Agenda item

The Schools Forum received a report from Andrew Ward, Head of Finance - CYP informing them of the Department for Education’s response and direction following the consultation on DSG deficits.

In considering the report and during the discussion, the following key points were noted:

Ø  Many Councils including most London Boroughs were forecasting a deficit on their DSG by the end of 2019/20. The DfE had consulted on how to treat these deficits and thereon responded that DSG deficits could be carried forward against future year’s DSG allocations.

Ø  Having allocated additional High Needs block funding for 2020/21, the expectation was that councils work towards balancing their in-year position on the High Needs block and recover any accumulated deficits over a multi-year period. There was a risk that this would not be possible if the number of Education Health and Care Plans (EHCPs) continued to increase.

Ø  The current position, as reported to the Schools Forum in January 2020, was that overall the Brent DSG would go into a deficit of approximately £4m at the end of the 2019/20 financial year. This was due to the rising demand on the High Needs block driven by the significant increase in the number of children and young people with EHCPs.

Ø  The £4m deficit was the forecast position after reserves had been used and eliminated. Expenditure on the High Needs block was forecast to exceed income by £7m in 2019/20.

Ø  The DfE announced in January 2020 that the terms and conditions would be amended to make it clearer that Local Authorities could recover DSG deficits from future DSG allocations.

Ø  DSG funding had increased for 2020/21, including an additional £5m for the High Needs block. The additional High Needs block funding, plus a £0.9m transfer from the Schools Block, and measures to contain expenditure meant a balanced budget would be set for the High Needs block.

Ø  The DSG budget being set would not attempt to recover any of the deficit incurred in 2019/20, so longer-term actions were required in addition to continued lobbying for sustained further increases in funding. A task group was being set up by the council to coordinate and monitor these actions, details of which were stipulated in paragraphs 4.5.1 to 4.5.6 of the report.

Ø  The Association of Directors of Children’s Services has requested that the DfE provide feedback to local authorities on what were the effective actions in the council recovery plans that have been reviewed.

Ø  The consultation response did not mention the production of recovery plans. The Council was setting a balanced DSG budget for 2020/21 with the £5m increase in High Needs funding being allocated against the pressures in the block in consultation with the Schools Forum. It would not reduce the deficit, which would carry forward into 2021/22. A combination of longer-term recovery actions and anticipated funding increases would reduce the deficit in the medium term. The main and clearest risk to this strategy was that the number of EHCPs would continue to rise.

Ø  Collaborative work was underway to find more capacity/resources under the joint working arrangements through the West London Alliance (WLA) – two more authorities were in the process of joining the WLA.

Ø  A Schools Forum Member raised a query whether there was a scope for more congruence between the financial assumptions between the local authority and the central government.

Ø  Once the local authority’s DSG was in deficit, it usually came under the purview of the Council/S151 matter but the DfE might want to retain the ownership with a view to possibly influence a future spending review.

RESOLVED that:

1.    The Schools Forum notes the contents of the report.

2.    To draft a letter, on behalf of the Schools Forum, signed by the Chair, to raise the relevant issues with appropriate authorities. 

                                                  (Action 59: Olufunke Adediran/Andrew Ward)