Guidance

Financial support for local authorities supporting maintained schools in financial difficulty (2023 to 2024)

Updated 26 October 2023

This guidance was withdrawn on 4 September 2024

No further payments of this grant will be made.

Applies to England

Introduction

In July 2023, the Department for Education (DfE) announced that it is providing up to £40 million of additional funding in 2023 to 2024, to support individual schools which find themselves in particular financial difficulties. This is on top of the £525 million schools will already be receiving this year through the teachers’ pay additional grant (TPAG), to support them with the September 2023 teachers’ pay award.

This £40 million funding is to enable the Education and Skills Funding Agency (ESFA) and local authorities to expand the existing financial support that is already in place for academies and maintained schools.

This is one-off funding available in 2023 to 2024 only and the department has no plans for similar additional funding in 2024 to 2025.

Additional funding for local authorities to support maintained schools

Of the £40 million, we will provide £20 million to local authorities which have the most significant maintained school deficits. Distribution of this £20 million is therefore targeted and not every local authority will receive additional funding.

The department will allocate the £20 million between local authorities who have aggregated school-level deficits as a proportion of their total maintained schools’ income above 1%.

Local authorities’ allocations will be in proportion to their aggregated school-level deficit.

The remaining £20 million will be used to top up the existing financial support already available to academies.

We want local authorities to be able to use this funding to best support their schools in the individual circumstances in which they find themselves. We are giving local authorities significant flexibility over how this funding can be used.

This document provides additional support and guidance to help local authorities make best use of this funding, and to clarify the department’s expectations for how this funding is intended to support schools.

Types of support for maintained schools in financial difficulty

Maintained schools are maintained by local authorities but have delegated budgets on a statutory basis. Maintained schools are responsible for managing their own finances and should have the financial, leadership and management capability to plan and make decisions in the best interests of their pupils within their existing funding.

Local authorities remain responsible for supervising their maintained schools. In some circumstances, a maintained school may require additional support and help in managing its finances. Where a maintained school is in financial difficulty, it should contact its local authority for guidance and support, to be provided on a case-by-case basis.

Any cumulative deficit in a maintained school needs to be authorised by the local authority. Local authorities will have the infrastructure and expertise in place to help a school to work through options for managing its finances and ensuring its sustainability.

The DfE also provides programmes and resources to assist maintained schools and local authorities.

This includes the offer of school resource management advisers (SRMAs) to review and support schools to make best use of available resource to provide an outstanding education for pupils.

The additional £20 million provided in 2023 to 2024 does not change this situation. Schools in financial difficulty should continue to reach out to their local authority, as they usually would. We expect that local authorities will continue to provide the full range of support that they usually offer. In the first instance, this may mean having a supportive conversation with the school, to discuss its situation and understand its challenges, to determine the most appropriate form of support.

Financial support

In some circumstances, it may be necessary to provide additional financial support. The usual form that this takes for maintained schools is a deficit arrangement licensed by the local authority, in accordance with section 6.9 of the statutory guidance on schemes for financing schools. We expect that this will continue to be the usual way for local authorities to support maintained schools financially.

Section 6.7 of the guidance allows for local authorities to pay cash sums towards elimination of a deficit balance. This is designed for circumstances where it is not reasonable to expect the school to eliminate the whole of the deficit from its own future resources. Such cash sums can be charged to the dedicated schools grant (DSG) only where they form part of a contingency fund approved by maintained school members of the schools forum under Regulation 11(5) of, and paragraph 51 of Schedule 2 to, the School and Early Years Finance (England) Regulations 2023.

For those local authorities in receipt of a portion of the £20 million being allocated in 2023 to 2024, this funding will be another source of cash sums towards elimination of a deficit balance. The conditions of grant for this addition to DSG will allow the money to be used for this purpose.

This does not mean that every school with a deficit within that local authority should be given additional funding. We expect funding to be allocated on a case-by-case basis, taking into account the severity of the school’s position and prioritising those in greatest need. Local authorities should report to their schools forum on how they are using the money.

It should be noted that this funding is not solely intended to cover schools which are in deficit as a result of the 2023 teachers’ pay award. It is to support schools facing substantial overall financial challenges, which may be driven by factors other than teachers’ pay.

Conditionality

Section 4.15 of the guidance on schemes for financing schools provides for local authorities to issue a notice of concern to a maintained school; setting out conditions to be complied with where the scheme has not been complied with, or where action needs to be taken to safeguard the financial position of the school or of the authority.

Local authorities may wish to associate such conditions with the payment of money out of the sum that it may receive from the £20 million of additional funding. This could include mandating the use of some of the department’s resource management tools and services, such as an SRMA. In the most severe cases the local authority can consider withdrawing delegation.

Eligibility

This funding can be used to support maintained primary, middle, secondary and all-through schools, maintained special schools, pupil referral units, and maintained nursery schools.

Transparency

Local authorities should demonstrate transparency in the use of this additional funding. Existing processes and infrastructure may already enable this. For example, reports to the schools forum will be transparent through published papers and minutes.

Remainder funding at the end of 2023 to 2024

If a local authority in receipt of this additional funding does not spend its full allocation within financial year 2023 to 2024, it can spend this funding as part of DSG and within the conditions attached to DSG and to this funding.

For local authorities that do not overspend their total DSG in 2023 to 2024, this may include continuing to provide additional support to schools in financial difficulty in the financial year 2024 to 2025. Department for Levelling Up, Housing and Communities regulations do not allow DSG to be carried forward where there is an in-year deficit.