School leaders have welcomed ministers’ pledge to wipe nearly all historic SEND deficits, but funding experts warned the bailout could “reduce the incentives” for councils to “contain costs”.
In a significant step towards reform, the government will write off 90 per cent of existing black holes racked up by councils on their dedicated schools grant as of 2025-26, worth an estimated £5 billion.
But ministers will have to sign off new “local SEND reform plans” by each council before they can receive a “high needs stability grant” funded by the Treasury and distributed by the Department for Education (DfE) from the autumn.
Councils will have to plug the approximately £500 million remaining gap.
Councils will rack up more deficits
The government announced in December that SEND cost pressures will sit on its own books from 2028.
Deficits have been kept off councils’ main books by a statutory override for many years. The budgeting mechanism effectively prevents councils from going bust.
The override is due to end in 2028, at which point councils will have to meet the cost of any leftover deficits not covered by the government write-off.
But the Office for Budgetary Responsibility has also predicted that councils will accrue further deficits of £8.6 billion between this April and 2028.
For these years, the Ministry for Housing, Communities and Local Government said councils can expect the government to take “an appropriate and proportionate approach”, but help will not be “unlimited”.
Luke Sibieta, from the Institute of Fiscal Studies, said the intervention “may now reduce the incentives faced by councils to contain costs, in anticipation that the government may feel compelled to step in again”.
Pepe Di’Iasio, general secretary at the Association of School and College Leaders, said it was “important to remember that these deficits were accrued in the first place because there is not currently enough money in the system to meet the level of need.
“This must fundamentally change if the reforms are to be successful.”
The Local Government Association added that councils “work hard to use their finite resources, but “lack the levers to influence schools and health”, which makes “it difficult to control spending”.
Safety valve to end
More details about SEND reform are expected in the schools white paper later this month.
But Schools Week revealed last week how the government quietly asked councils to begin working up new SEND reform plans last year, ahead of the delayed white paper.
At the same time, ministers have announced that the controversial safety valve programme will end in March.
The government had previously said it would make no new agreements, which involved 38 cash-strapped councils making sweeping SEND reforms in exchange for extra government funding.
These councils will receive at least the same amount of grant they would have got through the scheme.
Ministers are yet to reveal what councils will have to include in their new plans, or whether they will be measured on specific targets. But some leaders are already concerned.
Josh Greaves, deputy chief executive officer at Wellspring Academy Trust, said if the plans required “to trigger these write-offs are simply a national scaling of the safety valve programme, we are in trouble”.
He said the scheme was “a fiscal tourniquet” that “didn’t heal the system”.
Councils free up cash
Andre Imich, a former government SEND adviser, said the improvements made by the safety valve “were not huge” and helped “us learn that it wasn’t necessarily council actions that were responsible for the challenges in the local system”.
But safety valve plans “weren’t able to influence other key levers for change, such as the accountability, responsibility and engagement of all parties”.
In Bracknell Forest, which predicted a cumulative deficit of £34.5 million by March, Stuart McKellar, executive director, said it expected a large chunk of the £23 million reserve it had to set up as part of its safety valve agreement could be used for other purposes now.
But more information was needed for them “to accurately determine the impact on the council’s financial position” before 2028.
The DfE said “any local contributions already made will count as part of the 10 per cent remaining deficit that will fall to local authorities to cover, meaning no safety valve local authority will be expected to contribute more”.
Call for schools to sign plan
It is not yet known which organisations will have to sign off councils’ plans before they are submitted to the government. But the DfE will “commission local area partnerships to develop these plans”.
Imich predicted councils and local integrated care boards would be signatories but called for schools to have this important role.
Paul Whiteman, general secretary at school leaders’ union NAHT, said it was “vital that schools are involved in local plans”, and their success would depend on adequate funding.
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