Council accountants are warning urgent action is needed to avoid bankruptcy as the cost of providing special needs education spirals. Bristol City Council spent millions of pounds over budget on special needs education, and is now working to bring this down despite rising demand.
In the last financial year the council spent £94.6 million on the high needs block, £16 million more than was initially budgeted. Added to overspends on previous years, the council now has a total deficit of £42.5 million for special needs education, and just three years to reduce this.
Normally councils are not legally allowed to keep spending more than they have budgeted for, and must balance their books. But parliament has given special permission for councils to run deficits in their schools budget — but only until March 2026.
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Dire warnings were sounded during a schools forum meeting on Tuesday, May 23, about what could happen in Bristol if this deficit isn’t reduced and the books aren't balanced by the time this hard deadline is reached. One headteacher said: “This is going to be quite difficult.”
Angel Lai, council finance manager, said: “There’s a risk to the local authority if we don’t turn the financial position around and we can’t afford it, because we don’t have the reserves to cover the overspend as it is, let alone if the position keeps on deteriorating. So it’s a huge financial risk to the local authority.
“If we do nothing and let it carry on, when the statutory instrument ends the local council will run out of money. And if you run out of money — bankruptcy. So this is how severe the problem is. Based on modest forecasts provided by the Department for Education, by 2025/26 we are in a position to reach an in-year balance. But it will take us a bit of time.”
The special permission given to council is known as a “statutory instrument”. This was initially due to expire on March 31 this year, but has been extended for another three years.
Denise Murray, the council’s director of finance, said: “Local authorities don’t have the permission to continue to run a deficit programme, so we’re legally obliged to ensure that we have a balanced budget and we spend within our means and don’t exceed the funds that we have available.
“In order to enable us to carry a DSG [schools budget] deficit that exceeds the total level of reserves, we have to get approval from the secretary of state. That’s what the statutory instrument is, laid in parliament to enable local authorities with DSG deficits to be able to carry a deficit balance in our books.”
Earlier this year the Department for Education gave Bristol City Council £1 million to explore ways to save money in the high needs block. A consultation on options, for the Delivering Better Value for SEND programme, is expected to launch in the coming weeks.
Tonya Hill, headteacher of New Fosseway School, said: “This is going to be quite difficult. There’s going to be some hard times ahead. This will be very, very emotive but at the end of the day, we’re talking bankruptcy. So there has to be some kind of give and take.”
