Agenda item

Members are invited to scrutinise in-year budget (2022/23) for Hackney Education, including actions taken to address overspends and progress against agreed cost savings.

5.1 Budget monitoring is an important part of the overview and scrutiny function, and the Children and Young People Scrutiny Commission reviews the budgets of key council directorates annually to ensure that spending is aligned to budgets and the agreed policy priorities of the Council.  The budget monitoring report provided detailed in-year budgets for Hackney Education, together with management actions taken to address overspends and the service’s progress in achieving agreed budget savings for 2022/23.

Hackney Education (HE) and Corporate Finance (CF)

5.2 (HE) Key points to note from the report was that the overspend in SEND services in the region of £5.4m was contributing to overall deficit across Hackney Education (HE).  There were also some significant areas of underspends in the service in the Dedicated Schools Grant.

5.3 (CF) noted that there were overspends in SEND, children’s centre and operations budgets, with underspends, the overall forecast position for HE is a £4.8m overspend.  The cumulative overspend for SEND was predicted to be £18.7m by the end of this financial year.

Questions from the Commission

5.4 Officers in the past have suggested that under-occupancy is a key driver of overspends within children’s centres, yet the budget table in Appendix 1 of the report shows that those centres with highest occupancy have the highest forecast overspend?  Can officers explain further? Could officers clarify the future spend for Hillside Children Centre? There is an overspend of £148k at Ann Tayler Children Centre which equates to 30% of the total overspend in the Children Centre budget.  What factors are driving the overspend in this specific children's centre?

·  It was noted that the report was taken at month 8, with 4 months remaining in the current financial year which may in part explain the discrepancy between the year to date and year end positions.  There are three key factors which are driving financial variations across children’s centres:

o  Income derived from childcare fees;

o  Energy costs associated with individual centres;

o  Agency costs to cover vacancies as they arise.

·  In the case of Ann Tayler CC, the overspends were largely as a result of the use of energy costs and agency staff usage.

5.5 What is the current status of the two children’s centres (Hillside and Fernbank) which were earmarked for closure within the consultation?  Are all services continuing to be provided from both sites? Are staff being recruited to positions that become vacant? Are sites continuing to operate at the same capacity and accepting children?

·  Fernbank is a school run children centre so does not figure in the budget specifically (but under school commissioned services).  Most vacancies across children’s centres are being covered by fixed term or interim placements with agencies whilst the children centre programme remains in review. (This issue is picked up in greater detail in section 6- Cabinet Q & A).

5.6 The pandemic changed the way that families use childcare, but does the current system of fees and charging (which were agreed pre-pandemic) reflect the new usage patterns of the children centre?  Do these need to be updated to reflect a) more part-time usage, b) less usage outside of free childcare hours, c) balance in the week - i.e. more parents work from home Mondays and Fridays and demand may be less over these days?

·  More flexible use of childcare was being experienced at local children’s centres with parents focusing usage around their free entitlement.  In this context, the levels of full-time usage were down.  In terms of the fees and charges being updated to reflect the new childcare environment, this would sit within the remit of the children centre review.

5.7 The table at section 5 of the report outlining cost reduction proposals for SEND, is the same table as was presented to the Commission last year (i.e. with no savings targets).  Therefore no cost savings were achieved in 2021/22 and none are expected for 2022/23. Can officers set out when plans will be developed to achieve cost savings and the anticipated value of these savings? Similarly, when is the SEND transport review anticipated and when do officers expect to have estimates of cost savings?

·  The council is registered with the Better Value Programme which was a national programme to assist local SEND services to help reduce costs.  This was very much in its infancy and it was unable to attach cost savings to this at present.  The main driver behind the costs in this service were higher and more widespread needs resulting in higher spending for SEND services.

·  CF officers attended a national meeting of finance and SEND officers to help identify ways in which cost saving can be achieved across local SEND provision.  This had been informative in understanding how other local authorities were addressing cost pressures in SEND services

5.8 There are significant areas of underspend detailed in the report totalling around £1.5m  Can officers provide the Commission with further details  about the underspend is forecast in ‘delegated funding to mainstream’.  How has this underspend arisen and how can that money be used?  If it comes from the DSG then it should be spent on schools, not cover the overspend of other areas of HE spending.

·  The underspend in the delegated funding represents the 0.5% top slice of the DSG for high needs and is used to offset the overspend in the high needs budget.

5.9 The cumulative SEND deficit will be in excess of £18m at the end of this financial year (2022/23), which continues to represent a serious financial risk for both Hackney Education and wider Council budget.  Can officers update the Commission on the most recent meetings with DfE officials in seeking assurance of government commitments to cover the cumulative overspend?  What local contingencies are being developed if this sum is not underwritten by central government?

·  It was expected that the Better Value programme would start to realise local savings for SEND services.  In addition, the school estates strategy will aim to reduce the number of children which are educated in specialised schools outside of the borough which is more expensive.  Furthermore, greater focus on early help will help to address the needs of local children earlier which will help to reduce future needs, including SEND needs.  It was noted that officers were connected to national SENDE funding groups at which DfE officials also attend.  There has been a request that if the DfE cannot fund the cumulative deficit, that it funds local authorities in excess of its annual deficit so that it can begin to turn around service deficits.  The Council was also looking to create reserves to offset some of this risks of this cumulative overspend.

5.10 The report predicts a £5.4m  overspend for SEND this year, can officers outline to the Commission the main areas of overspend within the SEND Budget?

·  Increased needs are fuelling increased demands which the local authority is statutorily required to fund (EHCP).  5.3% of local children have an EHCP which is amongst the highest rates in London.  This filters into higher demand and higher costs for all aspects of provision including SEND transport, non-maintained commissioning.  Local authorities cannot simply decline to assess or authorise EHCPs and a number were accruing significant deficits (e.g. Kent had a cumulative overspend of approximately £200m).  The national funding gap is estimated to be £2.5 billion, which in the most part have been driven by failure to fund services in lines with the SEND reforms of 2014.

5.11 In July 2021, Hackney Education reported that a Pseudo Dynamic Purchasing System (DPS) and the Children's Cross Regional Arrangements Group (CCRAG) would improve commissioning of Non Maintained provision and reduce costs.  What improvements have these new commissioning systems brought in terms of financial control and quality assurance?

·  There had been improvements in SEND commissioning of non-maintained services.  In this sector there were some very expensive provision, and officers needed to challenge rate setting in this sector and, where appropriate, introduce rate caps.  There can be long waiting lists for more specialist provisions and use of the non-maintained sector can ensure that children are receiving appropriate SEND support in the interim.  The strengthening of the local offer (quantum of services) was central to reducing costs in this sector.

5.12 A vacancy rate saving of £800k is set for Hackney Education.  Can officers give an up to date figure on progress in reaching this target - how much has been achieved thus far?  If savings targets are not reached -  how will this impact on the overall budget?

·  There is a 3.5% target for vacancy factors savings in Hackney Education (HE) noting that 2% is budgeted centrally and 1.5% met across all other budgets.  If this is not possible to meet cost savings within the staffing budget, budget holders are requested to meet this in non-staffing budgets. At period 10, budget holders in HE indicated that they could meet this savings requirement from both these areas.

5.13 Hackney Education has a significant income derived from Traded Services - those services marketed to schools in Hackney and elsewhere for a fee (e.g. School Improvement Partners). How has this income stream held up in the past year (it's not evident within the report)?

·  It was noted that there is a traded service income of around £4m for which a £80k variance was forecast.  This would appear to suggest that traded services income was holding up well in the current financial environment.

5.14 The Chair thanked officers for attending and responding to questions from members of the Commission.