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So where did all the money go?

Ministers should put their own high-spending house in order before blaming local authorities for the school funding disaster. Jon Slater reports

As this year's funding crisis shows, one man's "record investment" can turn out to be another's redundancy notice.

Less than 12 months after Gordon Brown announced a three-year increase in education spending of pound;15 billion, parents, teachers and possibly the Chancellor himself are all scratching their heads wondering where the money has gone.

Teachers who suddenly find themselves unemployed will no doubt have better things to do than try to get to grips with the notoriously convoluted funding system.

But if they are looking for easy targets on which to vent their spleen, the non-departmental public bodies, better known as quangos, might just do the trick.

In 20023, the administration costs of the four school-related quangos - the British Educational Communications and Technology Agency, the National College for School Leadership, Qualifications and Curriculum Authority and the Teacher Training Agency - were pound;52.7 million, an increase of more than 50 per cent in three years.

Administration costs at the TTA alone have increased by 68 per cent since 199900.

Add in the Learning and Skills Council, which has responsibility for school sixth-form funding (pound;230m) and other higher education and adult learning bodies, and administration costs reach pound;380m - enough to run 190 secondary schools for a year.

And that is without the pound;30m spent on administration each year at the Office for Standards in Education, the schools' inspectorate.

Some of this spending, such as the TTA's work in recruiting teachers, is welcomed by heads, but many schools would be happy if some of the money was stopped altogether.

One of the key functions of the QCA is to monitor the testing regime, which cost schools pound;185m in exam fees paid from their budgets last year.

David Hart, general secretary of the National Associtaion of Headteachers, said: "This shows that the department has barely started on the bureaucracy-busting exercise it promised many months ago. Schools and colleges are still losing out to a bloated bureaucracy that swallows up far too many resources.

"It makes an absolute nonsense of ministers' arguments that they want to give more autonomy to schools."

Quangos may raise heads' hackles but they are not the main reason schools will benefit rather less from Mr Brown's largesse than some of the headlines might have led teachers to expect. A close look at the way the education funding cake is cut shows why schools in England were never likely to see more than half of the headline figure.

Of this year's pound;59bn education budget, England gets pound;50bn and Scotland, Wales and Northern Ireland share pound;9bn.

Higher and further education get a little more than pound;7bn each.

Support for young people, including schemes such as the Connexions service, Millennium Volunteers and youth services, eat up another pound;900m.

Add early years and childcare (pound;734m), local authority spending on youth and community services (an estimated pound;513m) and, of course, the pound;312m budget for central government spending on "activities to support all functions" - such as publicity and administration (see opposite) - and English schools' share is down to about 55 per cent of the total.

That, however, is not the end of the story. Despite the big increases in direct funding in recent years, two-thirds of schools' budgets still pass through education authorities. If they fail to pass on increases then schools will suffer (see opposite).

In addition, much of the DfES's own pound;9bn school spending, which has increased six-fold since 1997 compared to an increase in LEA budgets of around 20 per cent - is tied to specific purposes.

A third (pound;3bn) is set aside for school building work and pound;1.5bn for other elements of the school standards fund.

This trend of increasing centralisation has, for the moment at least, been halted by the ending of some standards fund grants with the money going into education authority budgets.

But with the funding crisis in full swing both councils and schools will be looking for further action.

"They say local authorities are holding money back but what about the DfES?" said Graham Lane, education chair of the Local Government Association.

"Why can't it have an Ofsted inspection to check it's getting value for money like we do?"

Certainly the Conservatives are attempting to capitalise on Labour's funding difficulties by once again promising to cut the cost of educational bureaucracy.

And while ministers attempt to pin the blame on to local education authorities, they might be advised to quietly ensure that their own spending is in order.

A DfES spokeswoman said the department's running costs were among the lowest in Whitehall.

"Since 1997 we have invested unprecedented amounts in education. It is therefore correct that we have the staff and structures in place to ensure that money is administered effectively and our system of reform is monitored and assessed," she said.

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