Agenda item

Salik Khan presented on the Deficit Budget Policy Report advising that the purpose of today’s forum is to note the planned development of the policy for Autumn 2025. No formal decision is required, the report is just guidance for schools to have a formal process in place.

It is statutory for all schools to have balanced budgets and any school that doesn’t, is operating unlawfully according to DFE guidance. The policy has been created to help support schools in their approach to manage deficits and aims to ensure the identification of financial risks. Key features of the policy that were noted include:

• The policy distinguishes the two situations where there’s a managed deficit:
• The first situation is where a school has a short term or one-off issue causing the deficit. In this instance, the expectation is that the school will return to a balanced budget by the following year.
• The second situation is a licence deficit, which applies to deeper or structural financial issues, where school will need to produce a detailed business case and repayment plan.

• A three-year spending plan is usually proposed with flexibility for five years in exceptional circumstances. The business case looks at the root causes, critical planning, staffing, risk assessments and the educational impact.
• There is a proposal for budget resubmission in October 2025 to consolidate all school forecasts into a single set of planning, ensuring a consistent baseline and enabling fair comparisons across schools.
• There is a section in the policy on roles and responsibilities. Governing bodies remain accountable for approving budgets, with the IT chair and Business Manager being responsible for producing forecasts and providing a framework for planning and monitoring compliance. A new element to the policy is around the Schools in Financial Difficulty Panel which includes representatives from Education, Finance, HR and School Effectiveness. The panel has proposed quarterly meetings with an additional meeting every May to review new licence deficits. A rollout plan is being developed for implementation at the Local Authority. The new policy is proposed to be sent out after schools’ forum.
• Briefings will be held for teachers, governors and business managers after budget resubmissions. Schools identified with deficits will receive targeted advice during these sessions, and they will have access to tools, templates and financial planning support.
• The policy aligns with the existing scheme for financing schools, who are required to cooperate with audits, demonstrate value for money and rate changes involving staffing, organisation and complete the equality impact.

Carolyn Shoyer, representing the Diocese of Leicester, welcomed the policy and the clarity it provides and requested that it was considered whether there could be a consultation with the religious authority when a maintained Church of England School was identified. They currently receive this information as soft data when visiting schools, but Carolyn was wondering if this was something the Diocese could receive more systematically.

Rebecca Jones agreed that the clarity and consistency the policy will provide is well received although she raised a concern over the time it will take for schools who it applies to. Rebecca noted that these schools are mostly likely in a deficit due to lack of resources and this could add to the issue. Rebecca also questioned whether there will be additional support to smaller schools who do not have a dedicated Business Manager and if there will be a cost attached to this.

Salik Khan advised that there is a proposal for a hub with examples of what a good, structured business case would look like and this would be complemented by proposed webinars. There are ongoing discussions proposing clusters of schools with similar parameters to be set up with a peer support model. In terms of costs, Salik advised that he will investigate this further with the Trading Service team and what that might possibly look like.

Phil Lewin was in agreement that a standardised approach would be beneficial and also noted that when looking at the timescales, it is important to factor in time for the Governing Bodies to be informed and hold relevant meetings.

Suzanne Uprichard echoed concerns around smaller schools not having the infrastructure or spare capacity for anyone to provide the information as quickly as is being requested. With October being really close, it could be very tight for most governing board to meet and discuss signing off on any potential issues.

Nerinder Samaria commented on the importance in terms or messaging that the School Deficit Policy is not trying to reinvent the wheel but aims to create a coordinated and consistent approach within the legal framework. It will provide a consistent baseline and form the foundation for supporting evidence and analysis. The structure will enable more effective and informed decision-making across schools and the Local Authority. All comments and concerns will be taken offline to coordinate effective next steps.

Tim Browne expressed his thanks for the work involved in putting the paper together, and re-iterated that it’s part of a wider approach developed in response to concerns raised by schools about support, processes and communication. A significant effort has gone into shaping a coherent strategy, with the wider group looking at school reorganisation and viability across the system, ensuring effective engagement across the whole school system. The approach reinforces the commitment to fulfilling statutory responsibilities for Local Authority maintained schools, taking a holistic view of the education system, aiming to ensure its long-term sustainability and deliver the best possible outcomes for children and young people.

 The LA made the following recommendation:

1.1 Schools’ Forum is asked to note the Local Authority’s plan to deploy the Deficit Budget Policy for maintained schools from Autumn 2025 and to offer any comments that would improve clarity, practicality and proportionality in implementation.

There were no further questions or comments from members on this report.