Bristol City Council will have to issue a section 114 notice if it fails to meet the terms of a government programme that aims to wipe an escalating deficit in its special educational needs and disabilities (SEND) budget.
The council’s Dedicated Schools Grant (DSG) reserve, which finances the SEND budget, is forecast to be £56.1m in deficit as at 31 March 2024, rising to £114.2m by 2027/28. The latter figure, though, assumes that all currently planned mitigations “have been successfully delivered in full up to that date”, according to a new report presented to the council’s cabinet.
The financial risk presented by the growing costs of Bristol City Council’s SEND budget has long been recognised, and the authority has signed up to the Department for Education’s (DfE) Safety Valve programme, with the DfE agreeing to pay £53.8m over the next six years to reduce the accumulated deficit on the Council’s DSG reserve.
Of this amount, £21.5m – or 40% – was paid to the council on 31 March 2024.
In return, the council must commit to plans to reform its high needs systems to make them effective and sustainable, and prove that the necessary improvements are being made over time
Bristol’s chief executive Stephen Peacock told a scrutiny meeting that the DSG reserve deficit and special needs education reform was one of the authority’s “biggest issues” and that if anything went wrong, effective bankruptcy would ensue, as reported by the BBC. Many other authorities are in a similar situation, he added.
The report on the Safety Valve programme and high needs provision capital allocation (HNPCA) was presented to cabinet yesterday (9 April). It stated that the DfE programme was the “only option” the council has “to reduce and eventually eliminate the cumulative deficit on its DSG reserve”.
A bid has been made to the DfE for an additional £28.2m of HNPCA to support the programmes of work required to deliver the reforms required under the Safety Valve programme. The outcome of this bid has yet to be announced.
Additionally, a Statutory Override is currently in place, which means that the council’s DSG deficits can be ring fenced away from core council budgets and do not have to be cash backed. This Statutory Override is currently due to remain in place until 31 March 2026 but is “not guaranteed” to be renewed beyond that date, the report noted.
As a result, there are “key risks” in participating in the Safety Valve programme. If, for any reason, the council or DfE are forced or required to terminate the Safety Valve agreement and a deficit remains on the DSG reserve at the date the current DSG Statutory Override ends, if not renewed, the council will need to fund the DSG deficit at that date from its own reserves.
“This would result in the need to reallocate resources and may require significant reductions in expenditure on other council funded services, the scale of which would be dependent on the size of the DSG deficit at that date,” the report stated.
“Assuming all of the planned mitigations are delivered in full, this is currently projected to be £96.0m, which is equivalent to 17% of the council’s projected net expenditure in 2026/27.”
As noted, the Safety Valve agreement can also be terminated if the council fails to make the required savings and reforms in its special needs education provision and deficit.
And if the council’s application for HNPCA of £28.2m is either rejected or scaled down, the savings identified in its Safety Valve plan would become “extremely difficult to achieve”, the report said.
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