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John Stone, chief executive of LSN, responds to the emergency budget.
In his Budget speech, George Osborne announced that, with the exceptions of health and international development, the average government department will face a 25 per cent cut to its budget over the next four years.
This is a monumental figure, which for education means something far more radical than the cyclical trimming and slicing around the edges with which we have become accustomed to dealing. On the government side, we can expect a large-scale withdrawal from the administration of education. But schools, colleges and universities will have to bear the brunt of the cuts, and pressing ahead with much-needed technological advancements could generate some of the key savings.
As it appears this government has recognised, the traditional approach of combining incremental cuts in departments with cancellation of the odd frivolous or ineffectual programme will not yield anything remotely close to 25 per cent. The education cuts of 24th May, which took this approach, are testament to this. Combined cuts of £1.5bn were found across DfE and BIS, but this represents only around 1.3 per cent of the 08/09 total spend for these departments. Just the 23.7 per cent to go then...
So where to start? Firstly, any political change this large needs a philosophical basis on which it can be structured, and I think we have already started to see this develop. George Osborne's speech spoke of a 'progressive budget', and a 'progressive alliance'. But this 'progressive' politics is tempered by a firm belief in scaling back the role of government (replaced in parts by the 'Big Society'); in fostering a free market approach where possible; and in de-regulation. All of these have the potential to cut central government expenditure markedly.
For education, this philosophy has already manifested itself in emerging policies around free schools, academies, and primary and secondary curricula, all of which have the potential to save significant figures. And we can expect there to be more changes in this vein, all moving towards a large-scale rolling-back of central government's involvement in frontline education – although only once Michael Gove has overcome his instincts to get involved in synthetic phonics, history and whatever else catches his eye.
This redressing of the balance of power between government and education institutions is only part of the picture though. Government administration of education can be pared to the bone and still not come close to total departmental savings of 25 per cent. The planned total schools expenditure for 09/10 was £39bn. £31bn of this was going direct to schools as grants. Despite the coalition government's pledge to protect frontline schools spending for a year, it is clear that if 25 per cent is to be saved over four years, most of the savings will have to be made in frontline education institutions.
Some of these savings will be found by schools and colleges cutting the least popular subjects and courses – as these have the greatest unit costs. However, unit costs in schools have risen by 40 per cent in the last seven years, and a large proportion of this is due to increases in staff numbers, not running courses with low numbers. Without a re-evaluation of the predominance of expensive, traditional face-to-face teaching, it is difficult to see how frontline institutions will come close to offering comparable outcomes for so much less. Technology needs to lie at the heart of this.
Whereas in other industries such as transport and manufacturing, the boundaries of technology are constantly advanced to improve products and services, education has lagged behind, making do with retro-engineered solutions, often clunky and uninspiring. However, the delivery of technology-enabled distance learning alongside traditional face-to-face tuition, can foster development of a wide range of skills, such as independent enquiry, self-management as well as technological awareness and media literacy. The financial benefits of replacing some face-to-face tuition with distance learning are well documented and vast, and largely centred around reductions in staffing costs – one of the key reasons spending is currently so high.
So I'm calling for those in education leadership to drive a technology revolution. Indeed, this could be the only way that state education can go on delivering results. This technology revolution needs to take into account the complexities of differing learners and courses. It also needs to ensure that the necessary social interaction between young people is not compromised, and that above all, outcomes do not suffer. But changes need to take place in universities, colleges and secondary schools. No longer can technology-enabled distance learning be the preserve of work-based providers and a few HEIs. Above a certain age, it needs to form part of almost every learning experience.
Finally, this technology revolution not only presents an opportunity to drag the nation's education system into the 21st century, but to build British businesses at the forefront of this growing industry – because if there is one thing we can take solace in, it's that there are many other nations facing similar pressures, and many commercial opportunities for world-class British solutions to be sold overseas.
On 5th July, we'll be discussing how education can deliver more for less, at our annual Big Debate, a free event aimed at fostering discussions on this crucial subject. To register click here.
Article Comments
I am broadly supportive of John Stone's argument. However, I would like to add some insights based upon my own published research in the field of Stategic Cost Management and my own professional background as a Transition Consultant to many organisations in the public sector, including UNESCO, HMRC, DEPFRA, ONS and REMPLOY.
Firstly, there has been much research into the impact of incremental technology, most importantly in the Sloane School of Management in the USA. The important conclusion is that IT investment is inherently non-strategic. This is my own experience too. Many organisations have been impailed chasing the holy grail of Best of Breed IT solutions. Over the last ten years it has become fashionable for large public sector organisations to follow Best Practice solutions recommended by major consulting firms and ERP suppliers like Oracle and SAP - the benefit realisation record have been mixed.
Based upon my own research, I would argue that the only way the Government will achieve costs reductions of 25% plus is by innovation. A fundamental rethink is required as to the the products and services needed to meet customer satisfaction. This is largely a market driven approach as opposed to a process or technology driven approach. I agree with John Stone that products and services will probably need to be fundamentally re-engineered and technology with play a critical part.
Based upon my research a clear strategy is required to achieve the cost reductions. There are three fundamental approaches: (1) Product Pruning; (2) Continuous Improvement; and (3) Radical Innovation leading to a fourth approach of (4) Continuous Innovation - this later state is only effectively deployed by a minority of truly market-driven organisations. I would favour Radical Innovation but the path is not straight-forward.
Dr Alf Oldman
29th Jun 2010 at 5:34 pm
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