The Business Advisor (Schools) will present statements, Document NZ Appendices 1 and 2, which update Forum Members on the forecasted spending positions of each of the DSG Blocks for 2021/22, on the estimated values of balances to be carried forward into 2022/23, and on the proposed uses of these balances.

These statements replace the initial indicative forecasts that were presented to the Schools Forum on 8 December (in Document NV).

Recommended –

The Forum is asked to note the information provided. This will inform decisions and recommendations to be made under agenda item 11.        

(Andrew Redding – 01274 432678)

The Business Advisor (Schools) presented Document NZ Appendices 1 and 2, which updated Forum Members on the forecasted spending positions of each of the DSG Blocks for 2021/22, on the estimated values of balances to be carried forward into 2022/23, and on the proposed uses of these balances. He explained that these statements replace the initial indicative forecasts that were presented to the Schools Forum on 8 December (in Document NV).

In response to the presentation of the documents, the Forum’s discussion focused on the £21.7m balance that is forecasted to be held within the High Needs Block at 31 March 2022. Forum members asked the following questions and made the following comments and statements:

·         The Authority must now develop a plan for this balance.

·         How much interest is the Authority receiving on this balance? Cllr Pollard, who was observing the meeting, stated that the Council’s overall investment yield in the first 6 months of 2021/22 was 0.08%. The Business Advisor explained that the Council’s overall treasury management position is complicated e.g. the Authority front loads cash into school budgets.

·         Is there risk that the DfE will clawback the balance? The Business Advisor responded that, in his view, it would not be legitimate for the DfE to clawback in these circumstances (where there is an underspend of DSG rather than an illegitimate use of DSG). The Business Advisor explained that the DfE / ESFA may challenge us to explain how our balance has accrued and how this is to be used, and he stated that he had a short conversation with the ESFA in early autumn 2021 about our High Needs Block financial position.

·         The Schools Forum, with the Authority, has previously taken difficult decisions to protect the High Needs Block, as we had serious concerns about the block’s future financial position. Within this, mainstream schools contributed to the High Needs Block via transfer from the Schools Block. The member representing special school academies added that the Forum took these decisions in the time before the DfE began to substantially improve High Needs Block funding (from April 2020), and that our concerns were very legitimate at that time. He added that the action that we have taken is now to our benefit. However, he has two main concerns. Firstly, that we are an ‘outlier’ (where a large number of local authorities are in deficit rather than surplus), which feels ‘uncomfortable’. Secondly, that we now need a plan for this balance.

·         If any of the surplus balance is used for capital (for the development of specialist places), whether this may affect the value of additional capital funding we are due to receive from the DfE. We need to be cautious.

·         The availability of capital funding however, is critical to our continued creation of specialist places. We need to communicate this message clearly and strongly to the DfE, in the context of the announcement to come about the distribution of the £2.6bn national SEND capital stream. We also need to ensure that we are successful in bidding for new free school provision, if the DfE opens up a new wave using the £2.6bn.

·         A view needs to be collected from alternative provision providers about their priorities and pressures.

·         Mainstream schools and academies need financial support now for element 2 (£6,000) and element 3 (top-up for EHCPs) and this balance should be used to quickly inject necessary funds to temporarily relieve pressure. The Business Advisor responded that this needs further detailed discussion, as the Authority is already supporting element 2 costs in schools and academies (via the SEND Funding Floor) and has significantly increased top-up funding rates over the last 2 years for all high needs providers. He added that an appropriate ‘balance’ needs to be found, between spending monies now and ensuring the sustainability of our High Needs Block, and the stability of provider funding, going forward, in the context that the DfE is now clearly indicating that increases in High Needs Block funding in 2023/24 and 2024/25 will not be at the same level as seen in the previous 3 years. He also stated that there is some crucial information, that is not yet available, which needs to be brought into discussions, before any decisions are taken. This includes the outcomes of the SEND and Alternative Provision national reviews, and the announcement of the distribution of the £2.6bn capital fund. This note of ‘caution’ was supported by comments from the Assistant Director, Access and Inclusion.

Following members’ responses to the document, in summing up, the Chair expressed her view that having a balance of £21.7m feels ‘uncomfortable’. The Chair proposed that a working group of Forum members be established, for the purposes of discussing the position of this balance and forming a plan. This proposal was supported by Forum members. The Business Advisor agreed that an email would be sent out to all members to invite them to attend a working group meeting.

Resolved –

(1)       That the information presented in Document NZ be noted.

(2)       That a working group of Forum members be established to discuss further the allocation / retention of the High Needs Block brought forward balance that is forecasted to be held at 31 March 2022. That an email be sent to all Forum members to invite them to join this group. That a report on this group’s discussions be presented to the Forum on 9 March.

LEAD:            Business Advisor, Schools