News, Politics

Nottingham City Council going in ‘wrong direction’ as money for SEND children dwindles

By Joe Locker, Local Democracy Reporter

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Nottingham City Council is facing a deficit in funding for children with special educational needs – having gone through the money “at a rate of knots” due to soaring demand.

Councils have been allowed to keep spending on high needs education using their main bank accounts since 2020, to help stave off effective bankruptcy as demand continued to rise.

This was achieved through a Government-allowed “statutory override”, which gave councils permission to keep their Special Educational Needs and Disabilities (SEND) spending separate to general fund budgets.

However, this rule 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.

Nottingham City Council had £19m in its Designated Schools Grant reserves as of March last year, however this is expected to drop significantly to £12m by the end of the same month this year.

By 2026 it is anticipating its balances will sink into a deficit.

The problem was highlighted by auditor Grant Thornton, which has been reviewing the council’s annual accounts.

During an Audit Committee meeting on Friday (March 28), Cllr Adele Williams, the chair, said: “I was interested to see the comments around SEND and the impact that is going to have on our budgets, and I think that will be one I want to have a deep dive in.

“There is a national culture of schools management that is inhospitable for children who are neurodiverse and it is actually driving costs to local authorities.

“I believe our position is better than historically has been, but is now tipping into quite concerning territory.

“When statutory override ends what will be the impact for us?”

Stuart Fair, the interim finance director, said: “That will have consequences for councils, potentially putting them into Section 114 territory, particularly where some SEND balances are over £100m.

“We have still got a positive balance rather than a negative one. But profiling shows that we will struggle to maintain a positive balance in the years ahead, and expenditure will significantly increase.”

According to an audit report into the council’s accounts, rising independent schools costs and a high number of permanent exclusions are the primary driver for the anticipated deficit.

Speaking to the Local Democracy Reporting Service after the meeting, Cllr Linda Woodings (Lab), executive member for finance, said the balance of the money is going “in a very steep trajectory in the wrong direction.”

“We are going through it at the rate of knots,” she added.

“We have got a recovery plan in place. In April 2026 it will be part of the overall balance sheet, at the moment it is a reserve.

“Other councils are in a dreadful situation, doing internal borrowing.

“There is an early indication that we will go into deficit. It is a good thing we can see it coming and we are taking steps to turn it around.”

Cllr Woodings said a number of new school places for children living with SEND are being created to meet demand and reduce costs, including turning the Waterside Primary School in Trent Basin into a state-of-the-art special school facility that could be open as early as September 2026.

The statutory override was originally going to come to an end last year, but was extended until 2026 after a number of councils revealed they would have gone effectively bankrupt overnight.

The Government has not yet said what it intends to do from 2026.

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.”