Warnings Dorset Council could face bankruptcy
Councillors say it's because of ongoing problems with schools funding
Bankruptcy could be facing Dorset Council unless the Government finds solutions for ongoing problems with schools funding.
In the unlikely event of a demand for repayment of the Dorset ‘debt’ of £95.6million for the Dedicated Schools Grant it could throw the council into technical bankruptcy.
The figure is predicted to rise to £148.6m by the end of March 2026 and, at the moment, is being accounted for separately, effectively keeping it off the council’s day to day balances.
But that, in turn, means the authority has £148m less cash than it otherwise would – which, if invested, could be earning almost £5million a year in interest which would help with day to day council spending.
Councillors are being told that most of the Dedicated Schools Grant is used to help fund schools and academies, early years education and nurseries and to help with the additional costs of pupils with high needs, including those in special schools.
A report to councillors this week from Dorset Council finance manager Lee House warns: “As the deficit grows, there will come a point at which it exceeds council reserves, and the council would be technically insolvent. However, the government announced a two-year extension to the statutory instrument in June 2025, and in addition, will set out their approach to SEND reform in a white paper in the autumn. These commitments from the government should mean the future risk is lowered.”
A report says that the growing number of Dorset children receiving an Education, Health and Care Plan, which gives access to specialist services, sometimes involving placements in out of county schools, has been a key driver for rising costs.
The Council currently funds more than 300 special school placements at an average cost of £66,300 each, per year.
The number of pupils with an EHCP has risen from around 1,400 in 2013 to over 4,400 this year.
At the same time the costs of specialist school transport for children with additional needs, often by taxi, has been soaring.
To help put pressure on the Government to resolve the issue Dorset has backed a letter sent to the Secretary of State for Education urging an assurance that Dorset Council, and others, will not find themselves in financial trouble in the years to come because of the current arrangements – the so-called ‘safety valve’ agreement and the arrangements over Special Education Needs and Disabilities (SEND) reforms.
Said the letter, co-signed by forty councils with the worst education funding in the country:
“The situation in Special Educational Needs and Disabilities (SEND) is now critical. Every day that passes without a sustainable solution means that children and their families are left without the right support in the right environment; schools are struggling to cope; and local authority deficits continue to grow – threatening the financial stability of many councils.
“While we understand the need to get these reforms right and to build consensus, further delay will help no one. Major improvements and genuine cultural change are required now. This demands brave and bold decision-making, supported by a clear roll-out strategy that brings all stakeholders together and focuses firmly on improving outcomes for children, parents, and schools.”