To report the recommendations of the Budget Working Group to Schools Forum for approval to Cabinet, and propose the High Needs Budget for 2025/26.

The Senior Finance Business Partner (SFBP) provided the forum with a presentation the following principal points were noted:

·       The gross high needs block allocation for 2025/26 is £28.9 million. (7.6% year on year increase).

·       An additional £1.1 Million had been transferred from the Schools Block funding (SEN Protection scheme), the Early Years Block for the SEN inclusion fund, and Central Block.

·       It was noted for 25/26, that the grant structure within high needs had changed. The teachers pay award grant, the teacher's pension employers contribution grant and the core schools budget grant uplift were going to be rolled into one grant called the Core Schools Budget Grant.

·       Q3 forecast deficit on High Needs block in 2024/25 is £11.1 million, which will result in a £17.2 million deficit as at 31^st March 2025. The main cause for this was independent school places. From January 24 to December 24, there had been an increase of 68% on new placements and this is due to a shortage of local authority special school places. Other drivers included top ups and increases in Education Care Health Plans (ECHP).

·       The DSG deficit is currently ring fenced from overall financial position in the statutory accounts until March 26, but that legislation revokes itself in March 26 and would have to start rolling that deficit into the council reserves, a huge risk for Herefordshire Council and for all councils nationally.

·       The SFBP took the forum through the High Needs Block 2025/26 allocation and the main year on year increases.

·       Detailed modelling undertaken by the Council proposed that the high needs block funding required 45.7 million which produced a deficit in year of £20.2 million and would produce a cumulative deficit of £37.4 million as at 31^st March 2026.

·       It was noted a change had been made to the trade unions SLA.

·       The SFBP provided the forum with two options for the funding of the SEN protection scheme. Detailed modelling had been completed, and some options and compromises would have to be made to aid with affordability.

·       It was noted Option 1 had a Full Year cost of £2 million+ for 2025/26 and was considered unaffordable given the pressures on the High Needs Block.

·       Option 2 which had been recommended by the Budget Working Group, had a Full Year cost of £1.5 million and was the Council’s preferred option for the high needs block budget 2025/26. It was highlighted that new options would need to be considered for the 2026/27 budget given the increasing costs of the SEN Protection scheme, and the affordability given the deficit on the high needs block.

The chair offered her thanks to the SFBP for her clear and informative presentation.

In response to member’s questions, it was noted:

1.     The Service Director, Education, Skills and Learning (SDESL) confirmed there had been an exponential rise in special school placements in the independent sector due to increased demand for specialist education and that is It is likely to continue to increase unless there is significant funding into the Herefordshire Special School Estates.  All Herefordshire Special Schools are full. The department continues to lobby the Department for Education around building projects, whether that be rebuilding or new buildings because unless Herefordshire can expand provision the rise in out of county places will continue to increase. It was highlighted that the f40, are calling for significant change and it was noted that this is not just a local issue, and the same challenges are being experienced nationally.  

2.     The SDESL highlighted that whilst being very aware of the impact of the deficit on the council potentially from March 2026, the council is mindful of its statutory duty to ensure that children have a school place that meets their needs and supporting schools to do that. Spending would continue but from a deficit management perspective, the SEN protection scheme would be reviewed so that it is well targeted to supporting schools with the inclusion agenda where necessary.

The Chair of the budget working group fed back the views of the group, they were supportive of option 2, appreciating the current deficit and projected deficits moving forward. The group had always given their support to the SEN Protection scheme and would continue to do so for as long as possible. Without the extra funding it would have a detrimental effect to those pupils that required additional support and concerns were raised of the impact that could have on those young people and the schools that are working hard to support them.

Resolved

That the forum recommends a High Needs Budget of £45.7 million for 2025/26 for approval by the Cabinet Member for Children and Young People as set out in Appendices 1, 2 and 3, noting the funding gap in 2025/26 of £20.2 million (253% higher than the funding gap agreed for 2024/25).