Agenda item

School Loan scheme: responding to government policy change

To receive a report on the school loan scheme as a response to government policy change.

Minutes:

Paul Clark presented a report on the government intention to amend school loan provisions which will require a consultation with schools to move to a licensed deficit scheme with loans in future only being available to support the purchase of a capital asset. This follows on from the December Schools Forum meeting with the key consideration how the deficit is managed if the school becomes an Academy.

 

It was noted that loans had been used successfully in BF for a number of years to support schools through short to medium term cash flow difficulties.

 

The key features of the new loan scheme were:

        Governors would need to be able to demonstrate ability to repay

        Loans were generally granted for a maximum of 3 years

        The value of loans would ordinarily be between 5% and 15% of the annual school budget which were then altered through to the conclusion.

        Loans were generally granted on an interest free basis

        Total loan advances could not exceed 40% of the aggregate surplus balances held by all schools

 

The changes proposed by DfE to Loan Schemes were:

        New loans would only be permitted for capital related purchases

        Conditions relating to existing loan arrangements would remain unaltered to maturity

        Financial support would be available to schools through a licensed deficits, which operate in a very similar way to loans.

 

The key issues for BF to be considered by the Schools Forum:

        If a school converts to an academy with a deficit and it is eligible for intervention, and underperforming schools which the Secretary of State judges are not strong enough to become an academy without a strong sponsor, the deficit would remain with the LAs Schools Budget

        Deficits at converter academies i.e. those that convert by means of an academy order following application by the governing body must repay the deficit

        Loan requests are in danger of exceeding 40% of school balances meaning not all requests could be agreed

 

It was noted that the next steps would be to consult with schools to propose replacing the invalid loan scheme with an equivalent licensed deficit scheme. At the same time it would be proposed that the surplus balance held by the Council in the Schools Budget from centrally managed services would also be available to support licenced deficit arrangements. Based on the projected year end balance on the centrally managed Schools Budget items, this would release a further £0.440m to support schools.

 

The Schools Forum will need to commit to funding any deficits that need to be financed from the Schools Budget through the de-delegated school contingency.

 

It was clarified that agreement was sought from the Forum to undertake a consultation with schools on the changes outlined in the paper.

 

RESOLVED that the Forum AGREE:

 

that subject to DfE confirming the anticipated change in criteria to school loan schemes, that a consultation is undertaken with schools to gather views on

 

1.         replacing the existing Bracknell Forest school loan scheme with an equivalent licensed deficit arrangement.

2.         Incorporating the unallocated balance on the Schools Budget Reserve into funds that can support the scheme.

 

RESOLVED that the Forum NOTE:

 

1.    the current level of school balances available to support school loans and the agreements currently in place.

2.    the associated risks.

 

 

Supporting documents:

 

Contact Information

Democratic services

Email: committee@bracknell-forest.gov.uk