Under the Education Reform Act 1988, Local Education Authorities are required to delegate financial management to schools and are expected to evaluate their schemes. This paper reviews the continuing debate between positivist and naturalist evaluation methodologies. A taxonomy of evaluation methodologies is proposed and two LEAs' evaluations of school financial delegation schemes which predated the 1988 Act are assessed. These evaluations were weak in relation to both the positivist and naturalist techniques employed. The use of positivist and naturalist approaches in formative and summative evaluations of the ‘merit’ and ‘worth’ of LMS schemes is discussed.

Both advocates of competition as a means to better school performance and economics-based research on this issue assume a direct relationship between a more competitive market structure (in terms of the number and concentration of schools in a local market) and better school performance. This is an application to schools of the structure-conduct-performance model. It is assumed that head teachers and other professionals are motivated solely by self-interest, so that lack of competition results in x-inefficiency. However, if educational professionals are motivated by other considerations, in particular their values and beliefs, there is no automatic link between competitive structure and forms of competitive conduct that lead to better school performance. Since it is competitive conduct that affects school performance, the hypothesis of a postitive relationship between competition and performance is investigated in this study by collecting and analysing data on perceptions of competitive conduct from a survey of headteachers. An analysis of these data combined with administrative data finds that: the two measures of perceived competition are only weakly related to measures of structural competition; the number of perceived competitors is positively and significantly related to school performance in terms of the percentage of students obtaining 5 or more grades A* to C at GCSE but not the percentage obtaining 5 + A*-G grades.

Knowledge of the effect of school resources on student outcomes is important for policy decisions concerning expenditure on schools. However, empirical research has so far produced equivocal findings. This paper examines the methodological and data requirements for good quality estimation of the education production function and reviews four UK studies that use pupil-level longitudinal data with a range of resource and control variables. These have produced some evidence of small resource effects on student outcomes and indicate the importance of model specification in affecting reported findings. If research in this area is to progress, high quality datasets are essential.

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The paper summarizes principal-agent (P-A) theory and applies it to the teaching profession, arguing that it provides a strong framework for analysing institutional arrangements governing the work of teachers. P-A theory proposes factors that determine whether or not paying teachers in relation to measures of performance improves teacher productivity. Teachers' work is characterized by moral hazard, risk aversion, multiple principals and multiple objectives, which make the design of an optimal performance pay system complex, especially as it needs to be context specific. A crucial factor is the extent to which teacher motivation is altruistic or opportunistic. International evidence on teacher rewards systems and their relation to teacher performance is summarized. In many developing countries, such as India, teacher contracts fail to provide sanctions for poor performance or rewards for effective teaching. In such contexts, improved incentives for teacher performance are an essential component of reforms to raise the quality of education.