There’s been a ‘notable change’ in the DfE’s ‘delivery model’ since 2010, says the Institute for Government*. The academies programme has increased the amount of money spent via contracting and decreased grants to local authorities (LAs) for education.
The DfE is the third highest spending department in the financial year 2017/18. Its overall spending was £96bn - £88bn went directly to education.
Since 2017, the government has attempted to introduce changes in all three ‘formula-based’ funding schemes – police, LAs and schools. This has been challenging.
35% of DfE spending goes to ‘third-party providers’, that is academy trusts and free schools, the IfG revealed. Outsourcing can bring benefits, the IfG noted. John Manzoni, Permanent Secretary for the Cabinet Office since August 2015, cited research which promised savings arising from competition when he gave evidence to the Public Administration Committee. But some of the evidence appeared to be ‘decades old’. Other research cited ‘new ideas, greater flexibility and specialist skills’ as a benefit accruing from outsourcing.
But there are also ‘downsides’ to outsourcing. Carillion’s collapse, for example, showed the risks of contracting out public services to third-party providers. (Author's comments: we have also seen how the academies system can result in public money being diverted into private pockets.)
Government has improved its contracting in recent years but it needs to go further, the IfG said. A recent report by the institute found the ‘quality of government data on outsourcing and procurement to be poor’. Improving this to develop a better understanding of what works and what doesn’t work in public sector outsourcing ‘would help the Government make better spending decisions.’
CORRECTION 23 January 2019 07.48. The original article said John Manzoni was Permanent Secretary for the Cabinet Office in August 2015, It should have said, 'since August 2015'. This error has been corrected.