Councils have been forced to find more cash to keep a special school trust afloat, after it claimed insufficient funding had left it paying wages from its reserves.
The Queensmill Trust, which runs two schools in west London, is now fighting not only for its financial survival but to keep its flagship school after receiving a government warning notice last week.
Experts and school leaders said it highlighted the wider financial challenges for special schools, including a reliance on local authority goodwill to pass on extra government cash.
Yet a shortage of places means that councils themselves are also heavily reliant on special schools to avoid paying for more costly private provision.
The government has threatened to rebroker the trust’s flagship Queensmill School, an all-through school for pupils with autism, if it cannot show sufficient improvement capacity.
Ofsted had rated it “inadequate”, stating that DBS checks were not completed for all staff and leaders lacked a “clear picture” of when pupils received medication.
But the potential further upheaval comes less than a year after the government allowed the over-subscribed, previously “outstanding” school to set up an academy trust and open a second school.
It also comes after the trust warned that its precarious finances could undermine its work, urging councils to step in.
Special school trust reserves used on rising costs
Queensmill’s 2020-21 accounts reveal that it had reserves of just £4,625. Auditors highlighted trustees’ acknowledgement that “there may be material uncertainties that may cast significant doubt on the company’s ability to continue as a going concern”.
The trustees claim reserves have been eroded by council top-up funds failing to increase for seven years. They have used them to fund rising pay, pension and pupil costs.
They say that, without extra top-ups, “it will be very difficult for the academy trust to maintain a balanced budget, manage its cashflow and deliver the excellent service that they currently provide”.
Councils provide top-up funding to cover extra costs beyond the £10,000 place funding that special schools are allocated by central government. It is understood that most councils agreed to increase Queensmill’s funding.
Camden, which funds fewer than 10% of its pupils, hiked top-up fees by 11.6 per cent to £19,189 per pupil, as requested by the trust in January. A spokesperson said Queensmill had not previously asked for extra funds.
A spokesperson for Hammersmith and Fulham said it had given Queensmill an additional £745,000 since last year, when it agreed to fund 50 extra places and enhanced provision.
But it is understood that the council, which funds almost two-thirds of pupils, has so far not agreed to raise top-up funding levels specifically.
A spokesperson said it would keep working with the government and councils on the school’s funding, “while encouraging the trust’s management to undertake a full review of all its costs”.
Other London councils did not comment. The trust declined to say whether it had subsequently secured such funds or to comment on the notice.
Investigation reveals shortage of state places
A recent Schools Week investigation highlighted the shortage of state-sector special school places, with more than half of settings taking more pupils than commissioned.
Warren Carratt, chief executive of Nexus Multi-Academy Trust, which includes nine special schools in Rotherham, said he was “absolutely not surprised” to see such financial challenges.
He said it was “typical” of councils not to have increased top-up funding for special schools for many years, while per-pupil place funding provided by central government had also stagnated for years.
Micon Metcalfe, a school finance expert, said: “Alternative provision and special trusts are heavily reliant on council top-ups and that funding hasn’t even increased in line with mainstream funding.”
The average special school’s per-pupil income fell 10 per cent between 2015-16 and 2020-21, according to analysis by the National Education Union. That compares with a 4 per cent drop for mainstream primaries and 9 per cent for secondaries.
Both Carratt and the Confederation of School Trusts recently challenged the government over some councils’ reported refusal to hand over new funds intended to cover rising employment and other costs.
Government officials highlighted a £1 billion increase in high needs funding in 2022-23 and £2.6 billion planned SEND capital funding.