Agenda item

This report provides Schools Forum with an update on the projected financial position for the second quarter of the 2024/25 financial year. It also provides an update on schools’ additional in-year grant allocations from the DfE.

Folake Olufeko (Head of Finance, Brent Council) introduced a report, which provided an update on the projected financial position for the second quarter of the 2024-25 financial year.  The position was reported against the budget set in consultation with the Schools Forum and submitted to the Department for Education (DfE) in the Section 251 budget return in June 2024.  It also provided an update on schools’ additional in-year grant allocations from the DfE with Appendix 1 of the report containing a detailed budget breakdown and forecast by funding blocks.  The Forum noted the following key points as part of the update provided:

·            As of the close of the 2023-24 financial year, the cumulative deficit stood at £13.2m. Due to rising demand for High Needs provision, coupled with the pressures on top-up funding allocations, the DSG budget was now projected to end the 2024-25 financial year with a slight increase to the cumulative deficit, forecast at £13.5m.

·            The DSG forecast was reflecting a deficit of £0.3m against grant funds of £235.9m for 2024-25, mainly due to pressures from the High Needs (HN) Block.

·            The overall DSG allocation had decreased by £0.6m, from the position approved by Schools Forum, due to an in-year adjustment by the DfE in July 2024.  The adjustment related to a £0.1m decrease in the HN Block funding for Brent children attending schools in other local authorities and £0.5m decrease in the Early Years Block following the completion of the January 2024 census which saw a reduction in hours of childcare provision compared to the January 2023 census data.  There was a 9.5% decrease in take-up of the two-year free entitlement in Brent and this was reflective of a 7% decrease in take-up nationally.  This decrease was attributed to three factors including falling birth rate in recent years, the transition to universal credit from legacy benefits and income thresholds for the eligibility criteria remaining unchanged whilst average incomes have risen in recent years.

·            In terms of the Schools Block, of the total £274.4m allocated by the DfE to Brent, £149.1m had been recouped and allocated directly to academies.  £1.4m had been transferred to the HNB and £2.3m had been deducted for National Non-Domestic Business Rates to be paid by the DfE directly to the billing authority, leaving £121.6m directly allocated to Brent maintained schools and to fund centrally retained items, including the growth fund.   This block was currently forecast to break even.

·            In terms of the High Needs (HN) this totalled £77m (excluding the proportion allocated to academies) including a £1.4m transfer from the Schools Block.  Place funding of £9.3m for academies had been recouped from the Block and allocated to Special Academy providers with a £0.09m in year adjustment by the DfE in July 2024 to decrease the HN funding for Brent children attending schools in other local authorities.  Although the HN Block allocation had increased by £2.8m in 2024/25 (£6.9m in 2023-24), as in previous years, the number of children with EHCPs had also continued to rise.  This growth in demand was recognised as a national and London trend but had not been supported by an increase in HN Block funding creating financial pressures.  Between January 2024 and September 2024, there had been an 8% increase in children and young people with an EHCP, with the number increasing from 3508 to 3782 over this period representing a 12% increase when compared to September 2023.

·            In noting the HN Block forecast detailed in Table 2 of the report, the Forum was advised that the £0.3m deficit against the HN Block was mainly due to an increase in the expected costs of out borough and in-borough academies and special schools’ top up funding.  Further details in relation to the forecast position were highlighted as follows:

Ø   The £0.4m forecast pressures against in-borough mainstream schools’ (including academies) top up funding due to the introduction of a new Band 7 top up funding rate on which further details had been included under Agenda Item 7.

Ø   There was a further pressure of £0.3m against the education costs of children placed in independent and residential settings.  This was partially mitigated by an additional forecast recoupment income of £0.1m to claim back the cost of children attending Brent schools placed by other boroughs.

Ø   £0.7m pressure against the cost of placing Brent children in schools out of borough.  The post-16 budget was projecting a breakeven position, as it was difficult at this stage to accurately forecast the post-16 costs due to delays in various settings confirming their charges to the local authority.  New pupils joining in the spring term also made it difficult to predict the forecast based on pupil numbers.  As such, the forecast against the post-16 budget line was subject to change later in the financial year.

Ø   The above pressures were expected to be mitigated by a forecast under-spends of £0.7m against SEN support services, including Education Otherwise/Awaiting Placement and a further forecast underspend against the SEN support budget due to slippage against the training budget earmarked for the graduated approach programme.

·            Details on the HN Block management plan could continue to be regularly reported to Schools Forum, which included longer-term actions to mitigate the deficit. A Task Group chaired by the Corporate Director of Children and Young People was coordinating and monitoring delivery of the Action Plan, which focussed on cost avoidance through managing demand, improving sufficiency of places and financial management on which the next update was due to presented at the February Schools Forum.

·            In terms of the Early Years (EY) Block this had reduced by £0.5m following the completion of the January 2024 census.  The census had shown an increase in take-up of the 3-and 4-year-old entitlement and a reduction in take-up 2-year-old entitlements with a clawback of £28.5k from the initial supplementary funding allocation for maintained nursery schools. To support these settings, the local authority was not proposing to recover this clawback from its Maintained Nurseries for this financial year.  At this stage, the Forum was advised, the forecast for the EY Block indicated a break even position although this position was likely to change over the next two quarters, as children moved on from early years’ settings and new take-up hours were confirmed from September 2024 and in the Spring term from January 2025.

·            The Central Block of the DSG (£2.1m), including a set contribution towards pension strain costs for former school employees of £0.3m, was currently forecast to break even.

·            In terms of DSG funding for 2025-26, the autumn 2024 budget announced that core schools funding would increase by £2.3b in 2025-26 with £1b of this to be allocated to support work to reform the system for pupils with special educational needs.  The Forum was advised it was not clear at this stage how the funding would be distributed at local authority level and between the DSG Blocks.  An announcement on the 2025-26 Schools Block DSG allocations was expected in December 2024 with the Council continuing to set a local funding formula (LFF) for mainstream schools in 2025-26 in line with the move of the funding factor rates closer towards the National Funding Formula (NFF) factors.  The Treasury had advised that funding would be provided to assist schools cover the increase of 1.2% in Employers’ National Insurance contributions, although final details were not due to be confirmed until spring 2025.

·            In relation to the Core School Budget Grant (CSBG) for 2024-25 the DfE had announced almost £1.1b of funding to support schools with their overall costs in the 2024-25 financial year, including confirmation of the 2024 Teachers’ Pay Award.  The indicative grant allocation for Brent mainstream schools (excluding Special Schools) in 2024/25 was £2.56m and special schools would be funded at £703.05 per place.  The funding for mainstream primary, secondary and all through schools would be incorporated into core budget allocations for 2025-26, through the schools NFF for 2025-26.  Funding for Centrally Employed Teachers would be rolled into the Central Schools Services Block funding for 2025-26.

·            The 2024-25 mainstream base funding rates, as detailed in section 11.2 of the report.

·            The update on previous Action Points agreed by the Forum, as detailed in section 12 of the report relating to the Delivering Better Value (DBV) in Brent Programme, and update on the DSG Deficit Management Plan and agreed banding arrangements for Special Schools.

The Chair thanked Folake Olufeko for the update provided and welcomed any questions from the Forum, with the following noted:

·            Nigel Chapman (Corporate Director Children & Young People. Brent Council) took the opportunity to highlight the national pressure on High Needs with the funding received by Brent recognised as marginal when compared to other local authorities and levels received in previous years.  Whilst the overall HN Block deficit remained, Brent was managing to contain cost pressures through the targeted actions with its HN Deficit Management Plan although given the ongoing pressures identified in relation to ongoing funding the forecast deficit was expected to remain challenging to address.

·        In response to further details sought on how it was anticipated the government would distribute additional funding support in relation to the increase in Employer National Insurance Contributions to each school, it was clarified that the expectation was for the DfE to use the schools’ workforce data included in census returns to the DfE. Additionally, the government would shortly be publishing a Policy Statement with the MHCLG (Ministry of Housing, Communities and Local Government) expected to provide further clarify around the funding position.  In response to a query on how schools are funded for placements from out of borough, it was confirmed that the local authority allocates direct payments to schools and recoups funds from other local authorities on behalf of schools.

As no further questions or comments were raised the Forum RESOLVED to note the report and update provided.