Government withholds SEND bailouts as councils told to fill £269m hole

The government withheld an emergency high needs funding bailout from a council that planned to cut millions in school spending, saying it failed to balance its books fast enough. 

Bury is one of 34 cash-strapped councils the Department for Education has struck “safety valve” agreements with since last year. These involve multimillion-pound bailouts in exchange for reforms to cut SEND budget overspends.

Ministers insist the agreements are not a “cost-cutting exercise”. But official documents reveal Bury’s plans include slashing £1.6 million from mainstream and special school funding for SEND pupils, taking £715,000 from its schools’ general funding pot, and cutting £348,000 from inclusion hubs.

Another £400,000 will be cut from non-statutory school support services – which could be chopped altogether.

The council even considered raiding the surplus balances of maintained schools, halting the plan earlier this year while keeping balances “subject to review”.

Bury aims to eradicate a £21.7 million school funding deficit by 2025-26.

But council papers show the DfE “delayed” one quarterly payment of its £20 million bailout last year because the borough spent £1.9 million more than planned in 2020-21. 

This was attributed to higher than expected placements and education health and care plans.

The government withheld the cash until it received “assurance that the recovery will get back on track”. It then restarted payments. 

The amount withheld is not stated, but would amount to £1 million if Bury’s £4 million allocation for 2020-21 was split into equal quarterly payments. 

DfE ‘blaming councils’ after its reforms push up costs

“Is the DfE happy withholding money doesn’t mean withholding provision?” asked Chris Rossiter, the former chief executive of the Driver Youth Trust, a SEND charity.

Dr Mary Bousted, the joint general secretary of the National Education Union, said it was “disgraceful” that government was “blaming local authorities and withholding emergency funding” when its own 2014 reforms had widened eligibility for SEND support. 

The DfE has admitted that more support plans added about £1 billion to council costs.

But a government official said it had delayed the Bury payment while waiting for “greater assurances” the council was following the agreement. Payments have been delayed in other authorities too, but each has said to have received its most recent payment.

Councils ordered to plug deficits ‘now’

It comes as the government orders councils nationwide to act “now” on school budget black holes that reached a net £269 million last year, confirming next year they will lose their ability to effectively set deficit budgets.

Will Quince, the children’s minister, wrote to every council last week to warn that a “significant number” ran services that were “not sustainable”.

New guidance says councils must “move to a more sustainable position now” as the levelling-up department will remove current protections around core funding “dedicated schools grant” (DSG) deficits in 2023-24.

Local authorities will therefore have a legal duty next year to find savings or use reserves to plug DSG deficits. Currently, they can lie unaddressed on balance sheets.

Education services will ‘inevitably lose out’

Rossiter accused the government of “brinksmanship” and warned some services would “inevitably lose out”, with school and other provision for children at risk. 

“The government is pushing that decision on to councils. That’s understandable, but it’s a system-level problem. Yes we can innovate and make better financial decisions, but will that fix issues? No.”

Guidance recommends councils meet needs in mainstream schools, limit placements elsewhere, invest in SEND leadership and give finance and SEND chiefs joint budget responsibility.

Fifty-five councils have also been partnered with advisers to “address the key drivers” of deficits through the “Delivering Better Value in SEND” programme.

Councils will be allowed to tap general funds, but the government has previously told them to find savings within DSG budgets. Bury’s reforms suggest other authorities may seek savings in not only SEND, but also wider school budgets.

A Local Government Association spokesperson said current protections should be extended, as DfE reforms and funding were insufficient to fix deficits.

Councillor Roz Chadd, the deputy leader of Hampshire county council, said SEND funding pressures were a financial “risk”, but there were limits to potential cuts from a “demand-led budget delivering statutory education” for vulnerable children.

A government spokesperson said many councils already targeted high-needs funding effectively, while new advice and “unprecedented” £9 billion funding would help other authorities.

Bury council did not respond to a request for comment.