Education: The money that went to school and home again: Despite their new financial independence, many heads are continuing to buy goods and services from county hall. Karen Gold investigates

IN APRIL, Hertfordshire County Council paid 442 school budgets into 442 separate bank accounts so that schools could control their own money and buy services anywhere they liked.

At least, that was the theory. The practice has been rather different. Most Hertfordshire schools were quick to realise that a few thousand pounds in an independent bank account would earn far less interest than the rates paid on the county's multi-million pound deposits. So they accepted the council's offer to hold each school's money in one huge umbrella account.

The story of devolved budgets is one of pragmatism versus enterprise. September 1993 was supposed to be the dawn of total financial independence for schools: the date when virtually every school in England would be handed a bundle of cash and encouraged to shop freely for nearly everything it needed, from computers to cleaning cloths.

But are schools really shopping around? Or is there merely a hypothetical transfer of cash, out of county hall and straight back in again?

More the latter than the former, to judge by the experience of Hertfordshire, until recently Conservative-dominated and ideologically committed to the transfer of purchasing power from councils to schools.

As September looms, the atmosphere in the civic grandeur of Hertford County Hall has certainly changed. The talk is of market research, product development and customer satisfaction. The council supermarket has 150 different lines which, from this autumn, it must sell if it is to survive.

The marketing strategy began last year: a catalogue of goods and services went out to schools. Its wares included advice on teaching, buildings maintenance, running the payroll and servicing the computers. As is the way with promotional catalogues, none of the goods was priced. Then there were trade fairs (of course, they called them meetings): county education officers in halls on stands, discussing their wares with headteacher-customers.

One such customer, Colin Pigeon, head of a St Albans primary school, recalls: 'It was quite frightening to go round the roadshow and see these people fighting for their jobs.' Nevertheless the customers behaved like customers: they haggled (a consortium of primary schools demanding cut prices emerged in Hemel Hempstead); they asked for special deals; they refused to sign then and there on the dotted line.

In December the county sent out a second catalogue. Apart from being glossier, it contained two extra items: packages of combined services geared towards primary schools whose heads simply wanted to buy back county-hall administration without having to select each item off the shelf; and a new supplement repackaging the wares of the advisers, now renamed Hertfordshire Education Service. The latter was to convince sceptical heads, who had warned that they would not buy advice services without a great deal more information about who, and what, they would get for their money.

Still there were no prices. The reason, according to Hertfordshire's assistant director of education, Jonathan Crossley-Holland, was to encourage schools to think about what they needed rather than what - before budgets were set - they might afford.

With the catalogue came his upbeat letter to heads: 'There has been a great deal of interest in . . . agreements of two or three years duration,' it said. The customers saw through that in no time. A third of primary schools expressed interest in two-year packages. A handful would consider three years. Not one of the secondary schools, no matter how good it would look for Hertfordshire sales targets, would commit itself to buying Hertfordshire goods for more than a year.

Finally, in March, the prices came out. Some seemed predictable - around pounds 200 per day for a senior adviser, for example - while others seemed inexplicable: buildings maintenance costing 97p for each 15-year-old in the school, but 92p for 16-year-olds and 94p for pupils who reached 17. The one that caused an outcry was payroll administration, which threatened to reach four figures for some schools.

After a meeting with heads, Mr Crossley-Holland offered a classic loss-leader. For 1993 schools could have the payroll service if they simply paid back to the county the amount they were allocated from the county for buying payroll services. The result? 99 per cent of county schools will use Hertfordshire's payroll service this year.

It may not always be so simple. A real supermarket chain was rumoured to be considering selling its payroll and personnel services to schools; several of the education authority's former computer software experts, made redundant two years ago, have set up a competing consultancy specialising in education software. Building firms, hit by the recession, have been undercutting county maintenance teams for several years: competition can only increase.

But for 1993 the fact remains that in most services, when school heads and governors finally returned their purchase plans to county hall this summer, most were passing the money back again. Ninety-four per cent of schools bought the personnel service; 89 per cent said they would use at least some county advisers; more than half bought a package covering most services.

Mr Pigeon was one of these. Staff salaries in his school account for 78 per cent of his pounds 413,000 budget; by canny purchasing he expects to save just pounds 3,000. Hardly worth the effort, he believes: 'I quite enjoyed working in Hertfordshire in the days when, nine times out of 10, if you could make a good case for something you got it fairly expeditiously. All this has been rather a non-exercise - it's pathetic.'

Graham Kingsley, head of Meridian School, Royston, will save pounds 3,600 this year by dispensing with the services of Hertfordshire's education advisers. He has taken a gamble that the school's audio-visual equipment will not need repair: that will save another pounds 900.

That extra pounds 4,500 will buy a lot of books - but it will not go very far towards meeting the pounds 50,000 shortfall in the 13-18 comprehensive's pounds 1.7m budget. The governors, who make the final spending decisions, have agreed to cover that, for just one year, from the school's financial reserves.

'At the end of the day, none of this is big money compared with the total budget,' Mr Kingsley says. 'When the governors discussed buying county services, one or two of them said that payroll and personnel seemed expensive and couldn't we do it ourselves. But payroll's only pounds 2,000- pounds 3,000 and it's so sensitive if you get people's pay wrong: there's a limit on the extent to which it's rational trying to save a few pounds.'

So Meridian is sticking with the legal advice, the personnel and payroll administration, the surveyors and music teachers supplied by County Hall. It already employs its own financial manager and buys in building work, so will not be buying those from Hertfordshire.

Mr Kingsley was insistent on keeping the council's much-acclaimed school library service, even though it costs almost pounds 6,000. But he refused the package of 10 days of visits by county teaching advisers: 'We didn't have anything like 10 days last year; I'd be surprised if we had three. It doesn't mean we won't ever use them, but we're not committed to it.'

In future he may look further afield for other services, too: 'We didn't look more widely this year because we decide to play safe. It was more through laziness than anything else. At the moment we have kept hold of our nurse, but I am sure we will consider other providers as time goes on.'