News, Politics

Nottingham City Council commissioners ‘very anxious’ over £15m black hole in special needs budget

By Joe Locker, Local Democracy Reporter

---

Government officials overseeing improvements at Nottingham City Council are “very anxious” over an expected £15 million black hole in its special educational needs budget.

Commissioners were appointed last year after the Labour-run authority declared itself effectively bankrupt.

While the council says its finances have since improved from “terminal to critical”, it is still facing serious problems in some areas.

The authority says its financial reserves for children with special educational needs and disabilities (SEND) are dwindling, with ‘significant overspending’ due to soaring demand.

Council reserves could now fall into a £601,000 deficit in the financial year beginning April 2027, before worsening to £15.2m by 2030.

Back in April the council had been predicting it would fall into a £1.5m deficit a year earlier, dropping to £20m by 2029, before a recovery plan was put in place.

Despite the improvement, Nick Lee, the council’s director of education services, said the commissioners remained “very anxious”.

“Our situation is not as bleak but clearly we have got a £15m deficit projected,” he said during a Schools Forum meeting on Tuesday (June 24).

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

The accounting loophole was due to come to an end in April 2026. But the Government announced on June 20 it would be extended to 2028 while it considers further reforms.

Estimates had suggested the combined deficits of all councils across the country was nearing £5bn.

“For those authorities in a more difficult position than us, that will have the risk of toppling over the entire council into bankruptcy,” Mr Lee added.

“Nottingham hasn’t been in that situation but clearly the deficit that has grown and the overspends that we are seeing are projecting to tip us in to that deficit.

“As a council that is already in statutory intervention and has issued a Section 114 notice [effective bankruptcy], our commissioners are clearly very anxious to ensure we don’t end up in that place where the [dedicated schools grant] deficit ends up sitting on the council’s books as a further financial challenge to the authority.”

Mr Lee said key problems include growing costs for alternative education due to exclusions, as well as girls presenting with concerns around self-harm and anxiety, and children presenting with autism spectrum disorders.

“We clearly have got to look at our practice as a system,” he added. “Working with children at the youngest age, supporting their transition into school.

“We are recognising we have got to put in more provision. Some of that needs to be short-term, some of that longer-term, intervention.”

He said a programme board would be set up in the future to help meet the current needs.