Bournemouth, Christchurch and Poole (BCP) Council expects to issue a section 114 notice in December if a dedicated schools grant (DSG) statutory override is not extended.
The authority is forecasting a £63.4m DSG deficit on 31 March as a result of overspending its special education needs and disabilities (SEND) budget, putting it in a situation of having negative reserves.
This position is described as “not tenable” by BCP and would ordinarily require an s114 to be issued – but for a government implemented statutory override which enables the council to hold the deficit in a negative unusable reserve, which is disregarded in terms of financial sustainability and for the purposes of the s114 assessment.
The Local Authorities Capital Finance and Accounting (England) Regulations became law at the end of November 2020 and also prohibit the council from contributing funding to reduce the deficit.
However, the statutory override is only in place to 31 March 2026. At this point, if there is no further extension, BCP’s accumulated DSG deficit will be greater than the council’s total reserves and it will technically be insolent.
This means BCP would not be able to set a balanced budget for 2025-26, and the s114 would be required.
This update on the authority’s financial position was presented in a report to BCP’s Schools Forum this week, which also provided details of the authority’s updated DSG management plan.
The plan was submitted to the Department for Education (DfE) in December for consideration as part of the DfE Safety Valve (SV) programme, which BCP joined in July 2023 as a result of its significant DSG deficit.
The plan noted that DSG overspend had increased “considerably” over the past two years, with an accumulated deficit of £92m by the end of financial year 2024-25 currently forecast.
The budgetary pressure is largely the result of an increase in the number of new Education Health and Care Plans (EHCP) and the associated cost of delivering these plans for the duration of a child’s or young person’s education, which can be up to the age of 25 years.
According to the report, support is needed from the DfE and the Department for Levelling Up Housing and Communities (DLUHC) to prevent the DSG deficit from being a “serious threat to the financial stability of the council”.
The report’s recommended next steps include requesting capital funding from the DfE to “increase the availability of more appropriate provision with significant revenue savings”. It also suggested entering into further negotiations with the department for revenue contributions from the safety valve programme.
The council will also need to discuss a way forward with DLUHC if the statutory override is not extended, the report stated.
In September 2023, Grant Thornton raised “serious concerns” about the continued financial viability of BCP Council in an audit report. The authority had been issued with a Best Value Notice by DLUHC in August.
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