Agenda item

To consider the attached report of the Assistant Director, Finance and the Assistant Director, Education.

Consideration was given to a report of the Assistant Director of Finance and the Assistant Director of Education providing an update on the latest school finding announcements.  The report provided information with regard to the DFE spending announcements and some context for the potential impact of the Council’s position.  Forum members were made aware that Dedicated Schools Grant (DSG) announcements at this stage covered the Schools Block, High Needs Block and Central Service Support Block.  However, Early Years Block information would not be shared at this point.

Forum members were made aware of the 2021-22 allocation of funding on a national basis in comparison to 2020-21.  It was highlighted that there had been an overall increase of £3.2bn, of which £2bn related to existing pay and pension grants.  With regard to the allocation for Tameside MBC, the provisional figure had increased by £12.5m, excluding growth.  It was stated that £7.5m of this increase related to the Teachers’ Pay and Pension Grant, which was protected and must be passed directly onto schools.  It was also explained that the further £5m represented a 3% increase on 2019-20 cash levels.

An overview of the main changes was provide for Forum members, including detailed explanation of the Teachers’ Pay and Pension Grant (TPPG), Sparsity Factor, IDACI Bandings, Prior Attainment, Minimum Funding guarantee (MFG) and Minimum Per Pupil Funding Levels for 2020-21, as outlined in the report.

It was highlighted that 2021-22 would continue to be a soft formula for Local Authorities to administer funding due to the impact of Covid-19.  It was also explained that the DFE had confirmed they would look to a future date for a hard formula implementation.

A question was raised with regard to pay grants and the ability of schools to fund pay rises, particularly when schools have high levels of staff who had reached the upper pay scales.  It was acknowledged that this presented a complex issue.  However, it was explained that the Teachers’ Pay Grant was introduced to fund teachers’ pay in September 2018 and September 2019 and this grant had not increased beyond these years.  However, the 3% that had been added to the basic entitlement this year and the similar increase last year represented be the increase to fund these pay awards moving forwards.  It was, therefore, confirmed that the increases on the basic entitlement represented the inflationary increases in pay awards.

With regard to High Needs, it was made clear that the current announcements indicated an increase in funding by a further £730m or 10% nationally.  It was also stated that Local Authorities had seen an increase between 8% minimum and 12% capped increase.  It was explained that the funding formula for High Needs remained largely unchanged with the exception of some technical changes with regard to the cap, TPPG and MFG.  Members of the forum were informed that Tameside had received the maximum increase possible, capped at 12% (before import/export adjustments and recoupment).

Forum members’ attention was drawn to Table 3, which presented the provisional allocation for 2021-22 compared to the current 2020-21 allocation.  It was explained that Tameside was seeing an overall increase of £3.390, or 14% as this did not include the TPPG (£0.488m) rolled into the High Needs Block for 2021-22.  As TPPG was based on an existing grant, excluding this, there was a cash increase of £2.902m. 

Forum members were asked to note that, without the cap at 12%. Tameside would have received an additional £3.1m in 2021-22 and, for context, the 2020-21 cap was £2.6m.  With this in mind, the substantial impact of this was highlighted in terms of the in-year projected deficit for this year and next year’s High Needs Block.  It was further demonstrated that the cap on this funding has had a significant and detrimental impact on the deficit position for the High Needs Block.

Whilst the notion of caps was agreed, concerns were raised with regard to the impact of the cap on High Needs funding.  As a result, Forum members support was sought, on behalf of the schools in Tameside, with regard to the Local Authority being asked to reduce spending where there has not been sufficient funding received.

Concerns were also raised with regard to out of borough placements and an update was provided with regard to this.  It was explained that there were currently too many families having to go out of borough because of a shortage of places locally.  However, whilst it was acknowledged that there needed to be an investment in Special School places, it was, again, highlighted that the budget was currently insufficient to be able to ensure this.  Again, it was emphasised that this was partly due to the challenge presented by this cap on High Needs funding.

Discussion ensued with regard to how and where investment in support services for SEND would take place.  However, the limits within the budget were, again, highlighted with regard to the ability to be able to invest effectively in this support, in light of the current cap on funding.  It was highlighted the Social, Emotional and Mental Health needs, in particular, required further investment and reviews were currently being undertaken with regard to how services were currently funded.  In conclusion, it was acknowledged that effective investment in these areas posed significant challenges, particularly when taking into account the cap on funding.

It was confirmed that Local Authorities would continue to be permitted to transfer up to 0.50% of the Schools Block allocation to another block within the DSG, with the support of Schools Forum.  However, members were made aware that this transfer must exclude the additional funding for Teachers’ Pay and Pension Grants to ensure that these remained, in full, with schools. 

Members of the Forum were reminded that it had been previously agreed to transfer 0.50% into the High Needs Block and Forum were asked for their support with regard to the continuation of this arrangement.  In addition, members were asked to consider the transfer of 1.00%, subject to consultation, with the final decision required for the next meeting of Schools Forum, in November. 

It was explained that, based on the current Schools Block allocation for 2021-22, 0.50% would equate to £0.869m and 1.00% would equate to £1.738m.  These figures may increase as a result of the final funding allocation, due in December.  However, it was unlikely that even the 1% transfer would be sufficient to offset the annual gap.  Assuming the process was similar to previous years, this request would be subject to the following:

• A consultation process with all schools and academies
• Presentation of the impact of the intended transfer on individual schools budgets
• The strategic High Needs Plan
• A full breakdown of the budget pressures that have led to the requirement to transfer
• A strategic financial plan setting out how High Needs expenditure could be sustainable in the longer term
• Schools Forum approval for a one-off transfer for 2021-22

It was stated that Central Schools Services Block funding had provisionally increased by 6.45% or £0.061m from £0.953m to £1.015m.  However, it was explained that, although there had been an increase, any extra funding here would need to be used to support the increases in pay and pensions for centrally employed teaching staff.  Therefore, it would be likely that this increase would simply cover the increases on centrally retained staff.

Forum members were made aware of the increased measures for financial transparency, which would come into effect from 1 January 2021.  It was explained that these changes had been brought forward as a number of Academy Trusts reported to DFE that they felt more accountable for their academies financial position than they had previously done as a Local Authority maintained school and these followed a period of consultation between July and September 2019.  The DFE recognised that these measures would create new burdens for Local Authorities and would compensate through a direct grant based on the number of maintained schools within the Local Authority.

Changes to enhance financial transparency were discussed, including:

·         Making public where Local Authorities are failing to comply with deadlines for completing assurance returns and financial collections

·         Strengthening DSG annual assurance returns

·         Maintained schools required to set 3 year budget forecasts

·         Strengthening Related Party Transaction (RPT) arrangements in maintained schools

·         Maintained schools internal audit too infrequent

·         Strengthening arrangements to help schools that are in in financial difficulty

·         Greater transparency reporting high pay for school staff

·         Greater transparency when reporting maintained school income and expenditure

RESOLVED

(i)            That the contents of the report be noted.

(ii)          That the Chair be supported in making representations to the Department for Education in relation to High Needs funding.

(iii)         That it be agreed, in principle, for the Local Authority disapplication to the Secretary of State in order to transfer 1% from the Schools Block to the High Needs Block.

(iv)         That it be agreed, in principle, for 0.5% to be transferred from the Schools Block to the High Neds Block, in the event of the 1%  transfer having not been agreed by the Secretary of State.