Local Education Authorities in England achieve better GCSE examination results when they set targets and when central government provides financial incentives for achieving them, according to research at Cardiff University. The Cardiff Business School researchers compared the performance of local education authorities with such targets against the performance of those without them.
Professor George Boyne and Dr Alex Chen, Centre for Local and Regional Government Research, reviewed the impact of Round One Local Public Service Agreements between local authorities and central government. The purpose of the agreements is to enhance performance in a variety of key public service areas, including education.
Financial rewards are divided into 'Pump Priming Grants' and the 'Performance Reward Grant'. A Pump Priming Grant is paid at the start of the delivery period to assist local areas in delivering improvements, though they are also expected to contribute their own resources. And, a Performance Reward Grant is paid at the end as financial reward for achievement of the agreed outcomes.
The agreements are a major experiment for the UK public sector in "payment by results". In Round One Local Public Service Agreements, local authorities negotiated typically twelve targets with central government in exchange for a maximum reward of 2.5 percent of their net budget requirements. If all the first generation targets are achieved local authorities collectively would stand to receive in the region of an extra £1.3 billion.
Professor Boyne said: "Our analysis shows that the impact of the targets is to 'stretch' performance beyond the level that would have been achieved otherwise. The difference is not huge, but is clearly very significant for those pupils who benefit from this policy."