The UK council is at risk of bankruptcy due to a deficit of £60 million in funding for special needs services.

Estimated read time 4 min read

The council has issued a warning that it may face insolvency this year due to significant deficits in funding for special education needs. This is the most recent development in the ongoing crisis surrounding local government funding.

Since 2015, many councils in England have exceeded their budgets for providing support for special education needs and disabilities (Send). This is due to the government’s decision to expand the age range of those eligible for Send support, without providing sufficient funding to councils. As a result, these deficits have impacted councils’ overall education budgets, also known as the dedicated schools grant (DSG).

The Bournemouth, Christchurch and Poole (BCP) council has incurred a total deficit of approximately £60m on its DSG budget in the past few years and claims that it is unable to eliminate it without making detrimental reductions to Send services and mainstream school budgets. Additionally, a recent report from the BCP council cautioned that its financial stability is in immediate danger due to government accounting regulations.

Typically, shortcomings in education have a negative effect on the financial well-being of councils. However, due to the excessive spending of education budgets by many councils, the government has implemented a “statutory override” since 2020. This excludes these deficits from being considered when assessing the financial health of councils, essentially keeping them off the record.

This override, which has previously been extended, is scheduled to expire in March 2026, during the 2025-26 fiscal year.

According to a report from the BCP council, once the statutory override is lifted, the council’s accumulated DSG deficit will exceed their total reserves, rendering them technically insolvent. If the deadline is not extended, the director of finance will likely have to issue a section 114 notice in December 2024 due to the inability to create a balanced budget for 2025-26.

children in a classroom

Eight councils in England have released section 114 notices since 2018, indicating that they lack the means to maintain a balanced budget – essentially admitting insolvency.

To date, the crisis in Send education has not been the cause of any of these issues. However, according to BCP council’s report, the expiration of the statutory override could lead to an increase in council insolvencies, possibly even before the override officially ends.

The Local Government Association, which speaks for councils throughout England, stated: “We persist in urging the government to eliminate all high-needs deficits immediately to bring about assurance and prevent councils from being forced to reduce other services in order to balance budgets through no fault of their own or their residents.”

Adam Sofianos, a resident of the BCP area, informed the Observer that obtaining an education, health, and care plan (EHCP) for his neurodivergent son in 2021 was relatively smooth. However, he expressed concern that the system is now falling apart. Due to insufficient funding for additional staff, the school has only one full-time member on the Send team to support 600 students. This is a common issue in schools across the country, where the workload has increased but the workforce has not. Sofianos stated that they are currently seeking referrals to address additional needs, but the process now takes much longer. He also refuted recent claims that the demand for Send support is on the rise due to middle-class parents viewing EHCPs as a “golden ticket.”

An EHCP serves as a lifeline and safety net for a Send child during their school journey, rather than a golden ticket or free pass.

A representative from the government stated that they are collaborating with affected councils regarding deficits in the dedicated schools grant, in order to help them achieve a more sustainable position in the future.

“Councils are ultimately responsible for their own finances, but we remain ready to talk to any concerned about its financial position.

“We understand that local governments are facing obstacles, which is why we have introduced a £64 billion funding plan to ensure they can continue making a positive impact, in conjunction with our joint efforts to promote equality.”


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