In Trading Places the Audit Commission this week reported on its first examination of the impact of the market on the education system - a market introduced through open enrolment, local management, pupil-led funding and self-government. In a nutshell, it concludes that unplanned supply and unmanaged demand is producing a wasteful mismatch between pupils and places, 900,000 surplus places in England alone, and too much parental disatisfaction over school choice.
The impact of this can be seen in schools: while one in six is less than three-quarters full, one in three exceeds its official capacity and is forced to endure large classes and overcrowding. After taking account of projected rises in pupil numbers and the distances between schools, the commission estimates 40 per cent of the surplus places in schools could be dispensed with. This would allow Pounds 100 million a year to be saved or spent more effectively on pupils, while overcrowding could be relieved in oversubscribed schools by using the capital released by sales of surplus property. The failure to recycle excess capacity means an ever-larger proportion of capital allocation goes to meet basic needs in areas of population growth, while the school building stock of authorities with little or no growth is starved.
The commission blames both central and local government for wasteful admissions arrangements. It finds some authorities very much better than others at forecasting needs, removing surpluses and managing parental demand. Too many authorities write school admissions brochures with lawyers, rather than parents, in mind. Only 14 per cent of authorities run a unified system of admissions for all their secondary schools. Nationally, appeals have risen by over a half in primary and a third in secondary. But in some the rate is falling.
Some authorities have continued to take the deeply unpopular decisions involved in reducing surplus places, even though their powers to plan and organise school admissions have become more restricted. But almost half of the 23 authorities with the worst record on empty secondary places had taken no action to remove excess places in the past three years. In one authority more than a third of secondary places were unfilled.
The commission wants every local authority to consider closing or expanding every primary school of fewer than 90 pupils and every secondary with 600 or less on roll (700 with sixth-form). And its research is likely to presage publication of league tables of excess places and, possibly, even percentages of satisfied parents next year.
But the public spending watchdog does not hide its major conclusion that only a change of government policy can avoid the "gridlock" the system is heading towards. So long as LEAs fear that closure threats will prompt a successful bid for grant-maintained status, the risks of intervention will continue to outweigh the rewards. There seems little point in the commission's call for the present government to restate its support for local management of places; if its approval of 40 per cent of those opt-outs subject to reorganisation plans was not eloquent enough, the current Bill allowing grant-maintained schools to expand by 50 per cent, or select up to the same figure, without local authority approval makes the Government's attitude quite plain.
Labour's ideas on squaring the appetite for parental choice with the circle of effective planning were sketched out in its paper Diversity and Excellence 18 months ago. This, at least, acknowledged the need for efficiency. It called for locally "agreed" admissions procedures and a duty on authorities to address surplus places and the need for new ones. That presumably meant procedures "agreed" by the local authority since schools were to be allowed an appeal to the Secretary of State. Objections to local planning would lead to a public inquiry and a decision by the Education Secretary.
The commission shares Labour's conviction, then, that local agencies - though it does not specify education authorities - need more power to manage the education market. Labour still has to show that it can make its policies work. The Audit Commission has demonstrated beyond doubt that current government policies on choice and value-for-money are in collision with each other.