Funding claw-back crisis hits West Berkshire schools

Please see the 18 July 2024 section below for the background to this.  

In very brief summary, in July 2024 West Berkshire Council announced that it would be clawing back from some maintained schools any funds which were, in its opinion, not committed to specific projects. This clawback had originally been planned to take effect from April 2025 but was advanced by a year following a decision by the Schools Forum. The affected schools greeted the announcement of the exact sums being considered with consternation (the more so as this was revealed just before the end of the academic year). 

Our coverage below looks at the matter as it evolves, taking into account the point of view of the schools, West Berkshire Council and opposition councillors. 

5 September 2024 update

After a five-week truce, the conflict – for so it can fairly be described – between West Berkshire Council and about a dozen of its non-academy schools reopened on 5 September with an extraordinary Full Council meeting to discuss one matter:

1 August 2024 update

The furore about the proposed clawback of surplus funds from several schools in West Berkshire has not gone away but, it being August, there’s not a great deal that can be done over the next month or so. Both sides, if I can use such an adversarial term, will be looking over the situation and the regulations and hopefully establishing some common ground.

The basic positions seem to be unchanged: West Berkshire Council believes that the clawback process has been managed correctly and that the money is needed sooner rather than later; many of the schools feel that in some cases the sums have been incorrectly calculated and that the timing has been deeply problematic. Between these two positions there’s the possibility for any amount of nuance and compromise. WBC’s Leader Jeff Brooks said last week that he invited any school which had concerns about the process to contact him, and I understand that several have done so. I’m sure we can rely on him to respond. A good deal of work should thus be taking place behind the scenes, therefore, but as far as news is concerned matters have probably reached a definite pause.

WBC’s Minority Group Leader David Marsh told Penny Post on 1 August that he “welcomed the fact that Councillor Brooks has responded to what we’ve been asking. It’s good that he’s giving the schools an opportunity to state their case rather than rushing into a decision. Hopefully the matter will have been resolved by the end of the summer.”

The next public outing for the issue will be at an extraordinary Full Council meeting of WBC on 5 September.

I’m grateful to Jeff Brooks for having taken the time to respond to various questions I had. Despite this, I’m still not completely clear about whether the account the money is held in, the way it was raised or the extent to which it’s been committed is the key factor in deciding whether it can be clawed back. However, assurances have been given that the matter will be carefully considered so I don’t think there’s much to be gained from going over these now. To have unambiguous definitions emerge from the discussions is really what’s needed.

26 July 2024 update

• West Berkshire Primary Heads Association statement on clawbacks

West Berkshire Primary Headteachers stand as one in supporting each other.

The clawback vote, which took place at Schools Forum in December was close but clearly indicated support for clawbacks to take place from April 2025. Primary headteachers agreed with this decision.

Headteachers on the funding group were surprised when, in May, representative officers from the local authority suggested that the Local Authority would appeal to the Secretary of State to request that clawbacks were made retrospectively (ie from March 2024). This would overturn the previously democratic decision made in December. This was also after school budgets had been set, agreed by governors and submitted to the council. A decision was reluctantly taken by headteacher representatives on this group therefore to ensure that any decision made should remain a democratic one and this is the only reason it was agreed at the June Schools Forum meeting.

In advance of the July Schools Forum meeting, affected heads were asked to provide evidence of committed and uncommitted spend. This information consisted of 91 pages of financial information provided seven days before, with a further 426 pages of governor minutes provided just over 24 hours before. Affected headteachers were then given 10 to 15 minutes each during the meeting to answer questions from forum members.

Schools Forum representative headteachers did not have sufficient time to fully read all of the paperwork or the level of knowledge of each school to make a decision that would significantly affect their colleagues. Therefore, at the Heads Funding Group, it was requested that a recommendation for suggested clawbacks be made by the Local Authority. This recommendation formed part of the paperwork in advance of the Schools Forum meeting.

From the perspective of headteachers with potential clawbacks, the criteria against which they would be judged was released after all papers had been submitted and less than 24 hours before the meeting. Affected heads were not asked to present, but simply to answer questions linked to three bullet points.

From discussions in advance of the meeting, primary representative colleagues were planning on abstaining from the vote during the Schools Forum. Most, however, changed their minds, when Local Authority officers, when asked what would happen if the Forum voted against the clawbacks, said that the Local Authority would likely appeal the decision to the Secretary of State. This would potentially mean that schools with balances above 5% for secondaries or 8% for primaries would have these excesses clawed back. This would have affected a greater number of schools.

Most primary colleagues present felt that this left them with no option but to reluctantly vote for the clawbacks, as suggested.

The suggestion at the council meeting on 25 July 2024 by the Leader of the Council Jeff Brooks that “I expect all Headteachers in Maintained schools across our District to want all schools to support each other” has been met with dismay by Primary Headteachers.

All primaries in West Berkshire Schools work consistently together for the common good and have done so for years through the West Berkshire Primary Heads Association but the approach taken by West Berkshire on this issue has left many disillusioned and concerned about the way forward.

• The Downs School

On 26 July, The Downs School produced a Q&A document for parents and carers. This referred to “the unjust and incorrect decision made by West Berkshire Council (WBC)” to claw back £490,000 of self-generated income “to cover its funding shortfall.” It went on the address a number of issues…

• One is the suggestion that the school is sitting on piles of cash. The school explained that the Schools Improvement Priorities (SEP) had identified a number of projects. These, however, can “require several years to build up sufficient capital for, which is then ring-fenced within the budget. Funds for these larger projects have already been approved by the local authority and are classed as committed balances.”
• Was this clawback a surprise? The document points out that the clawback had been originally planned to take effect from April 2025 but was recently backdated by a year. It added that “schools that were likely to be affected by the clawback, such as The Downs, were not permitted to be present for either discussion or vote on this matter.”
• As regards unaccounted sums in the reserves, the school points out that “all of our funding and surplus is built into our approved 24/25 budget, which has already been submitted to WBC.” It also stresses that it is “important to also ensure we have a proportionate surplus remaining to reflect the uncertain financial landscape around school funding.” This has, perhaps, seldom been so uncertain.
• The question has also been asked about schools’ academy status (The Downs is one of the few secondary schools in West Berkshire which is maintained, ie not part of an academy). The letter accepts the possibility that the “rushed clawback is to deter schools with surplus balances, which are considering academisation, from moving forward with their plans.”
• The clawback decision was, the document points out, made by the Schools Forum (not including members who were subject to clawbacks), not WBC members. It suggests, however, that the remaining schools “were warned that their own schools were likely to be subject to clawback if they did not vote in accordance with WBC’s wishes.”
• There’s also the question of the various bank accounts the school holds and whether some sums are, as WBC sees it, in the wrong one. The school points that it does have a charitable trust from which money is moved at the end of the fiscal year to pay for identified projects. It adds that its accounts “are audited by WBC every year, as recently as June 2024, and no issues have been flagged.”
• Finally, there’s the question of what the consequences of clawback would be. The conclusion is that this “would compromise the financial resilience of the school to manage unplanned expenditure.” In order to reduce this risk, The Downs “would need to reprioritise investment projects, ultimately deferring planned and much needed investment on the site for our current students.”

25 July 2024 update

This article first appeared in This Week with Brian on Thursday 25 July 2024. It will be added to as further news emerges.

Last week (see below) we wrote about the problems faced by some schools in West Berkshire as a result of a decision to claw back some of the money which they hold.

The key point is that there appears to have been a confusion between money which the school has been given by the government via the Local Education Authority and that which it has raised itself. The latter would not, so far as I’m aware, be subject to claw-back, regardless of in what account/s it’s held.

The backdrop to this problem is a looming black hole in council finances, not just WBC’s, caused by what The Guardian called “out-of-control overspending on special educational needs (SEN)” over the last decade. This has, as we reported last week, been so far disguised by an accounting sleight of hand which has allowed councils to keep these overspends off the balance sheets. This will end in 2026, leading to a serious day of reckoning. WBC’s deficit in this area is already £9m. If this were put onto the books, it would be bankrupt.

On 22 July, WBC issued a statement on the matter which was more concerned with discussing the process by which the decision had been taken than explaining why it had been necessary. It was admitted that it was not the intention “to take income which has been raised by or on behalf of the school”, but then complicated matters by mentioning the question of the bank accounts, which seems a red herring. It refers to the amount of funding schools have been holding without spending plans having tripled in the past nine years, but offers no explanation as to why, nor why this matter has only been dealt with now.

Nor does it address the matter of why the claw-back was, last month, moved forward 12 months so as to impact the current financial year, nor why the details were only announced to schools when they were about to break up. Finally, there’s no mention of the SEN black hole, which is what this is all about.

All in all, the statement posed more questions than it answered. I have raised these and other points and await a response. Meanwhile, others have not been silent…

• Earlier this week, The Downs School issued an open letter to parents in which it described the news of the claw-back as “devastating” and explained that “this money was raised over the last three years because we knew that otherwise we would not get the funding we needed to make essential improvements to the fabric and facilities of the school.” It added that it was seeking legal advice.
• The Downs School Headteacher, Chris Prosser appeared on BBC Radio Berkshire on Tuesday 23 July explaining to host Paul Coia about the issue. To listen click here. There’s a longer Interview at 2′ 8″.     
• On 22 July, Olivia Bailey MP, whose constituency includes The Downs, said that she had “written to the Leader of West Berkshire Council to ask for the claw-back affecting many schools in my constituency to be paused and reviewed. I share concerns of parents and staff and fear there are a number of flaws in how this decision has been made.” You can see the full letter here.
• Ross Mackinnon, the leader of the Conservatives on WBC, has urged the Council to “reverse this awful move” and act swiftly to rebuild the trust of parents and schools. WBC’s Minority Group Leader, David Marsh, also urged the Council to “think again” and pointed out that this had caused serious problems for schools and placed “intolerable pressure” on head teachers.

These appeals, and those of others, appear to have had some result. The matter will be addressed at the meeting of WBC’s Executive at 6pm on 25 July at which the Leader, Jeff Brooks, is expected to make a statement. You can see the agenda for the meeting here and watch a livestream here. You can also see the text of Jeff Brooks’ statement here. Questions were then received from Councillors David Marsh and Ross Mackinnon and summaries of these will be added to this post in due course.

It’s worth reminding 0urselves that the councils are, once again, at the mercy of Whitehall in this and many other matters. They provide services such as SEN provision on behalf of the government and it’s becoming increasingly clear that they don’t have the funds to provide these to the specified standards. The Guardianarticle referred to a recent “highly critical report” published by the Local Government Association (LGA) and the County Councils Network (CCN) which said the SEN services in England were “overwhelmed and dysfunctional” and that “fundamental reform was not only inevitable but unavoidable”.

Until that happens, we may be seeing more of these rather desperate “smash and grab raids”, as David Marsh termed this expedient. When the system is reformed, local councils will certainly all be relieved – as will the local schools.

18 July 2024 update

This article first appeared in This Week with Brian on Thursday 18 July 2024. It will be added to as further news emerges.

It’s well known that Britain’s councils are in dire financial straits.  Many have deficits which need plugging if a Section 114 notice (an admission of effective bankruptcy) is to be avoided. No one can say for how long the current squeeze will last, so it’s hard for councils to know what solutions to find.

Selling capital assets to plug expenditure gaps is, long-term, a recipe for disaster but, in the short-term, is sometimes necessary. Selling your own family silver for this purpose is risky enough: worse still is when you end up selling someone else’s.

West Berkshire Council has a deficit of about £9m in its Special Educational Needs (SEN) provision. As the Council only has reserves of about £4m, this would normally make it vulnerable to an S114. However, thanks to a piece of creative accounting sanctioned by Whitehall, this can be kept off the balance sheet for this year at least. Whether the new government will extend this scheme is uncertain.

Local Education Authorities (LEAs) have the power to claw back balances which they regard as too high. This document, prepared for a recent meeting of the WBC Schools Forum, explains that “the maximum amount that could be clawed back each year is the amount of school balance in excess of 10% of their budget share. This is subject to leaving the schools with a minimum of £50,000 balance.” The paper went on to identify about a dozen schools from which a total of about £2.85m would be clawed back.

There seem to be a number of problems with this…

• This Gov.uk document (section 6) refers to this measure being applied to “schools which have built up significant excessive uncommitted balances or where some level of redistribution would support improved provision across a local area.” It seems moot as to whether tipping all this money into the SEN pot satisfies the second part of this. There’s also the word “uncommitted”. What is the school meant to do: get suppliers to raise invoices well in advance of having done the work just so the funds can be “committed”?
• This claw-back was due to happen from April 2025. Last month, however, WBC pulled this forward by a year (so, effectively, back-dating it). This was probably prompted by two things: if you know you’re going to have unspent money taken back then you spend it; and the cash was needed not next year, but now. The Schools Forum, which may or may not be a suitably effective vehicle for scrutinising such decisions, gave way.
• Schools have to deal with this almost a quarter of the way into the financial year and a week before the end of the academic one: not great timing by any standards.
• Much of this money was raised by the schools themselves and their PTAs for specific projects, often ones that WBC had decided not to fund. To claw this back seems like a landlord not only refusing the fix a tenant’s roof, but also grabbing most of the money that the tenant has saved to do it themselves, which the landlord then uses to repair even more dilapidated buildings (or avoid bankruptcy).
• The school from which the majority of money is to be clawed back is itself an SEN specialist.
• This claw-back will only fill about a third of the SEN black hole. Where’s the rest of it going to come from? And, even more worryingly, what’s going to happen next year?

The matter was given a brief airing at the meeting of WBC’s Scrutiny Commission on 17 July (you can watch here from about 1′ 45″). In answer to a question from the Chair, the financial portfolio holder Iain Cottingham said that PTA-raised funds should not be subject to claw-back unless they’d been moved to the school’s general account, in which case they would be.

However, WBC Scheme for Financing Schools 2024-25 makes no reference to this. Indeed, clause 8.3 expressly states that “schools may retain income from fund-raising activities” and is silent regarding the account in which it’s held. The new MP for the area, Olivia Bailey, agrees that this money should be ring-fenced and has promised to raise the matter with the DfE.

It would seem that the LEA can only claw back money which has come from government funding, not just anything in the account. To be compliant, WBC needs to establish the provenance of the funds and only claw back from the public ones.

WBC Councillor David Marsh tried to ask the following questions at the meeting of WBC’s Full Council on 18 July (but was not allowed to do so):