We agreed with the DFE when it said we should offer advice on ways in which further progress could be made. It was premature to do so then, but we referred to the feasibility study we were undertaking to provide a basis for addressing the whole question in this report. The study (issued in July, 1994) underlined the value to the schools involved of developing their own framework for managing their performance. It also enabled us to develop proposals to encourage this process.

We were guided by the view that any performance-related pay scheme should be:

* simple and straightforward; n aim for year-on-year improvement; n provide that any payments should be funded separately from the rest of the school’s budget; n have a common national framework, but with sufficient flexibility to allow for individual school circumstances; n encourage positive attitudes for both educational processes and school outcomes.

We proposed that participation would be voluntary and open to the heads and deputies of all primary, secondary and, eventually, special schools. Governors would be responsible for introducing and operating the scheme. One-off, non-pensionable bonuses would be paid where the following essential performance indicators were met:

* year-on-year improvement in a school’s exam or test results; n year-on-year improvement in pupil attendance; n evidence of sound financial management; n if there had been a recent OFSTED inspection, progress in meeting the requirements of the action plan.

Half the bonus would be paid where all these essential performance indicators were met, with the remainder linked to successful performance in the five areas of management activity identified in our feasibility study. The cost of bonus payments, of some 2 to 3 per cent of annual salary for heads, ranging from Pounds 600 to Pounds 1,500, with half those amounts for deputies, would be met through funding separate from and additional to that for school budgets generally.

In assessing the evidence it came as no surprise to be reminded of the difficulty which the teaching profession as a whole finds with the concept of PRP, and the incompatibility it often sees between the traditional values and culture of the school environment and an approach which seeks to recognise financially the outstanding performance of individuals. As to our particular proposals, we noted the reservations which were expressed about the essential performance indicators if they were applied in too simplistic a way, but we received no evidence that greater sophistication, such as an approach based on “added value”, important though it might be to develop such indicators wherever possible, would in practice be generally attainable in the foreseeable future.

We have also considered the difficulties of establishing any new scheme at national level in the absence of new money. The Government has made clear its view that resources for performance pay should be found by devoting an increasing proportion of the pay bill, nationally and at school level, to that purpose. Concern expressed by employers and unions about the funding position indicates that this would be a major obstacle.

A useful next step would be for further guidance to be provided to governing bodies on the assessment of performance, drawing on the essential performance indicators as in our consultative document, which they should take into account in their annual reviews of the salary position of heads and deputies.

The four essential performance indicators should be applied to all schools, except for pupil attendance, which would be more appropriate in secondary schools.