Agenda item

The report updates School Forum Members on the Forecast position of the Dedicated Schools Grant (DSG) ‘Schools Budget’, including Sixth Form funding grants and planned use of reserves for 2018/19. It also includes a presentation which describes the pan-London pressures on High Needs provision.

Andrew Ward introduced the report which provided an update on the position of the Dedicated Schools Grant (DSG) Schools Budget for 2018/19. He highlighted that the forecast for Q3 showed that there were increased pressures in the High Needs Block, which along with other probable underspends indicated that the overall overspend could be limited to approximately £0.1 million. He directed members’ attention to Appendix A (page 31 of the Agenda pack) which contained the full budget monitoring table. Mr Ward said that a slight overspend of £123,000 against the DSG budget had been forecast and provided detailed information about the financial position of the four blocks of the DSG:

·         High Needs block – there had been a late ‘Import / Export’ adjustment to Brent’s High Needs Formula which meant that the Block’s funding was approximately £0.3 million less than budgeted for. The Forum heard that there were 2,200 children with Education, Health and Care Plan (EHCP), which represented an annual increase of 8% over the last four years. The current demand for support was expected to remain and officers would continue to monitor growth. It was noted that nearly half of the EHCPs were for children in mainstream education so additional funding would be allocated to schools according to need. Moreover, the High Needs post-16 budget of £1.8M had overspent by £0.6M in 2017/18 as approximately 180 young people had been supported (compared to 150 in the previous year) and the pressure was likely to continue in 2018/19.

·         Early Years block – Mr Ward reminded members that 95% of the income of the Early Years block was passed to providers so little variance was expected on the remaining 5%. Expenditure in this block is forecast to underspend by approximately £0.3 million, but this remained in line with expected income and officers would continue to monitor its performance.

·         Schools block – the funding formula for 2018/19 had already been set and it was likely that there would be a large underspend against the growth contingency budgets. Allocations would be known at the end of the autumn term, but indications based on the number of primary place offers made showed a likely underspend of £2.4m. Mr Ward said that officers did not expect to use all of the budget allocated to supporting schools in difficulty as the forecast showed that approximately half of it would be spent.

·         Central Schools Services block – this block was expected to underspend due to the fact that the costs of running some services such as the Schools Forum had been lower.

Mr Ward said that information about the Council’s General Fund had not been included in Appendix A. However, he noted that it was under pressure, particularly in relation to the Children and Young People Department. He reminded the Forum that the Achievement of Black Caribbean Boys project and the School Leadership project, which Schools Forum approved in June 2018, would be funded from the High Needs earmarked reserve for 2018/19. The funding pressures related to the High Needs block were not unique to Brent and the increase in expenditure was forecast to continue due to increased demand.

A letter to the Secretary of State for Education signed by the President of the Society of London Treasurers and the President of the County Treasurers (Appendix 2 (pages 33 and 34 of the Agenda pack)) argued that the reforms that had been made had created an increased demand for High Needs provision which had had financial consequences for DSG budgets.

Mr Ward directed members’ attention to Appendix 4 (pages 37 – 48 of the Agenda pack) which contained slides of a presentation by the Society of London Treasurers and the Association of London Directors of Children’s Services which had been provided for information. Data showed that Brent’s expenditure had been close to the average and there were not any figures that could classify Brent as an outlier.

The Forum welcomed the report and the Chair summarised that the DSG had been balanced in the current year due to the fact that there had been an underspend on growth budgets which balanced the significant overspend in the High Needs block. If the situation remained the same, growth budgets would have to be re-allocated and there would be severe pressures on the high needs budget. However, there were limits to the amounts that could be transferred from mainstream DSG. Mr Ward said that Secondary Head Teachers in Barnet had signed a lobbying letter to the Secretary of State and a similar action could be considered by the Forum. Moreover, the Department for Education (DfE) had released a short consultation aimed at local authority finance officers about the creation of a negative DSG reserve to allow local authorities to have a deficit that could be carried forward from year to year. There were certain conditions associated with this proposal – for instance, local authorities and Schools Forums had to create three-year recovery plans outlining how balances could be returned to positive figures. However, if the deficit continued for too long, the Council’s General Fund may have to cover it.

A Head Teacher addressed the Forum, stating that they had submitted a detailed response to the consultation on the EHCP proposals. It contained comments related to managing parental expectations; the discrepancy between private and maintained schools; and the fact that more money would be required for 19+ provision. They commented that in their view a system where parents could approach tribunals to request what they felt was required irrespective of the cost had been established. They welcomed the letter to the Secretary of State for Education and said that the issue was that if 19+ places continued to be created, this would inflate the amount of funding required and would lead to a situation where it had to be spent. A potential way forward would be to try to achieve savings by finding bespoke provision in the Borough for young people with high needs aged 0-25. For instance, four students, each costing up to £250,000 per year, could save up to £1 million annually. Such an approach would be in line with the Council’s approach to explore ways of providing more placements in the Borough where possible.

A Nursery Head Teacher expressed a point of view that related to the consultation on the national funding formulae for the High Needs formula. They suggested that using proxy indicators had limited relation to the needs that had to be covered. Mr Ward clarified that 50% of the High Needs block formula was based on past spending, with the remaining 50% based on proxy indicators for 3-19 year old population. If adopted the National Funding Formula for High Needs did not give Brent as much funding as it received currently. Where funding had been increased, this had not reflected demographic growth and demand on the High Needs block, e.g. the increase accounted for 0.5%, with other 0.5% expected next year. It was noted that the High Needs funding for Brent was £55 million and it had grown very little despite the fact that the number of children with EHCPs had increased in line with the national trend. In response to a question whether the formula which was based on the proxies would go up, Mr Ward said this would depend on weighting the proxies correctly.

A Head Teacher commented that the DfE used set categories to classify special needs which did not take into account multiple needs simultaneously. For example, the primary need for a child could be Autism but this could change the following year. A Primary Maintained Head Teacher added that there was a long delay between a child receiving a diagnosis and funding being allocated to the school. Therefore, it was necessary to consider not only the costs to the High Needs block, but the investment made by schools to support children with special needs as this could put pressure on their budgets.

A Primary Governor noted that the Special Education Needs and Disabilities (SEND) transport had not underspent which had been unusual and asked whether this could be considered a saving to the Council’s General Fund.

RESOLVED that the contents of the Dedicated Schools Grant Budget Forecast - 2018/19 report, be noted.