Agenda item

The Strategic Director of Social Care and Education submits a report and will deliver a presentation on the financial position for Education and Children’s Services up to the end of the first quarter to 30 June 2025.

The Strategic Director for Social Care and Education introduced the report which updated the Commission on the financial position for Education and Children’s Services as at the end of the first quarter up to 30^th June 2025.

The Head of Finance presented the report. It was noted that:

• A high-level summary of the Education and Children’s Social Care budget was provided within the report. The total budget was £119.3m, with a forecast of £116.3m and an underspend of £3m as at the end of June. Of this, £0.8m related to reduced growth and demand for SEND transport, and £2.1m related to vacancies across the directorate. This represented 2.6% of the budget, which is a small percentage. It was explained that while the forecast would be monitored as accurately as possible, the 2.6% underspend may not necessarily continue for the full year.
• Capital forecast information was outlined in the report. Capital schemes were progressing and there were no plans to overspend or underspend on these schemes. It was noted that June was early in the year to judge projects, and one project was currently rated purple while awaiting further developments. The timing of work was dependent on school availability and operational windows.
• Monitoring of savings was discussed, with two savings reported on track.

-        Adventure playgrounds had delivered a saving of £400,000 in the current year, with a further £1m saving scheduled for the following year, which had already been built into the Council’s budget strategy.

-        SEND transport was on track to deliver a saving of £900,000, rising to £2.1m in two years.

• Examples of cost mitigation measures were shared. These included investment in in-house residential homes, with two opened in the last two years. This avoided placing children in external placements , generating an annual saving of around £400,000. Work to reunify children in care with their families had also produced an annual saving of £1.3m. The authority was among the first nationally to pilot this approach and expected to expand it further.
• Dedicated School Grants (DSG) balances were reported with a deficit of £22.2m in 2024/25, projected to rise to £43.1m the following year. A special ‘override’ is in place until March 2028. The authority is awaiting a government decision on how DSG deficits would be addressed. This was a challenge shared by most local authorities. Efforts were being made to manage the impact through a recovery and transformation plan. The council had discussed our position and proposed actions with the Department for Education.
• A transformation plan was in development to reduce the DSG deficit. It was acknowledged that while it would be unrealistic to expect the deficit to shrink significantly, the aim was to stem the growth of the deficit going forward.

In response to members comments, the following was noted:

• Questions were raised on early years provision, noting there had been no spend yet on two-year-olds and asking what spending plans were in place.
• Officers explained that work was required across nurseries to increase capacity to support two-year-olds, though access remained constrained by the academic year and school holidays. The plan was to utilise the full allocation to enable provision across the city.
• Further queries were made regarding the removal of the adventure playground budget, with members asking whether this would shift following the Overview Task Group and whether the money could be reallocated back into adventure playgrounds.
• It was confirmed that the adventure playground funding had been fully removed from the budget. Any recommendation to reinstate funding would need to be agreed by the Executive, with £1m of savings required from elsewhere.
• Members commented on the scale of the DSG deficit, noting that while Leicester’s position was challenging, it was not as high as some authorities. It was confirmed that the Government was expected to publish papers next month on the SEND system and the rising national deficit. Local work continued through the SEND Change Programme, including piloting more inclusive mainstream school approaches.
• It was suggested that the DSG recovery and transformation plan may need to return to scrutiny at a future meeting for further consideration.
• Members highlighted the importance of inclusive practice in schools to support children staying in mainstream settings where possible, with appropriate structures and support in place.
• Questions were raised about how many young people were being educated this year compared to last, and how many were subject to child protection plans
• Officers reported that there were around 120 children subject to protection plans, a figure similar to the previous year. There were approximately 609 looked after children, representing an increase of about 100, and around 450 children in need. Demand for early help had increased, driven by pressures such as housing and the cost of living.
• Members welcomed the budget monitoring work and observed that there was no significant overspending.
• Officers explained that education costs were forecast with complexity, and it was suggested that school place planning be invited to scrutiny in early 2026 to inform members. Questions were raised about additional bulge classes in the south of the city, with reassurance given that numbers should even out over time.
• Members asked what risks might skew the financial position. Officers explained that most spending related to staffing and children’s social care. While looked after numbers had remained relatively static, circumstances could quickly change, for example through new arrivals under the national transfer scheme, potentially creating costs of up to £1m.
• Members asked whether the Home Office reimbursed the Council for supporting children seeking safety. It was explained that funding was received, but often did not cover full costs. Specialist skills were required to conduct age assessments, and delays in the process sometimes created additional pressures. Once young people turned 18, the Council became their corporate parent, with only reduced central government funding available. Members expressed concern about whether all eligible funding was being claimed.
• A complaint had been received from families regarding SEND transport. Officers reported that post-16 applications were processed within three working days, and that this year there was an £800k underspend reinvested into school-age SEND transport. Savings were attributed to the competitive procurement of taxi journeys. Members noted that school-age transport was statutory, whereas post-16 provision was not.
• Concerns were raised about the upcoming white paper and how DSG deficits would be dealt with, noting that authorities might be allowed to overspend without it being carried as council debt, possibly to be repaid over multiple years.
• Members asked about the risks if savings were not delivered. Officers explained that growth in spending continued to rise, and while actions were being taken to mitigate this, further funding would still be required in future years. Savings initiatives included reducing the number of children in care through prevention work, building capacity in mainstream schools, and reinvesting underspends on staffing to strengthen family support.
• Updates were provided on the edge-of-care pilot, which had supported 7 young people, 6 of whom had been successfully reunified with families, achieving annual savings of £1.3m. Investment in a new prevention grant was also expected to reduce demand and produce further cost savings.
• Members asked what key financial risks should be kept under review in future quarters. Officers noted that while the current position showed a small underspend of 2.6%, risks included changes in the needs of children, recruitment challenges and higher agency costs, and rising placement costs.
• Questions were raised about the condition of Pindar Nursery. It was confirmed that the nursery was still functioning but required refurbishment, with estates colleagues to be asked for a clearer timeline. Members praised the quality of provision and the dedication of staff and welcomed the decision to move renovations forward.

AGREED:  

1.     The report was noted.

2.     The DSG / High Needs Recovery Programme would be added to the work programme.

3.     School planning would be added to the work programme.

4.     Looked after children seeking safety would be added to the work programme