Ministers mull future of £380m SEND budgets transfer policy

Ministers are mulling changes to a controversial policy that allowed councils to raid nearly £380 million from school budgets over the past decade to plug spiralling SEND deficits.

Schools Week can reveal how 21 councils were given ministerial go-ahead to transfer a combined £75.5 million from mainstream school budgets to the high–needs pot in 2026-27.

Headteachers are demanding the government scrap the cash transfers, in light of its plans to wipe most of councils’ existing SEND deficits.

Town halls must get Department for Education approval if they want to transfer more than 0.5 per cent of school budgets, or to move up to 0.5 per cent without sign-off from their local schools forum.

In the past eight years, councils have transferred £378 million from schools budgets, with one head warning he had to make redundancies because of the cuts. 

Councils have argued the transfers are needed to keep up with ballooning costs and rising numbers of education, health and care plans (EHCPs), with the money taken benefiting the wider SEND system.

But with the government expected to clear deficits worth £5 billion up until April this year, heads want the policy scrapped and previous decisions reversed. 

The DfE told Schools Week block transfers have become an “established part of the funding landscape”, but that it is considering policy and guidance for beyond 2026-27.

‘Reverse the decision’

Vic Goddard, chief executive of Passmores Cooperative Learning Community academy trust, said it would be “beyond comprehension” if the government continued to approve more money taken from school budgets.

“Report after report shows the impact that will have on staff and other resources that are in place to support the most vulnerable children in our schools.

“It’s not too late to reverse these decisions and they should do it now.”

Freedom of information data obtained by Schools Week revealed Kent had the largest amount approved – £16.5 million, or 1.2 per cent of the schools budget.

Other councils, including Essex, Bedford, Bracknell Forest and Kirklees, transferred 1 per cent of their core school budgets.

Essex has taken 1 per cent from its core schools budget for the third year in a row, equating to more than £13 million.

“By taking that 1 per cent, you are directly impacting the schools you say you want to support,” said Goddard.

His trust, which runs five schools in the county, has made 20 redundancies, which he suggested was a direct impact of the transfer.

“We probably would have had to make four or five redundant if that 1 per cent hadn’t been taken. It’s not just a generic amount of money.”

Matt Jessop, the headteacher of Crosthwaite Primary in Cumbria, said transfers “shouldn’t be allowed and councils shouldn’t even be in a position to consider it as an option”. 

Many of these transfers were tied into “safety–valve” agreements, where councils agreed sweeping changes to SEND services in exchange for a government bailout. 

This scheme has ended, and instead councils are being asked to draw up “local SEND reform plans”. Ministerial approval of these plans releases the deficit cash through the “high–needs stability grant”. 

Eighteen other councils confirmed to Schools Week they had approved a transfer of up to 0.5 per cent without the need for government approval, including Medway, Cornwall, Hull and Bristol.

This year, the department refused just one application – from Somerset – while schools forums refused 11 requests.

‘Sticking–plaster solution’

Mainstream schools have been thrust into the driving seat of the SEND reforms. They will produce individual support plans for pupils with additional needs, with all secondary schools expected to have an inclusion base. 

The white paper set out how they want to “re-balance funding” by directing more high–needs cash into core school budgets. 

The DfE has also announced an “inclusive mainstream fund”, where the average secondary school will receive £48,000 per year. Primaries will receive £14,000. 

But heads claim it does not go far enough to match reform “aspirations”, with one pointing out the amount for primary schools is about half the salary of a teaching assistant.

James Bowen, the assistant general secretary of the school leaders’ union NAHT, agreed block transfers continued to be “sticking-plaster solutions” that “do not offer a sustainable way forward”.

“We need to get to the point quickly where transfers from the schools block to the high-needs block are no longer required.”

Julia Harnden, the deputy director of policy at the leaders’ union ASCL, said it was “concerning” that transfers “only end up increasing the strain on school budgets, which ultimately impacts the provision and support available to pupils”.

‘Recognised mechanism’

Many councils approached by Schools Week said the block transfers remained necessary.

North Somerset transferred £1.84 million, 1 per cent of its school budget, to the high-needs block this year.

A council spokesperson said even with the 90 per cent write-off it would be left with about £6 million in deficit, and that it still faced a “significant shortfall” for 2026-27.

“The disapplication is a recognised mechanism to ensure that resources focused on SEND return to mainstream schools.”

Kingston, which has transferred 0.4 per cent (£621,000), said the DfE “has been clear that the write-off should not mean that local authorities and schools stop taking steps to minimise deficits”.

A Medway council spokesperson agreed that “paying off the deficit does not change the fact that the current funding is not enough to provide services”.

Experts have warned council financial woes are likely to continue. The Office for Budgetary Responsibility predicted councils will accrue further deficits of £8.6 billion between now and 2028, when the DfE takes on the cost pressures. 

Matt Keer, a contributor to the parent-led campaign group Special Needs Jungle, said: “The overall value of block transfers are tiny when compared to the size of in-year dedicated schools grant (DSG) deficits.

“They don’t ease financial pressure by much, and although most LAs will presumably be getting 90 per cent of their built-up DSG deficits eliminated in the autumn, the financial pressure will continue for a couple more years yet.”

‘Everyone’s competing’

Amanda Watkins, an independent SEND consultant, said the way the system had been set up meant everyone fighting their “own little corner”.

“They’re competing for resources, rather than working together to use the available resources in better ways for everyone.”

But in some instances, a block transfer has not led to a showdown between council and schools.

Oxfordshire’s schools forum managed to reduce the council’s original plan for a 0.5 per cent transfer to 0.25 per cent after members asked for a breakdown of how the cash would be used.

The council was asked to present evidence of what initiatives were working, which the schools forum then agreed to fund as part of the transfer.

Nathan Thomas, forum chair and chief executive of Acer Trust, said this approach allowed a decision, but “not in a blanket way”.

“We did actually agree to fund some of that collaborative SEND work…which has been really successful at having an impact. We declined with some of the other areas.”

Thomas said this meant members could help find solutions, but “equally push back to say, there isn’t enough money in schools”.

Norfolk previously transferred 1.43 per cent from its budget last year, but did not make any transfers this year.

Council documents said officials were “of the view that continuing the block transfer is counterproductive” because it “is removing funding from mainstream schools at a time when Norfolk’s strategy, along with the national narrative, is to increase mainstream inclusion”.

When asked whether she felt this difference, headteacher Jess Balado, the chair of the Norfolk School Leaders’ Association, said leaders “respond to what we get”.

“It’s just the case of week by week, day by day, and balancing the books to make sure that you’re making the money goes as far as it possibly can.”

The DfE said block transfer decisions “have been taken through the usual process” and were “not affected” by the announcement of the high-needs stability grant.

“Arrangements for supporting local authorities with deficits from 2026-27 onwards have not yet been announced, but local authorities can expect that we will continue to take an appropriate and proportionate approach, though it will not be unlimited.”