factFiction4 How dodgy stats could decide our childrens futureHow do taxpayers find out how money is being spent on their children? A simple question that is proving frustratingly difficult to answer.

FactCheck wanted to find out if councils had been slashing their spending on Sure Start children’s centres as a result of squeezed funding from Whitehall – and whether Labour, Tory or Lib Dem town halls were cutting the most.

That ought to be fairly straightforward, as all councils by law have to fill in something called a Section 251 workbook detailing how much they are spending on various services for young people.

The figures are collected by the Department for Education (DfE) and published on its website.

One of the spending items purports to show the total amount of money councils spend on their children’s centres, but it became clear that the figures submitted to the department under this heading were very strange.

Brent Council in north London appeared to have slashed its funding by nearly 90 per cent, something that seemed strange, as we hadn’t heard an outcry from local parents.

The council swiftly admitted making an accounting error – to the tune of a staggering £6m.

A spokesman said: “The correct comparative figure for 2011/12 is £7.221m and not £915,612. In completing the Section 251 statement for 2011/12, which is where the £915,612 figure has been extracted, a large element of Children’s Centre expenditure had been mistakenly allocated to other lines.

“We will be submitting a corrected Section 251 Statement to the DfE immediately.”

Fair enough – mistakes can happen. But we quickly found out that Brent wasn’t the only council who had submitted misleading figures to Whitehall.

Newham, another London council, appeared to have increased their spending on children’s centres by over £10m this year – a bit of an eye-opener in these times of shrinking budgets.

The council also told us they had also made an error: the number should have been £9.7m, not £22.4m. Oops.

It went on. Brighton & Hove put their total spending on children’s centres at a measly £194,400 on the form, but told FactCheck the real allocation was £3.73m.

We contacted DfE and asked them how mistakes as big as this had been allowed to go uncorrected.

The big surprise was that they weren’t all that surprised.

A spokesman admitted the numbers were “not very accurate”, then issued a written response saying this year’s figures for children’s centres were “not directly comparable with spending under previous grants because we have never collected this information before”.

“As such, these numbers must be treated with caution. The picture is very complicated, and some funding for Sure Start is likely to be included in other lines in the return… Local authorities are responsible for their own figures. They are given the opportunity to check them before publication.”

We asked DfE if it was really telling us that it knew the S251 returns are inaccurate, they don’t check them, and they’re not planning to find out what the real situation with funding is.

They replied: “It’s important to have full transparency on how local authorities spend their resources, which is why we publish this data.

“The s251 returns are only a snapshot and should be treated with caution – some local authorities record their spend differently. The data published is as reported by local authorities.”

So to recap, these spending figures don’t actually reflect the real amount of money spent; figures from different councils are not comparable with each other; spending in one year can’t be compared usefully with other years; and the government doesn’t propose to audit the figures or correct them when they’re wrong.

Academies overspend?

Apart from the minor scandal that budget documents published by government partly in order to tell taxpayers how their money is being spent don’t bear any relation to reality, why is all this important?  

Because S251 form is the document the government uses to reallocate funding from council-run schools to its flagship academies.

Ministers say they want as many schools as possible to opt out of local authority control and switch to academy status, meaning they will get their funding directly from government.

Schools are flocking to do just that, and in such large numbers that the whole education budget is having to be recalculated, with money taken from conventional state schools and redistributed to the growing numbers of academies to reflect the changing demand for local services.

Neither type of school is supposed to lose out as budgets are rebalanced, but there have been howls of protest from councils of all political complexions about the government’s calculations.

The Local Government Association (LGA) says less than £250m should be swiped from council budgets and given to academies, while the government wants to cut more than £1bn, prompting accusations that it is overfunding its favoured schools to the detriment of thousands of other children.

Many councils’ complaints, made plain in responses to an ongoing government consultation, hinge on DfE’s use of S251, a document it has variously described as “unaudited”, “flawed” and”not fit for purpose”.

It’s clear that DfE has been aware of those concerns for some time, but this is the first time the department has admitted that is knows that at least one section of the budget document it is relying on to decide on how money is doled out to the nation’s schools is so unreliable.

We ought to be clear that, according to DfE, “only a limited set of data from s251 is used for funding purposes in relation to Academy funding”. And the figures for children’s centres aren’t used directly to allocate funding to academies.

But the question remains: if one line in the return is out by several million pounds, what faith can we have in the accuracy of other parts of the accounts?

Local government funding expert Tony Travers, from the London School of Economics, said: “Having figures which are known to be inaccurate can’t be good. If they have any impact on the way resources are allocated, that would not be good either.”

DfE has conceded that the current situation cannot go on, a spokesman saying: “The government has always been clear that this system needs reform. That’s why we have consulted on a new approach to Academy funding to remove reliance on this data and ensure that all schools and academies are fairly funded.”

We will await the results of the government’s consultation on this issue with interest.

Meanwhile, the question of who is at fault in all this – the government or the councils - is not immediately clear.

Education Secretary Michael Gove has got form on S251. Earlier this year, he was forced into the embarrassing admission that some academies had already been overpaid to the tune of £300 per pupil – and blamed “individual mistakes made by local authorities in the calculation of their Section 251 returns”.

Not surprisingly, the LGA thinks that is disingenuous, saying S251 forms are too complicated, were never intended to be used to recalculate funding, and the government has never issued strict guidelines about how they should be filled out.

The independent Chartered Institute of Public Finance and Accountancy also said they would prefer to talk about “differences of interpretation” by councils rather than “errors”, adding that there will inevitably be differences in how they spending like this is reported and saying: “We would welcome clearer DfE guidance on how they want the form filled in.”

Whoever is ultimately to blame, parents and other taxpayers remain completely in the dark about how money is really being spent by their council, contrary to the government’s stated aim of increasing local accountability.

By Patrick Worrall

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