives, policy areas that you are very clearly saying, 'This money has to go there, and that is the only way that we can ensure that that's where that money's spent and that's how that money is spent.' So, there seems to be a direct correlation between that and hypothecation. Is that fair?

Sometimes.

Sometimes.

Sometimes. [Laughter.]

Just quickly to add, Chair—very quickly to add. The majority of the money that goes to the regions actually, then, is passed on to schools, because it's passed on to the good schools to spread it with others.

Indeed, and I was going to say, certainly with the improvement grant I can see the benefit of that being a regional grant that can be then targeted where it's most needed, so it gives both flexibility and targeting, presumably.

Yes, absolutely—

So, it's got greater value for money as well, hasn't it, in that?

Yes, absolutely. Again, that's always one of the challenges, isn't it? What provides greater efficiency, value for money, and issues around workload? As we've heard from Hefin, there are some voices that say all the money should go to schools—everything. But, actually, do we want schools being responsible for commissioning and purchasing and buying in or providing every single service that that school would need? That's a huge workload issue, potentially, for headteachers. But, actually, if we have a very specialist service, is that more efficient, more cost effective, and presumably service effectiveness, is that better delivered at a regional level or at an LEA level? So, there's always that conflict, isn't there, about what is the right service to deliver in the right place in terms of making it a great service for the recipient and good value for money?

Okay, that's fine. Thank you, Chair.

Can I just ask, Julie, I mean, what you just said about looking to the future of whether it's possible to move to a system where everything goes into the RSG, are things like PDG going—? No, nothing like that will be—

Well, not at the moment. In lots of other service areas, we've run pilots. So, with the housing Supporting People grants, we ran pilots in a number of authorities to see what happened if we unhypothecated some of the funding, because behaviours are different. In some authorities, if you hypothecate it, they spend only the hypothecated money on that service. So, they assume that we're saying that that's the amount of money you should spend. In other authorities, they add money to the hypothecated grant and spend more, and we were very interested to see, in some authorities, what would happen if you unhypothecated it. Would they then spend more or less or what? So, some of the behaviour changes depend on the culture of the authority, its mandate, its governance arrangements and so on. So, we're looking—. On that one, we ran several pathfinder—as we call them—arrangements to see what would happen when we unhypothecated that.

Yes. What I'm interested in is the education money. Obviously, PDG, professional learning—

So, PDG is a good one. At the moment, that's time limited. It's a manifesto commitment. It's not necessarily going to continue forever into the future.

It depends whether I'm here or not. [Laughter.]

It depends whether you're here or not, but it also depends whether it's successful or not. I mean, if it was successful in achieving its aim, then you wouldn't necessarily need it anymore. Now, I'm cynical enough to think that that's not likely any time soon, but that's what we tried to look at. We looked to see whether something is  time limited, whether it will have a specific set of circumstances that might not run on into the future. If we decided that PDG was something that was always going to be necessary and it could be put into the distribution sub-formula in a way that allowed schools to get the money, we might change our minds about the hypothecation. I mean, we're not, in any way, discussing that now, just to be really clear to all the people watching. But sort of the discussion that we have is around that, isn't it? What drives this behaviour, what do schools do with it, does the authority add more to it, does it ring-fence it in a way that's unhelpful? All those kinds of conversations.

Okay, thank you. I've got some questions now about consortia. Can I ask Kirsty Williams: local authorities spend £11 million on school improvement as well as there's £11 million that goes to the consortia for that purpose? The committee's had it suggested to us that that is a duplication. What is your response to that point of view?

Well, I'm very concerned, and officials are very concerned, about issues around duplication, because we are in such a tight financial system, we cannot afford and schools cannot afford to have duplication. So, I would be very, very concerned around that. I note that the Welsh Local Government Association say that, sometimes, what they badge as 'school improvement services' doesn't necessarily mean that that is duplicating what their regional consortia are doing, so there could be a wider definition and there's not a huge amount of clarity around that. But, clearly, I think what's curious to me—and I think we've discussed this in the Chamber, Siân, haven't we—is that regional consortia sometimes are misconstrued as being beasts of the Welsh Government. They are not that. They are constituted of their individual local authorities; they are run by their local authorities; they have business plans that are scrutinised by individual local authorities and agreed by the people who manage that regional consortia. So, it would be very curious indeed, given the fact that we all acknowledge that these are tough, tough times and getting money to the front line is a priority, why you would end up in a situation where a local authority that is part of running a regional consortia would choose to duplicate their spending to the detriment, potentially, of individual school budgets.

Now, again, there are issues around delegation rates, so if you look at the Education Achievement Service—high, high levels of delegation rates, where the vast majority of that money going into that regional consortia finds its way into schools. Sometimes—and you've heard it yourself—we require the regional consortia to spend some of that money centrally, in response to trying to make sure that we drive improvement in PDG, because we want a PDG co-ordinator in that regional consortia ensuring that good practice is spread. We want to try to improve the spend and the efficiency of our looked-after children PDG. You know, we've said, we want a designated individual person in that regional consortia to spread good practice, to drive change and to drive improvement. So, sometimes, we require them to keep it centrally, but: some consortia—high levels of delegation; other consortia—lower levels of delegation. We constantly test that with them. But it would be curious indeed, wouldn't it, that local authorities would sign off a business plan for the regional consortia that they control to duplicate spending that they may be doing in their own local authority?

So, how much of a sense have you got, then, that that duplication is actually happening?

Well, you've had evidence that that doesn't happen, so the consortia and the WLGA are saying to you it's not happening—

But the teaching unions are telling us that they are.

—professional bodies are saying to us that it is happening. We are engaging with the concerns that have been raised with us by the Association of School and College Leaders on that individual set of circumstances. And, as I said, we are very clear about my priority to get money to the front line and we are—. I've said to Steve that I want to be clear that there is better transparency around how money that is going to regional consortia is then finding its way into schools, so that we can satisfy ourselves that those concerns, which have been legitimately raised by ASCL, are not the case.

Can I say that finance is just a part of that picture, if we're looking at duplication and we're looking at the middle tier? So, finance is part of it, but also we know that, for headteachers, sometimes they find the middle tier increases their workload, makes things challenging—'Whose hoop am I jumping through today? Am I jumping through the LEA's hoop? Am I jumping through the consortium's hoop? Am I jumping through Estyn's hoop? Am I jumping through the Education Workforce Council's?' So, what we have done as a response to that—not just about finance, but, actually, the coherence of the middle tier, so that there is not duplication, but everybody is very clear about what their roles and responsibilities are, who's doing what and when they're doing it—I have established a middle-tier group under the chairmanship of Professor Dylan Jones. He is an experienced ex-headteacher, he is now a professor of education at Trinity Saint David, he is chairing that middle-tier group, and the group is there to establish very clearly a greater coherence across across the middle tier, not just in terms of financial resources, but, actually, their role in the national mission and delivering higher standards in our schools. Because I think some of those issues go beyond finance, and we are responding to that by establishing that group. So, they will be very clear about who does what, when they're doing it and to try and address some of these concerns, not just in financial duplication, but actually what is being asked for the system.

Okay, thank you. Final question from Suzy, then.

Right, okay. Thank you very much. I just wanted to go back to something that Julie James raised earlier—the letters that are going to Damian Hinds at the moment, and I recognise—[Interruption.] Very sorry—

It's not Julie's fault—my fault.

The reasons for that—. I know this is part of what you're calling austerity, but I just want to look at the slightly longer picture on this, because, any cuts, of course, affect the whole of the UK—they don't just affect Wales. I just want to try to get to the bottom of why, over a longer period, even in a situation where everyone's finances are declining, Wales has received less per head per pupil than they've had in England, and whether that, in your view, has had an effect on the education. It goes back to that read-across question, because I recognise that the roll and all the rest of it is making that figure between England and Wales's finances per pupil head smaller now—

And if you took London out, it would be zero.

But let's look at it with London in; they're children as well. I'm trying to get a sense of whether, over a period of time, children in Wales have been at a disadvantage, because they haven't had as much money put into their overall education funding, and whether, when you talk about how there's no read-across locally on this, there has been a read-across nationally. I know it's difficult to answer in a short period of time, but I'm really trying to get to the bottom of—has there been significant damage as a result of years of underfunding in Wales as compared to other parts of the UK?

I don't believe that is case. We have—

Before your time, Minister.

Well, I believe that there are many factors that influence educational outcomes. Finance, undoubtedly, is a part of that, but there are other factors that are involved, also—everything from the socioeconomic backgrounds of our children, through to the quality of our teaching. So, you cannot simply say, 'I think that, alone, finance is a direct read-across.' It is about resources in their entirety, and if you look at the work of the Organisation for Economic Co-operation and Development, what they say is that it is resource in its entirety that makes the difference, not necessarily, simply, financial resource. It is resource in its entirety, and it is the quality of that resource in its entirety that makes the difference to education. That's why we are on a programme of reform, because it's not just money that will make the difference to raising standards and closing the attainment gap. Clearly, we need adequate financial resources to deliver that system, but, on its own, money itself will not be enough.

Okay, that's what I just wanted to confirm, because that's what I picked up from what you said earlier. Thank you very much.

Okay, thank you very much. We've come to the end of our time, so can I thank you both for attending, and your officials, and for answering all our questions? It's been a very useful and informative session. As usual, you will be sent a transcript to check for accuracy following the meeting, but thank you all very much for coming. Thank you.

Item 3, then, is papers to note. Paper to note 1 is a letter from the Minister for Education—clarification of the Welsh Government's response to the committee's 'Degrees of Separation' report. Paper to note 2: letter from the Chair of the Constitutional and Legislative Affairs Committee on inter-institutional relations agreement between the National Assembly and the Welsh Government. Paper to note 3: letter from the Chair to the Petitions Committee regarding the petition to create a national taskforce for children's mental health. Paper to note 4: letter from the Minister for Education—developing the new curriculum for Wales. This is following the exchange of correspondence regarding the Welsh Local Government Association's and the Association of Directors of Education in Wales's evidence. Paper to note 5: letter from the Chair of the Culture, Welsh Language and Communications Committee updating us on their inquiry on the teaching of Welsh history and culture in schools. Paper to note 6: letter from the Secretary of State for Exiting the European Union to the UK children's commissioners on Brexit and the implications for children. Paper to note 7: letter from us to the Minister for Education on the draft additional learning needs code—our response to the consultation. Paper to note 8: letter from the chief medical officer on the soft drinks levy. And paper to note 9: a letter from the Chair to the First Minister on the improving outcomes for children in care work he is undertaking. Are Members happy to note those? Thank you. 

Item 4, then: can I propose in accordance with Standing Order 17.42 that the committee resolves to meet in private for the remainder of the meeting? Are Members content?