Bucks faces 'bankruptcy' risk if special needs funding rule is scrapped

Buckinghamshire Council could be headed towards the dreaded section 114 notice if the Government scraps a convention which allows it to just about manage its high needs education budget.

Money used to pay for support for special needs (SEND) children comes from a pot of Government funding.

But councils all over England are spending far more on SEND costs than the Government gives them.

This creates a deficit in their budgets – spending more money than they have and getting into debt.

When this becomes extreme, a local authority can declare a s114, which is the closest thing a council has to declaring bankruptcy. When this happens:

• All non-essential spending stops straight away
• Only services the council is legally required to provide can continue
• Councils lose control of spending decisions – a Government-appointed officer takes over.

This is considered very serious and happened in Slough previously. As well as cuts to services, it can cause higher council tax and sales of council-owned libraries and other facilities.

What’s changed?

In 2020, the Government changed the rules so that a deficit created by SEND does not count against its main budget – recognising that this was financially unmanageable for councils.

Instead, Government brought in a temporary rule called the ‘statutory override.’ This says that a local authority must record its SEND deficit separately.

Effectively, the council is temporarily allowed to ignore it when balancing its day-to-day finances.

This stops councils from immediately going bankrupt because of SEND overspends.

However, the statutory override is currently et to ends in April 2028 – unless the Government extends it or creates a new solution.

When it does, the entire SEND deficit suddenly falls back onto the council’s main budget.

The trouble is that SEND is so costly, many councils’ SEND deficits are bigger than their reserves – in other words, would wipe out all their money.

The Department for Education (DfE) thinks that by March 2026, around 43 per cent of local authorities will have that problem.

Bucks’ situation

Bucks council is already expecting its SEND overspend to grow from £22.9million in 2025/26 to £72.3million by March 2027, even if it carries on at its current pace.

But if they speed up EHCP assessments – which they plan to do – the costs will rise even more because more children will get plans earlier and will therefore need funded support sooner.

The acceleration is expected to add:

• £12.4m more to the deficit in 2026/27
• £35.2m more in 2027/28
• £45.7m more in 2028/29.

These figures assume that a very large number of new specialist school places (580) can be created by 2028/29 – and assume extra places that do not yet exist and are not yet funded.

The council simply does not have the money to cover that gap.

If the statutory override ends in April 2028, the worst-case scenario is the dreaded section 114 – a stark declaration that the council cannot balance its budget.

The only real way to stop the SEND deficit from getting even bigger is to create a lot more local specialist places, both inside mainstream and special schools, Bucks council thinks.

Independent placements are far more expensive than council-run or mainstream-based provision.

Right now, the council spends £28million a year sending children to independent special schools because there aren’t enough places in Buckinghamshire.