Agenda item

This report sets out the final Dedicated Schools Grant (DSG) outturn against the budget set for 2024/25.

Folake Olufeko (Head of Finance, Brent Council) introduced a report, which set out the final Dedicated Schools Grant (DSG) outturn against the budget set for 2024/25 and provided detail on the in-year 2024/25 deficit of £0.4m.

The Forum noted the following key points as part of the update provided:

·            The in-year deficit was mainly due to overspend of £2.1m against the High Needs (HN) Block offset by a £1.5m underspend against the Early Years (EY) Block, £0.1m underspend against the Schools Block and £0.1m underspend against the Central Schools Services Block (CSSB).

·            The High Needs Block budget was £77.4m and the allocation included a contribution of £1.4m (or 0.5%) of Schools Block income.  This excluded £8.9m, which was recouped by the DfE to allocate directly to academies.

·            The High Needs block supported pupils in specialist provisions and mainstream settings.  It also covered specialist support services and costs in relation to post-16 provision.  The HN Block had reported an overspend of £2.1m.  The main reason for the pressure was the top-up funding for children placed in special schools and academies due to an increase in the number of pupils with Education, Health and Care Plans (EHCPs) and average unit costs from January 2025.  The number of children requiring EHCPs was 3,892 at the end of March 2025 compared to 3,598 in March 2024, an increase of 8.2%.  This had led to increases in the top-up funding for in-borough mainstream academies and special schools, additional placements in independent day special schools and alternative education settings for children awaiting placements, as well as increased pupils in post-16 provision.

·            The £2.3m overspend on the budgeted HN top-up funding allocation to schools in Brent.  This variance was primarily attributed to an increase in the number of pupils with SEND, reflecting a 9% growth in FTE pupils across Special, ARP and mainstream settings compared to 2023/24.  Additionally, an overspend of £0.3m had been incurred for the cost of placing Brent children in settings out of borough due to increased rates.

·            The £1.2m pressure against the independent day and residential top-up funding due to the increased number of pupils placed in these settings in addition to an increase of fees for some settings.  Independent school pupils had increased by 9% in 2024/25.

·            The £1.2m underspend against the SEN Services budgets due to unutilised funds held for contingencies.  Additionally, a further £0.6m underspend was reported across the SEN support and support for inclusion budgets. 

·            The £1.5m underspend against the EY Block, which had been mainly driven from the additional funding from the DfE to cover the increase in provision of free childcare for working parents from September 2024 to 30 hours.  This allocation was provided based on an estimated take-up of hours by working parents in Brent.  However, take-up had been lower than predicted leading to underspends of £0.5m and £0.7m reported against the under 2- to 2-year-old and the 2-year-old working parent entitlements respectively.

·            The EY Block was a self-contained block based on headcount and therefore there was a risk that the DfE may claw back the surplus following a final in-year adjustment expected in July 2025.  The accounts had been adjusted to make a provision for this potential clawback.

·            The Central Block allocation of the DSG totalling £2.1m which funded central services for schools.  This budget had seen an underspend of £0.5m.

·            At the end of the financial year 2024/25, the DSG deficit had increased to £13.6m. This was based on the DSG reserves opening balance at the start of the year of £13.2m and the in-year DSG deficit of £0.4m as detailed in Appendix A of the report.

·            The DSG deficit would be disclosed as an earmarked unusable reserve in line with DfE regulations (the School and Early Years Finance (England) Regulations 2023).  These regulations required any DSG deficit balance to be held within the Local Authority’s overall DSG and carried forward to be funded from future year’s funding and/or recovery plans agreed with the DfE.

·            Of the 45 maintained primary schools, 22 (49%) compared to 18 (38%) in 2023/24 had increased their reserve balance by an average of £73k, and 23 (51%) compared to 26 (55%) in 2023/24 decreased their reserve balances by an average of £85k.

·            Two schools had cleared their deficits, and three additional schools had moved into deficit in 2024/25, resulting in eight schools being in deficit at the end of 2024/25.  Of the 45 maintained primary schools, 18 had closed with balances of 8% or more and 27 have closed with balances of less than 8%.

·            Of the two maintained secondary schools, one had seen no significant change in reserves and the other had seen a 210% decrease in reserves.

·            The only maintained special school saw an increase in reserves of 12% with a £1.5m reserve balance.  One of the two PRUs decreased their reserves by 29% and the other saw an increase of 269% compared to balances in 2023/24.

·            The financial pressures on the HN Block continue to present a significant challenge, both locally and nationally.  The HNB position continued to be closely monitored with cost containment measures being implemented in line with ongoing elements of the Delivering Better Value (DBV) plan.

·            The arrangement for the statutory override set out in the School and Early Years Finance Regulations 2021, which required Local Authorities to either carry forward any cumulative DSG deficit to set against the DSG in the next funding period or carry forward some or all the deficit to the funding period after that was due to end in March 2026. There was currently no confirmed plan for how DSG deficits would be treated beyond March 2026 with the Brent continuing to work towards deficit recovery through local planning and continuation of the DBV initiatives and further updates being provided for the Schools Forum as more information became available from the DfE.

·            Folake Olufeko added an amendment to paragraph 12.1, and it should read:

Core schools’ budget in England to go up by 0.4% or £2bn (£3bn increase in 2024/25) in real terms on average over the next three years, reaching £69.5bn by 2029.  This equates to average real term growth of 1.1% a year per pupil. In comparison, Brent’s core schools’ budgets increased by 4.3% in 2025/26 with a 1.7% increase seen against the Schools Block.

The Chair thanked Folake Olufeko for her report and as no questions or comments were raised the Forum RESOLVED to note the report.