Headlines: January 29th, 2001

The lessons learned from the establishment of Education Action Zones (EAZs) can be applied to other government programmes involving the setting up of innovative new bodies, says the National Audit Office (NAO).The debate may continue about the educational achievements of the EAZs, or their success at developing true partnerships with business, but they have proved so far to be a safe method of administering resources.

The NAO says the DfEE took reasonable steps to mitigate the financial risks inherent in the new EAZs, but warns it must continue to be vigilant to avoid financial irregularities or improprieties.

The feedback comes in a report by the NAO after examination of the workings of the first 25 EAZs in their initial period of operation.

EAZs are local charitable partnerships (including schools, parents and other representatives from the local community and private sector) which aim to develop imaginative approaches to raising educational standards in seriously disadvantaged areas. Each of the first 25 zones received 750,000 pounds of annual grant funding and was expected to raise 250,000 pounds each year in business contributions.

The report praises the successful partnership in setting up the mechanics of the programme, between DfEE, consultants PricewaterhouseCoopers and the NAO itself, which gave advice on issues such as parliamentary accountability, preparation of charity accounts and VAT liability.

There were risks from the outset in paying substantial sums to very small, newly formed bodies – such as impropriety, poor value for money and inadequate accounting. To counter this, the department phased the introduction of the zones, to learn lessons and establish good practice for later stages, and set ground rules for the zones’ financial operations.

With only one or two full-time staff in post, many zones experienced difficulty in meeting all the department’s initial requirements and expectations and some zones were spending large sums of public money before they had sound financial controls in place. The department respondedpositively to these teething troubles with the result that no major irregularities or improprieties occurred.

Good practice examples identified as worthwhile passing on to other organisations include trustees clearly understanding their responsibilities, secure purchasing arrangements that are competitive and proper, and account for grants made.

Link: www.nao.gov.uk