16. DfE should rationalise agency responsibilities

Recommendation 16

A DfE review should consider the rationalisation of funding and quality agency responsibilities but also ways to reduce the costs of assessment and inspection across the education system.

The education and training system serves a diverse society and advanced economy. The system is unavoidably complicated and Government needs to spend money on regulation, inspection and monitoring to ensure that it gets the best value out of tens of billions of pounds in public funds. The costs of regulation and administration have been cut in recent years which has reduced the number of officials by thousands[1]. Nevertheless there is a combined administration and regulation cost of almost £1 billion particularly if large agencies like Ofsted[2] and the Student Loans Company[3] are counted in the cost.

The Government continues to take steps to make savings in its own costs (for example via the recent rationalisation exercise in BIS and the creation of an EFA/SFA shared service) but there are risks to regulation and capacity. Government is asking colleges to merge in order to make savings. It might make sense for DfE to review whether it needs three funding agencies[4], multiple regulators[5], a variety of commissioners and four different national education databases[6]. DfE oversees an inspection system with direct costs of £160 million a year[7] plus an exam system that requires £200 million in fees in colleges alone[8]. The compliance costs in schools and colleges are as significant and although England has world-leading outcome and performance data, the systems to collect this are expensive and intrusive.

AoC recognises there are no simple solutions to reducing the costs of administration and regulation but we do believe that the DfE review provides a chance for a rethink. There are some obvious options to merge funding agencies but reforms to Ofsted should not be out of scope. The existing inspection system relies very heavily on data. Perhaps it would be worth changing the nature of inspection and making greater use of data, for example via a balance scorecard in a similar form to the Teaching Excellence Framework. Government should leave no stone unturned in the search for efficiency at a time of considerable financial pressure on teaching and learning.


[1] The Learning and Skills Council employed 5,000 people 10 years ago. EFA and SFA employ just under 1,000 each.

[2] Ofsted’s resource departmental expenditure limit in 2014-15 was £155 million.

[3] SLC operating expenses reported in its 2014-15 financial statements were £134 million of which £115 million was funded by BIS for English activities.

[4] The three funding agencies are EFA, SFA and HEFCE.

[5] Financial regulators in future will include the Office for Students, SFA and EFA with Ofsted acting as a shadow regulator. 

[6] The four databases are the school census, the individual learner record, the higher education student database run by the Higher Education Statistics Agency (HESA) and the Student Loans Company system. A review of these systems was started in 2012 by BIS but was never finished.

[7] Ofsted annual financial statements, 2015-16

[8] AoC analysis of college finance record data