‘No immediate danger’: Notts County Council facing £30m deficit in special needs budget

The projected deficit was discussed in the authority’s Overview Committee on September 4.

Councils are given specific funding from the government for schools and education. The pot for young people with special educational needs and disabilities (SEND) is called the ‘High Needs Block’.

In the 2024/25 financial year, the council overspent on its high-needs budget by £18.1 million, which brought its school’s reserve down to “just £1.1 million”.

By the end of the current 2025/26 financial year, council officers are forecasting a £31.1 million overspend in its high-needs block, meaning a £30.3 million anticipated deficit in its schools reserve.

Nigel Stevenson, corporate director for finance at the council, said last year’s overspend “exhausted” reserves.

Councils have been allowed to keep spending on high-needs education off their main bank accounts since 2020 to help stop them from having to declare effective bankruptcy.

The accounting loophole was due to come to an end in April 2026 but the government announced in June it would be extended to 2028 while it considers further reforms.

During the meeting, Conservative councillor Bruce Laughton asked: “SEND transport, [the government] allowing us to be able to hold the negative balance, the likelihood is [the government] is going to recind that ability – what impact will that have on the budget?”

Mr Stevenson said: “It’s a smaller overspend although it is worrying… Quite rightly, in the autumn we are expecting there will be changes around provision of SEND.

“Hopefully the government will realise that they have to do something to tackle the deficits across all councils including the high-needs block.”

Mr Stevenson said he was “confident” the government would find ways to help councils with the deficits they face in their education spending.

Councils can account for overspends in some areas through underspending elsewhere. Mr Stevenson said: “We’ll have to make sure we’ve got enough positive balances elsewhere on the balance sheet to meet that negative balance.”

Chair of the committee, Cathy Mason (Ref) reacting to the deficit asked: “We would be able to pull an emergency meeting should we need to?”

Mr Stevenson replied the authority was not in “immediate danger” financially, saying: “£31 million in terms of a forecast deficit, it’s not an issue for the local authority for this [financial] year.

“That deficit would likely increase, again, double, in another year unless there is additional funding provided by government.”

Funding issues for SEND are impacting local authorities across the country.

Neighbouring Nottingham City Council’s reserves could fall into a £601,000 deficit in the financial year beginning April 2027, before worsening to £15.2 million by 2030.