News, Politics

Nottingham City Council facing £20m deficit in SEND funding amid soaring demand and costs

By Joe Locker, Local Democracy Reporter

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Nottingham City Council could be facing a £20m black hole in its special educational needs funding by the end of the decade as demand and costs continue to soar.

The Labour-led authority’s financial reserves for children with special educational needs and disabilities (SEND) are dwindling, new figures show.

Council reserves could fall into a £1.5m deficit in the financial year beginning April 2026, before worsening further to £20.5m by 2029/30.

Nick Lee, the council’s director of education services, said there were four areas of concern during a Schools Forum meeting on Tuesday (April 29.

These include a rising number of permanent exclusions and need for alternative provision, demand on high-level needs support, a growth in post-16 provision requests for SEND children, and a lack of special school places in the city, leading to children being placed in costly independent schools.

“I think it is fair to say the challenge is a national one and one that is of huge concern and consequence to many local authorities and many areas of the country,” Mr Lee said.

“The scale of the challenge for some of our colleagues in parts of the country is eye watering to a level that is really quite staggering.”

Councils have been allowed to keep spending on high needs education off their main bank accounts since 2020, to help steer them away from the path to effective bankruptcy.

This was achieved through a Government-allowed “statutory override”, which gave councils permission to keep their SEND spending separate to general fund budgets.

However, this override comes to an end in April 2026.

According to the National Audit Office, two-fifths of local authorities face the risk of issuing a section 114 notice by 2026 – due in part to these costs – but the Government is yet to identify a solution to manage the estimated £4.6bn deficit across all councils.

Section 114 notices are issued by a council’s chief finance officer when its outgoings exceed income, and it is unable to set a balanced budget as is required by law.

“We are also waiting to hear from the Government on their response to this and reforms they want to put into the system, because it is one of the major fiscal concerns facing government at the moment,” Mr Lee added.

“A lot of our pressures and demands are probably better maintained than some of our colleagues, and have been, but what we have got is a situation that we know – if we don’t manage to reign in and get reserves back in order – then it starts to accelerate and the pressure just builds.

“I think we can reverse that. It is hopefully in collectively in our control to manage.”

According to council figures, its SEND reserves fell from £21.7m at the start of 2023/24 to £19m by the end of the year.

In the last financial year of 2024/25, which ended in March, reserves fell from £19m to just over £10m.

They are expected to keep falling to £1.6m by the end of the current financial year of 2025/26, before the anticipated deficit of £1.5m in 2026/27.

Mr Lee said a draft recovery plan was signed off by council leader Cllr Neghat Khan (Lab), and lead commissioner Tony McArdle, on Monday (April 28).

A sign-off on fully-costed plans is expected by the end of May.

A Department for Education spokesperson said: “The evidence is clear that the SEND system has been on its knees for years – with too many children not having their needs met and parents forced to fight for support.

“It will take time, but as part of our Plan for Change we are thinking differently about what the SEND system should look like, to spread opportunity, restore the confidence of families up and down the country and deliver the improvement they are crying out for.

“We are already making progress by investing £1 billion into SEND and £740 million to encourage councils to create more specialist places in mainstream schools, paving the way for significant, long-term reform.”