Southampton Schools' future: The Council report - part 6

104. In the case of the proposed New School East and New School West, the DfES are currently reviewing their policy, but it is likely that if an Academy Sponsor were successful in their bid to open an Academy on the East or West, they will be able to apply to the DfES for implementation grant to cover the cost of some additional capital alterations.

105. Funding The table below summarises the potential funding sources in order to implement the recommendations contained in this report: Capital funding source Capital contribution required from City Council £3,410,025 Expanding Popular & Successful Schools grant £800,000 New Deals for Schools grant £1,320,000 Total funding required £5,530,025 106. Cabinet will need to consider the level of proposed investment, in the sum of £5,530,025 and balance this against the fact it is anticipated to either rebuild or substantially refurbish all of the Secondary Schools implicated in this decision which remain (excluding Redbridge Community School which is funded through PFI) following the implementation of Learning Futures through the Building Schools for the Future programme.

107. Capital receipts Once the New School East is able to operate from a single site at Grove Park, sometime after September 2010, then the Woolston site will be become surplus to requirements Should the Council agree with the recommendation to declare the Woolston Site surplus to requirements, then there would be a capital receipt, currently forecast at £3,580,000, which would be available to contribute to corporate capital resources, and which would replenish any funding which the Council determines to apply to the Learning Futures proposals at this stage.

In advance of this funding being available, there is sufficient scope within the overall capital programme and overall capital resources to be able to cash flow the required City Council contribution to Learning Futures in the sum of £3,410,025.

26 108. Currently there are no proposals to sell the Millbrook site once it is available.

However, if an alternative use is found for the site, this could free up other sites which could generate capital receipts to contribute to corporate capital resources.

109. Government Grants The DfES Expansion of Successful and Popular Schools grant is intended to enable existing secondary schools to expand beyond their existing capacity.

Government funding is available for schools intending to: increase the annual intake of the school by 27 pupils or more; or increase the physical capacity of the school by 25% or more, or by 200 pupils (whichever is lesser).

110. The above criteria apply to the expansions of Redbridge Community School and Bitterne Park School. The allocation of £400,000 for Bitterne Park School has been approved by the DfES. The DfES have confirmed that a further £400,000 allocation for Redbridge Community School will be paid once a decision to expand the school is made.

111. Southampton receives an annual allocation from the DfES under the New Deal for Schools (NDS) programme. The grant is intended to cover capital works across all school phases within the City. Southampton will receive a new three year NDS allocation for the period 2008/09 to 2010/11. Although not yet confirmed, the Chancellor announced the Government's on-going commitment to increase capital investment in school buildings from £6.6 billion in 2007/08 to at least £8.0 billion by 2010/11. There is therefore every reason to believe that NDS funding from 2008/09 onwards would be of a similar size to existing funding. An allocation of £610,000 has been earmarked in 2007/08 and £710,000 predicted against 2008/09 NDS grant. The contribution in 2007/08, equates to approximately 23% of the 2007/08 grant.

112. Funding gap The contribution required from corporate capital resources is £3,410,025.

Revenue 113. The majority of the revenue costs of implementing the recommendations are detailed in the table below, although there are some specific financial implications resulting from the schools competition, which are detailed in the next section.

27 Estimate 2007/08 Estimate 2008/09 Temporary governing body expenses including recruitment of two new headteachers £10,000 £15,000 Appointment of two headteacher designates from Jan 2008 £44,000 £74,000 Additional Human Resources support officers £90,000 £90,000 Retention allowances paid to existing staff in the four closing schools £194,400 £388,600 Reorganisation allowances paid to the nine schools affected by Learning Futures £450,000 £450,000 Safeguarding of salaries £33,000 Travel, training and sundries £19,900 Supply cover for teachers seeking redeployment £7,220 Total estimated costs £788,400 £1,077,720 114. All of these costs will be met from the local authority Schools Budget. Any ongoing premises costs resulting from implementing the proposals will be met from each school's funding.

115. New schools competition The remainder of this section deals with the financial implications of the new schools competition and the difference in financial arrangements between setting up an academy or trust school.

116. The table below summarises the financial consequences of establishing either a Trust School or Academy in the city.

Academy Trust School Effect on Schools Budget Estimated £300,000 drop in funding in 2008/09, £150,000 2009/10 onwards None Funding for redundancies Funded by DfES grant Assumption of contribution from Local Authority Implementation funding Grant available from DfES Funded by Local Authority 117. The effect on the council's Schools Budget - ongoing revenue In summary, a Trust school is funded in the same way as any other local authority maintained school. They receive a budget share from the local authority's Schools Budget based on the Fair Funding Formula. Academies are funded on an academic year basis from grants received directly from the DfES.

28 118. Trust School Establishing a trust school will have no effect on the council's Schools Budget.

119. Academies Academies are mostly funded directly by the DfES. This funding is called the General Annual Grant (GAG).

120. If two Academies were established in Southampton, the DfES would deduct part of the council's Dedicated Schools Grant based on the January 2008 pupil count of the two closing schools on each side of the city, and use this to fund the new Academies.

121. Initial calculations suggest that in 2008/09 the council would lose approximately £300,000 more Dedicated Schools Grant than the amount that would have been funded through the authority's Fair Funding Formula. This is because the Dedicated Schools Grant funds both the Individual Schools budget and what is know as central expenditure, covering other local authority expenditure relating to pupil provision, which includes: Special educational needs Pupil referral units Provision for pupils out of city Support for inclusion Early years funding School admissions Therefore the deduction covers the amount that would go directly to the school, plus a share of the central spend.

For information, the council's Schools Budget for 2007/08 is shown in the table below: 2007/08 Estimate £000s Individual Schools Budget 100,488.9 Central expenditure 12,996.9 Total Schools Budget 113,486.3 122. It is estimated that the funding gap would drop to £150,000 per year thereafter. It should be noted that these figures are based on estimated pupil numbers and indicative future funding levels, and are subject to change. The implication of this to the authority is that Children's Services and Learning would have to secure savings in the central expenditure funded from DSG, in the order of £300,000 in 2008/09 (from an estimated budget of £13.5 million) reducing to £150,000 thereafter on a recurring basis.

29 123. There is a current DfES consultation on whether to implement an alternative, recoupment model under which an amount based on the academy's budget share would be deducted from the DSG each year along with a deduction for central expenditure. This is likely to increase the deduction to the DSG for Southampton. The outcome of this will be known in a few weeks.

124. Funding for redundancies Under TUPE, where redundancies are required, it would normally be for the new schools to carry out the necessary selection process and affect the necessary redundancies 125. Trust School Both the Trust School promoters have indicated that they expect the local authority to fund redundancy costs. It would be extremely difficult for a Trust School to balance its budget if it had to pay for redundancies without additional funds from the council.

126. Southampton's Scheme for Financing Schools states that when a school closes, any balances held will revert to the City Council. However, the funding formula will allow additional payments to be made to new schools to reflect the balances held by preceding schools (where appropriate). Although the Learning Futures report to Cabinet and Council in November stated that any redundancy costs would be funded from the council's central retirement and redundancy budget for schools, it is recommended that any balances transferring back to the local authority from the four closing schools should be passed onto a new trust school and used to fund redundancies in the first instance.

127. Academies The DfES have confirmed however, that where staff of an Academy have transferred there under TUPE, and are then made redundant, the Department pays the Academy Trust redundancy costs for the period of service up to the date the academy opens. Post-opening service costs have to be met from the Academy's normal funding. Any payments for severance costs would be subject to agreement by the DfES.

Implementation Funding 128. Trust Schools No additional grants are available from the DfES to Trust schools as part of setting up the new school. All implementation costs would need to be funded by the council.

129. Academies Academies receive additional funding from the DfES to help to set up a new academy, although at this stage it is not possible to assess how much this grant may be.

130. Private Finance Initiative (PFI) costs Under the PFI agreement, the expansion of Redbridge Community School has to be managed by Interserve within the PFI framework. This means that along with the capital costs of expanding the Redbridge site, there will be other revenue costs. These include: 30 Facilities management fees (i.e. cleaning, caretaking and maintenance costs) Special Purpose Vehicle (SPV) fees (including insurance, project management and legal fees) The SPV is a company established by Interserve, the PFI partner, for the delivery of the Southampton PFI project.

Lifecycle costs (a contribution to fund the costs of future repair and maintenance of the new building) 131. These costs will be incorporated within the PFI Unitary Charge and will be spread over the remaining 24 years of the contract period at an estimated cost of £60,000 per year. The increased charge will be partly met by an increased charge to Redbridge Community School, estimated at £10,000 per year. The balance will need to be met from the Children's Services and Learning portfolio.

132. Lottery grant at Grove Park It is expected that a new school will be built as part of Building Schools for the Future on the Grove Park site. Grove Park Business and Enterprise College received a New Opportunities grant for PE and Sport in 2003/04 totalling £583,134. A Multi Use Games Area (MUGA) is due to be built on the site this year again with lottery funding totalling £255,000. The Big Lottery Fund has stated that if the sports hall or MUGA is demolished within 20 years of completion, and not re-built as part of the design of the new school, the whole grant amount will have to be repaid, and that it is very likely that inflation will have to be paid on the value of the grant.

133. Alternatively if the facilities are re-built as part of Building Schools for the Future, the money would not necessarily have to be repaid as long as the new facilities met the original aims and outcomes and incorporated a community use programme, as the current hall does.

134. All of the promoters, apart from ULT have confirmed that they will keep the sports hall as long as it conforms to Sport England specifications. However, if this is not possible, there is a risk that the Lottery grant will need to be repaid. The scheme to build the MUGA at Grove Park has been put on hold until further discussions can take place with the winning promoter.

Property 135. "Learning Futures" and "Building Schools for the Future" are recurring themes in the current corporate Asset Management Plan. The site specific property implications are continually briefed to the Corporate Asset Group and will be reflected in the evolving 2007 Plan.

"Building Schools for the Future" is a major national programme of investment in secondary school buildings. Southampton City Council is in Waves 7-9 of the BSF programme. This means that detailed negotiations between the Council, the Department for Education and Skills, and Partnership for Schools (the delivery agent for BSF) are scheduled to begin in 2009.

136. BSF offers the prospect of the complete renewal and the very significant remodelling and refurbishment of a significant proportion of the school estate. The structural changes to the pattern of school organisation achieved as a result of the Learning Futures Secondary Education Review put Southampton in a good 31 position to develop its "Strategy for Change", the initial document required for BSF.

Other 137. None.

LEGAL IMPLICATIONS Statutory power to undertake proposals in the report: 138 a) Power to discontinue (close) maintained schools and make prescribed alterations (expansions and changes of character) to schools is contained within s.28 School Standards And Framework Act 1998 and further detailed within the School Organisation (Transitional Provisions)(England) Regulations 2007. Proposals for new schools' under secondary school competition processes are authorised by virtue of s.66 of the Education Act 2005 and the aforementioned regulations.

b) Should an Academy proposer be successful in the School Competition, the implementation of that proposal will be subject to the Academy proposer entering into a formal agreement with the Secretary of State under s.482 of the Education Act 1996. Whilst the Secretary of State would normally follow the proposal details contained within the Notice to Bid issued by the Council and any modifications that may be passed by the Council when it determines proposals, s/he is not bound to do so and may enter into such agreement as s/he thinks fit c) The Minister of State for Schools (Jim Knight MP) has confirmed that the Department for Education for Skills is willing to enter into negotiations for the establishment of Academies in Southampton (see appendix 15) in accordance with section 482 of the 1996 act.

Other Legal Implications: 139 In making any school organisation decision as set out in the report the decision maker has a statutory duty to have regard to the Statutory Guidance issued by the Secretary of State as set out at Appendices 2,6,7 and 8 of this report. The Council must also determine the proposals having regard to Equalities legislation and s.17 Crime and Disorder Act 1998 (duty to exercise its functions having regard to the need to reduce Crime and Disorder in its area).

POLICY FRAMEWORK IMPLICATIONS 140 This decision relates closely to the Children and Young People's Plan and is intended to support the delivery of better outcomes for children and young people.

32 SUPPORTING DOCUMENTATION Appendices 1. Technical appraisal of proposals for New School West and New Schools East and Linked proposals and other Matters to be considered by the decision maker in respect of the Learning Futures Secondary Education Review 2. Decision makers' guidance (1998 Act proposals) - previous statutory guidance: establishing a new mainstream school 3. Analysis of consultation responses/representations 4. Regulation 7(5) of the Education (Transitional Provisions) (England) regulations 2007 5. Description of stages in the consultation process 6. Guidance: Closing a maintained mainstream school 7. Guidance: Making changes to mainstream school (Other than by expansion) 8. Guidance: Expanding a mainstream school or adding a sixth form.

9. Local factors taken into account 10. (a) - (e) Statutory Notices 11. Categories of school 12. Details of building proposals 13. Map showing location of schools affected 14. Relevant Data for Schools affected 15. Statement from Secretary of State confirming willingness to commence negotiations under Section 482 of the Education Act 1996 for the establishment of an Academy.

16. Data about standards in Southampton schools, and schools associated with the promoters (where available) 33 Documents In Members' Rooms 1. Copies of prestatutory consultation documents 2. Proposal documents 3 Consultation Responses Background Documents Title of Background Paper(s) Relevant Paragraph of the Access to Information Procedure Rules / Schedule 12A allowing document to be Exempt/Confidential (if applicable) 1. NONE Background documents available for inspection at: Children's Services & Learning, Frobisher House. Nelson Gate, Southampton. SO15 1BZ E-mail: andrew.hind@southampton.gov.uk FORWARD PLAN No: CL02258 KEY DECISION? YES WARDS/COMMUNITIES AFFECTED: All wards and communities are affected to some degree.

Millbrook Community School is in Redbridge Ward.

Oaklands Community School is in Coxford Ward.

Five Acre Field (the potential longer term location for New School West is in Redbridge Ward. Its catchment area is in Coxford, Redbridge and Shirley Wards.

Redbridge Community School is in Redbridge Ward. Its catchment is mainly in Redbridge Ward and part of Millbrook Ward.

Grove Park Business and Enterprise College and The Sholing Technology College are in Sholing Ward. Their current catchment areas are in Sholing, Peartree and Bitterne wards.

Woolston School Language College is in Woolston Ward. Its catchment area is in Woolston, Peartree and Bargate wards.

The proposed catchment area for new school east includes parts of Sholing, Woolston, Peartree and Bargate Wards.