Schools PFI Funding MFG Protection update for 2021/22: Voting Item
Minutes:
NP referred to the circulated paper outlining the LA update for Southampton.
He noted that SCC had not yet received the finalised DSG allocation for next year which will be updated to use October 2020 census data. This is due to be published in December. NP advised he was currently working on provisional figuresuntil the finalised data is received.
The forum were requested to vote on the APT modelling for next year’s schools funding to make a technical adjustment in the modelling to ensure the PFI schools see the full benefit from the MFG protection like every other school in respect of their PFI funding. This technical adjustment was applied in previous years for PFI schools, and the protection of the PFI funding they receive. Without this adjustment the 3 affected PFI schools would be subject to capping and would potentially lose significant funding.
The modelling on the current numbers available required suggests this technical adjustment leads to a 0.17% loss on average to other school balances and academies. This would balance the model and fund the adjustment.
JD advised that the issues around the PFI funding were historic and the PFI part was previously paid by the council. Across the country there was an affordability gap when the council could no longer fund the PFI bill. The issue is that if it was included for their funding calculation, they could lose their minimum funding guarantee protection. A way around this is for the PFI bill to be paid out of the schools block before it was distributed between the schools. To resolve this issue it is necessary for PFI charges to be protected from MFG capping as is the case for the treatment for Business Rates. It was tempting to think that with the 0.17% reduction in schools funding, that all schools payed a tiny bit towards the PFI bill. However, it was important to understand that that any schools with MFG protection cannot lose any money. It will be paid by those schools without MFG protection.
The discussion was opened up to the forum.
JH recalled for the new members how Woodlands Community College, Redbridge Community School and Cantell School would have significantly felt the impact of the financial losses without the vote. JD pointed out that this was the same solution to the problem as in the previous 3 to 4 years.
RW questioned if the move to direct NFF from 2022, would mean this would be the last year this adjustment would be needed. NP advised that there were local anomalies across all LA’s with respect to setting a hard NFF and this was one of Southampton’s anomalies when constructing the APT modelling. There will be a DFE consultation on APT funding through the hard NFF. This issue will be discussed and consulted on although there was no guidance at present. The current local formula provides the Council with the ability to make a technical adjustment to the APT model to ensure that funding flowed through to the PFI schools is not subject to capping under MFG. It has not yet been agreed by the DFE how PFI funding will be applied in future settlements.
JR questioned if this approach was taken in other LA. NP advised that SCC approached the DFE to explain this issue and asked what could be done to ensure that PFI was protected. The DFE guidance was to put through a technical adjustment in the APT model. NP’s view was that the same guidance would be given to other LA’s in the same position.
JR sought clarity regarding the money that was sliced from schools to fund it was to ensure that morally the money ended up in right place. NP agreed and advised that when the NFF model is run by DFE they treat PFI as unprotected, the MFG had already been applied to the funding. The LA are proposing a technical adjustment to ensure that the PFI funding is protected.
JR’s final question was around the range regarding the 0.17% on average. NP advised that based on indicative figures, there were 64, 50 schools were affected by the adjustment and the average adjustment was £3,500 per school. This ranged from the lowest adjustment of £115 to the highest adjustment of £19K. NP did not have the percentage range to hand as a % of individual school balances.
RW recalled that this came in when SCC retreated from paying extra PFI costs and this was due partly to the numbers at Woodlands Community College and Cantell School who were significantly below PAN. RW asked, as children in the schools were increasing should less money be taken from other schools or was the £738K taking into account an increased contribution from those schools. NP advised that the contribution of PFI contribution has not changed for the last few years.
RH noted that the PFI contract started 20 years ago and the policy meant that schools had new buildings although he thought they should not be denied the flexibility that other schools had. As time went by the contribution required for those schools had increased and ability of the schools to pay them would have disadvantaged the schools and the adjustment was the solution. It should be recognised that the PFI had a legacy and it would have disadvantages for those schools if the members did not vote to support the adjustment.
HK noted that this had been issue for Cantell School in past and was pleased that there was a local solution to the national problem. Cantell School, Woodlands Community College and Redbridge Community School were in some of the most socially and economically deprived areas in Southampton. The MFG was there to provide support to schools in a variety of circumstance and should be available for all schools. HK echoed the thoughts of others and noted that it was essential for them.
JD requested that the primary, secondary schools and academy reps moved to the voting meeting to cast their vote. All other members remained in the main conference.
Vote: Maintained and academy schools to approve a technical adjustment relating to PFI costs for use in the MFG calculation
For: 8
Against: 1
Abstain: 0
On return to the main meeting all members were advised that the vote was carried to approve the technical adjustment to the MFG for the PFI costs.