The funding position was of overriding concern in the evidence we received for this review in the light of what were seen as the consequences of the Government's previous funding decisions and its policy that increases in pay should be met from improvements in efficiency and productivity. Almost everyone who gave evidence said that pay awards should be "fully funded" so that staffing levels could be maintained or improved relative to the rising number of pupils.
We share concerns about funding. Actual expenditure by local authorities continues to be higher than the level supported by the Government, but pupil numbers have risen at a faster rate than teachers in recent years which has led to larger classes.
With other pressures on teachers' time, this underlies the representations from the classroom teacher unions for a range of nationally prescribed conditions of employment to moderate the demands on their members. Our established approach is that teachers and their schools are best served by a national framework of pay and conditions of employment with local discretion so that individual schools can exercise choice over the best use of their resources.
However, evidence from the parties, and our own study last year of teachers' workloads, suggested that schools felt they were reaching the limits of what could be done without making unreasonable demands on their staff and putting the quality of education at risk.
It was against this background that we received the Secretary of State's letter of November 27 containing her direction to have regard to affordability, given the overall state of schools' and LEAs' finances and the level of Education Standard Spending (ESS) for 1997-98. The ESS and the related Standard Spending Assessments represent the level of spending that the Government is prepared to support financially.
The National Employers and others told us that the Government's decision not to make further additional funds available on that occasion had risked putting many schools in difficulties which threatened standards of educational provision.
They told us that planned spending by LEAs in 1996-97 was very close to the maximum that could possibly be achieved within capping limits, with authorities drawing heavily on reserves, making severe reductions in other education expenditure, and cutting other local authority services.
The greatest part of staff costs is that related to classroom teachers. Here we have noted the steps being taken to make better use of resources. Some savings should always be possible but developments in technology have not as yet resulted in any breakthrough in classroom teaching methods comparable to the changes in the delivery of many other public services. It is, therefore, difficult to envisage how major savings in the classroom can be generated.
Finally, on the question of funding, we have continued to hear concern that the existing system is complex and confusing, with wide variations in levels of funding per pupil in different parts of the country. A national funding formula for grant-maintained schools is a long-term aim of the Government and we welcomed the discussion document issued by the DFEE last year on questions that needed to be addressed when introducing and developing such an approach.
In particular, we noted reference in the document to the view of many grant-maintained schools "that a national funding formula would be consistent with the existence of the national curriculum, the national code of practice on special educational needs, a national pay scale for teachers and a national system of school inspection". We believe for those same reasons that a national funding formula could be relevant not just to grant-maintained schools but also eventually to those maintained by LEAs, so that all schools are funded on a similar and more transparent basis.