Hounslow Council is set to launch a loan scheme for schools, offering financial support to manage large, one-off capital expenditures. The loans are specifically intended for individual capital projects that provide lasting benefits to the school beyond a single financial or academic year.
The scheme will allow schools to apply for loans from the council to cover significant capital projects. Loan applications will be reviewed on a case-by-case basis by the Schools Finance Team, with final approval resting with the Executive Director of Finance & Resources.
Successful loan applications will need to demonstrate repayment within a reasonable period, between three to five years, and schools must be compliant with the Scheme for Financing Schools and the Schools Financial Regulations. The criteria used to assess a school's ability to repay will focus on demonstrating a clear repayment plan within the given timeframe and adherence to existing financial regulations.
The council says that it will consider developing such a scheme if there is demand from schools.
One conditional 'yes' response was received during the consultation, based on the loan being interest-free.
The move comes as part of a broader review of the Scheme for Financing Schools and Schools Financial Regulations, aimed at better supporting schools in financial and budget management. The council intends to:
- Better support and equip schools in the overall dispensation of financial and budget management responsibility
- Improve schools' strategic financial planning of resources
- Empower schools
- Limit the number of schools heading to deficit budgets
- Provide assurance to the Council
Other proposed changes to the Scheme for Financing Schools include:
- Moving the deadline for schools to submit a 3-year budget forecast each year forward from mid-June to 1 May. The council has stated it is committed to providing the required information to schools to meet this deadline and intends to roll out training to School Business Managers and Headteachers.
- Increasing the threshold for excess balances from 8.3% to 10% of a school's funding. Schools that maintain balances exceeding 10% of their funding for three consecutive years should anticipate the excess being reclaimed by the council.
A consultation on these proposals was conducted, with responses received from 28 schools and LMS Ltd, which provides financial services to 21 of those schools. Key concerns raised during the consultation included the 1 May deadline for financial forecasts, the introduction of the ICFP submission, and the retention of the excess surplus policy. The council has addressed these concerns by committing to provide necessary information and training and considering the feedback regarding the excess surplus policy in future processes. The ITEM 7B Scheme Regs Consultation document provides further details on the consultation and the council's response.
