Agenda item

The Committee considered a report of the Corporate Director, Resources, which provided Members with a description of the Council’s approach to settling a funding formula for mainstream primary and secondary schools for 2019-20 and the need to transfer funding from the Dedicated School Grant (DSG) to help cover a shortfall in the High Needs Block and the Head of Finance & Transactional Services gave a presentation (for copies see file of minutes).

At its meeting on 17 October 2018 Cabinet had expressed a preference for Option 2 which was a continuation of the current transitional formula and convergence with the NFF in 2020/21, and in addition to seek the maximum amount possible into the high needs (HN) block in 2019/20.

On 5 November 2018 the Schools Forum had expressed a preference for Option 3, which was to continue with a transitional formula approach, but at a slower rate than currently planned, aiming for a National Funding Formula (NFF) equivalent formula from 2021/22.  The Schools Forum had did not support the transfer of any DSG funding to the HN block, as they were of the view that schools could not afford to take a further cut in funding (on top of the real terms cuts they had been facing); that supporting any transfer would effectively say to Government that school could afford it when they could not and that they thought the Council should top up the funding from their own reserves. 

Ten other North East Local Authorities were facing a shortfall in their HNB next year and the latest Budget announcement had not indicated that any additional funding would be granted to cover the shortfall, and an increase of 0.5% per pupil for inflation was insufficient to meet the demands being placed on this budget. 

An equality impact assessment of the impact of a transfer from the schools DSG budget to the High Needs budget had confirmed that the majority of schools would receive a reduction in funding if the transfer was to happen.

Although support of the Schools Forum was not a requirement when applying to the Secretary of State, they did have to be consulted as part of the decision-making process and it was not ideal if they did not support the application.  The deadline for applications was 30 November 2018. 

The Strategic Manager Support & Development, confirmed that Special Educational Needs and Disability (SEND) reforms had increased parental expectations and pupils were being identified much earlier now and were being supported until the age of 25 following the SEND reforms. It was also identified that some needs could not be met in County Durham and therefore parents were exercising their right to send their child out of county, which came at a cost to the Council.  Reference was made to York City Council who could meet all required needs and therefore had a policy of only funding places within their boundary.  If Durham was to provide their own services, this could offer a significant saving going forward.

Councillor Crute queried the position of the Council, should the Secretary of State reject the application and commented on the need to increase pressure on the Government.  The Head of Finance & Transactional Services confirmed that the Portfolio Holder for Children and Young People’s Services had written to the Minister and expressed her concerns.

With regards to whether the application would be successful, the Head of Finance and Transactional Services confirmed that Hartlepool Borough Council had successfully applied last year with the support of their Schools Forum but this year’s application was not supported by them.  He was not aware of any applications which had yet been unsuccessful in the current year, but speculated that there would be an increase in applications in the coming year.

Issues arising from the pressures in the HNB included the inability to set a balanced budget for the HNB – the Council would have to increase resources available, reduce spend, refuse to meet the needs or reduce the way the needs were met.  If the Council could not meet the needs of the HNB, this could potentially open them up legal challenge.  It was likely that the Council would therefore be forced to put in money from their overall budget, which would effect the Medium Term Financial Plan MTFP and increase required savings.  Over the next four year period, savings of around £20 to 25 million will be required to balance the Councils existing MTFP. Any additional pressures linked to HNB spending would only serve to increase this requirement.

There was an opportunity as part of the Comprehensive Spending Review next year for the Government to rebase and invest in High Needs, to recognise the under-funding position and address this in the 2020/21 funding allocations. It was imperative to know the Government’s intention with regards to any additional funding going forwards.

Ms Evans referred to the breakdown of the figures at Appendix 3 and of the impact of the HNB transfer for each school and noted that it was not a significant amount for some schools.  She agreed that parents had higher expectations and schools worked closely with families, building up trust and understanding of a families’ needs.  She was concerned that if budget restraints resulted in services being cut, the support would diminish and it would place more pressure on other child services.

Ms Evans further commented on the importance of ensuring that families were well aware of the proposals and the potential impact.  The Head of Finance & Transactional Services added that it would also encourage people to make representations during the consultation period.

Councillor Jewell confirmed that he felt he was fortunate as a Councillor to have knowledge of the decision-making process and a full view from both a financial point of view and from the perspective of the community.

In response to a question from Councillor Bainbridge, the Head of Finance & Transactional Services confirmed that approximately a third of the HNB budget was spent on children going out of County, therefore if services could be improved internally, it would amount to a significant saving.

Resolved:

That the presentation and report be noted.