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Councils ordered to submit school deficit ‘action plans’

More than one in ten councils are having to submit to closer government monitoring of their school finances as falling pupil numbers, spiralling costs and the SEND funding crisis devastate balance sheets.

In 2020, the government announced new measures to tackle financial mismanagement in maintained schools. They included the power to demand “high-level” action plans from councils with a certain proportion of schools in deficit.

Data obtained by Schools Week shows 11 councils submitted a plan in the 2021-22 academic year; 15 in 2022-23. This year, 17 councils submitted plans before term even began – most of them in deprived areas.

This year, councils were asked to submit action plans if more than 10 per cent of their schools had a deficit of more than 5 per cent. In 2021-22, the Education and Skills Funding Agency set the deficit threshold at 10 per cent. In 2022-23 it was 7 per cent.

However, plans can be requested at any point during an academic year, so this year’s number is likely higher. The data does not include any plans submitted after August 3, the date of our request.

Schools Week also revealed earlier this year how town halls were having to sign off on more “licenced” deficits for their primary schools.

Twelve of the 17 councils submitting action plans this year are in areas with above-average free school meals eligibility. Eight are London boroughs.

Rising costs ‘not addressed’ by government funding

Bristol City Council, which has 12 schools with a deficit of more than 5 per cent, is forecasting an overspend on its dedicated schools grant of £18.5 million. The “main driver” is in high-heeds top-up and placements costs. 

The council plans to consult on “mitigations” that could save £12.6 million by 2027-28. These include ensuring top-up funding for schools is “robust, appropriate, time-limited and impactful”.

A spokesperson said rising costs, increased demand on SEND services and a growing population were “all factors yet to be addressed by government funding of schools, which is pushing many across the country to return deficit budgets”.

In London, however, falling rolls are driving much of the pressure.

Southwark, which has nine schools above the threshold, has already removed 420 surplus reception places since 2017. But a council report said the reduction had “not kept pace with the overall drop in demand”. 

“This has put extraordinary financial pressure on …  Southwark schools in managing their finances within a continually decreasing funding envelope.”

If the council does nothing, it predicts a £10 million deficit in the next two financial years. 

It is considering “informal” capping of reception intakes, and closing and amalgamating schools.

London schools need ‘increased funds’

The DfE said its monitoring scheme would mean “parents can feel assured that the money their schools spend is focused on making sure children get a great education”.

Schools Week reported earlier this year that the wider crackdown, initiated by Lord Agnew, the former academies minister, had revealed how more than one in three councils reported school funding fraud over two years.

Michelline Safi Ngongo

Eight councils also stripped schools of budget powers because of financial issues in 2020-21.

But councils want more support. In Islington, 20 schools are in deficit, double last year’s number.

A council report blamed falling pupil numbers, rising home education and increases in SEND, while per-pupil funding has been “significantly less than the increases in energy costs and likely staff pay awards”.

Michelline Ngongo, Islington’s executive member for children, said pupil numbers were unlikely to stabilise until 2030, “so we’d urge the Department for Education to come forward with a standalone proposal with increased funds to support inner London schools”.

Gateshead council also said academy trusts could “pool budgets and direct resources or reserves to schools that require additional support”.

But that option was only available to mainstream schools if they de-delegated revenue funding annually, “which in effect is a top slice. With budgets being so tight, this could lead to more schools not being able to set a balanced budget”.

The councils told to submit action plans

Bristol: 12 schools

Cheshire East: 6 schools

Croydon: 6 schools

Gateshead: 7 schools

Gloucestershire: 10 schools

Greenwich: 6 schools

Islington: 7 schools

Lambeth: 11 schools

Liverpool: 13 schools

North East Lincolnshire: 2 schools

Reading: 7 schools

Southampton: 8 schools

Southwark: 9 schools

Sutton: 3 schools

Waltham Forest: 5 schools

Westminster: 9 schools

Windsor and Maidenhead: 4 schools

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