The Fair Funding system intends that schools' budgetary arrangements will be much more transparent and delegated on the basis of actual cost. The local education authority monopoly will have to compete, for the first time, on a true market basis to survive.
Establishing a true and transparent cost for each service will present a big challenge for many authorities. For those services where true cost is already established and the service is valued, then schools are likely to be loyal. But there can be no doubt that some authorities have lacked accountability and have traded on the paternalistic basis that "We know best." Inevitably those services will now come under much closer scrutiny from schools looking to obtain best value for money.
Confident authorities will look for opportunities to collaborate with neighbours on opportunities for in-sourcing (partnership arrangements where external managers are brought in to reinvigorate services) and out-sourcing (privatisation of services).
There are already many examples of authorities participating in arrangements such as the formation of a company limited by guarantee or shares in which the authority and the private sector have an interest. Coopers Lybrand research (1996) showed that two out of five responding authorities have such an interest in at least one company.
Authorities steeped in the culture of paternalism and control will find these ways of working difficult to accept. But there is no doubt that schools will be offered new services as the private sector realises that an entirely newmarket is opening up.
Schools that feel let down by their authority will have little reason to use its services and some schools, probably secondaries, may decide to seek a more detached relationship and vote for foundation status.
But, the authorities will say, what about the values and ethics of public service? For too long now educational services have suffered from woolly notions of "values'' and the proper focus of education - the quality of teaching and learning - has been clouded. This new climate offers directors of education the opportunity to re-focus and to see back-up services for what they are - supports to the quality of teaching and learning on a best-value basis. It is, anyway, wrong to assume that private- sector companies do not have "values" of service: without them they would not survive.
There will also be debate about which services to in-source or out-source. Many authorities have little difficulty in accepting that services that are purely administrative (such as payroll) can be provided in non-traditional ways. But many believe that some services (such as personnel) which are fundamental to the employment relationship between the authority and school staff must remain as part of the core function.
Education Personnel Management (EPM) was out-sourced from Cambridgeshire in April 1993 and our "values" have not changed just because we are no longer in the public sector. Our purpose is to provide a high-quality, cost-effective service, to support schools and the local authority in personnel management issues, and thereby contribute to influencing the quality of teaching and learning.
EPM provides best quality professional advice and a range of solutions to governors and headteachers while having regard to an individual local education authority's own policies, procedures and culture. Over the past five-year period we have been able to achieve a level of cost-effectiveness enabling charges to schools to be held down to an extent that would not have been possible in the authority.
Town halls could Kitemark approved providers. Following consultation with schools, the specification and service standards could be established. Approved providers might be existing authority services and those from other public and private companies, but the authorities need to monitor them effectively and independently without favour and without the need to invent expensive bureaucracy.
Authorities have a legitimate right - indeed responsibility - to ensure that schools are well served and that public funds are used effectively. But that monitoring function should, of course, apply equally to its own services - something which, arguably, has been lacking in the past.
LEAs can rise to this new challenge. By ensuring more flexible and responsive services, capable of meeting the needs of schools, the quality of teaching and learning can best be supported.