90% Of £5bn SEND Deficits Already Written Off: What's Left For The Budget

The 28th of October, five weeks from now. Yeah, it is. It's just looming there on the calendar. It really is. Five weeks from now, the chancellor stands up at the dispatch box. And I mean, I have already had a governor ask me point blank what the budget is going to do to our funding. Really? Already. Already. They want to know exactly where we stand. You know, they want to know how we are supposed to plan for the next academic year. Right. And they want me to give them a firm.

quantifiable answer on what is coming our way. So what did you actually say to them in the moment? I looked them in the eye and said, we'll see. Which, I mean, it is the honest answer, but it is also a completely useless one. It doesn't give them much to go on, does it? No, it doesn't help us plan the curriculum. It doesn't reassure the finance committee. It just leaves this heavy cloud of uncertainty hanging over the entire autumn term. You know, you can't run a school on, we'll see.

You can't. But there is a much better answer you can give your governors right now. Yeah. And crucially, it doesn't involve guessing what the chancellor is going to pull out of that red box on the day. Yeah. You don't need to read the political tea leaves or try to predict the Treasury's mood. Okay. I'm listening. Because the reality, and this is what we're going to unpack today, is that next year's school budget was decided before this budget was even given a date. This is the education commute.

Both voices on this show are synthesized. The judgment isn't. So let's establish exactly where we are both coming from today, because you and I are approaching this from two very different chairs. I am sitting in the head teacher's chair, like you listening right now, whether you are a school leader or, you know, a governor. I set a budget in the spring and I built that budget based on numbers I was explicitly told were settled. So what I really need to figure out today as someone just trying to keep the lights on and the staff paid is whether those numbers are still settled.

And I am sitting in the policy reader's chair. So while you've been running the operational side of the school, I have been going back through the primary documents, the ones that actually dictate your financial reality. The heavy reading. The heavy reading. I've read the spending review. I have read the Treasury's own letter fixing the budget date. And I've thoroughly read the February note on council send deficits. Based on all of that text, we are going to build this out for you in three columns. That's the mental blueprint to hold on to.

Three columns. Yeah. Column one is what's locked. Column two is what is genuinely open. And column three is what you actually need to watch for on the day itself. Let's start with column one, the locked items. Okay. Because when I am standing in front of my governors, that is the foundation. If I'm going to replace... We'll see with something concrete. I need to know what we can actually rely on. Right. Let's pull up the spending review. This was published in June 20, 2025. June 2025. So months ago.

Exactly. The entire purpose of this document was to set departmental budgets for a three -year period. And the crucial detail for anyone running a school is how the core school's budget numbers are presented within it. Okay. How are they presented? They aren't presented as proposals. They are stated as settled multi -year commitments. Settled commitments. Yes. Let's look at the revenue side first. The core school's budget grows by two billion pounds in real terms over the period. Two billion pounds. I just want to pause on real terms because in education finance, that phrase does a lot of heavy lifting.

It really does. It means that two billion pounds of growth is calculated above the rate of inflation. That is the crucial distinction. It outpaces the Treasury's measure of inflation. And to translate that 2 billion real terms figure into raw cash, it is a 4 .7 billion pound cash increase per year by 2028 to 29 compared with 2025 to 26. Wow. 4 .7 billion pounds in cash. Yeah. It's a huge number. When you hear a number that large, it's so easy for a governor to think the sector is suddenly flush with cash.

Right. It sounds like a windfall. It does. But I know from sitting in the head's office that national billions do not translate to local millions. What does that actually look like when we bring it down to the ground level per child? Well, when you distill that massive national figure down, it works out to 1 .1 percent. Per pupil, real growth on average. 1 .1%. On average, yeah. That is the reality check right there. It is positive, yes, and it is above inflation. But 1 .1 % is an incredibly thin margin.

It's very thin. If you are trying to balance a spreadsheet, that doesn't give you any room for error. It gives you almost zero room for error. Nobody is suggesting it is a windfall, but... And this is the key point for column one. It is a locked figure. Right. OK. Now, that is the revenue side. The day -to -day running costs, the capital side, you know, the physical buildings and the estate is locked in that exact same document. Also from June 2025. Exactly. The school rebuilding program is set at roughly $2 .

4 billion a year. And alongside that, the estate maintenance budget is rising to $2 .3 billion in 2029 -30. Okay, let me just verify the absolute certainty of this. Sure. The $2 billion real -terms growth, the $4 .7 billion cash increase by 2028 -29, the 1 .1 % per pupil, the $2 .4 billion a year for rebuilding, and the $2 .3 billion for maintenance. Yes. Is there... Any asterisk next to those numbers? Like, is there a tiny footnote somewhere saying subject to the budget? There is no footnote.

The document presents these figures entirely as multi -year commitments. OK. Now, obviously, a budget can technically reopen anything. Chancellor always has that sovereign power. But the primary document you are supposed to plan from says these figures are decided. Column one is firm. Well, that gives us a floor to stand on for core funding and buildings. But. And you knew I was going to bring this up. That doesn't cover the biggest financial black hole in the sector right now, which is special educational needs. It doesn't. But column one isn't finished.

Oh, really? Yeah, because column one also contains the biggest send money decision of the entire year. And it isn't waiting for the chancellor in October. It happened on the 9th of February. 9th of February. Walk me through the mechanics of that, because this is the stuff that keeps local authorities awake at night. On the 9th of February, the government stated it will cover 90 % of councils' accumulated high needs deficits. 90 %? Yes. And specifically, they are looking at the deficits exactly as they stood on the 31st of March this year.

Wow. I just want to dwell on the sheer scale of that for a second. Yeah. If we look at the accumulated high needs deficits across all the councils, that is around 5 billion pounds in total. It's massive. It is a staggering amount of debt sitting in the system, 5 billion. It is around 5 billion pounds. And the government is stepping in to cover 90 % of it. So 90 % of 5 billion, that is roughly 4 .5 billion pounds. Roughly. Just written off, erased. That's right.

I mean, that is a bigger single intervention than the revenue growth you just quoted to me from the spending review. How does a mechanism that massive actually work? Do they just send a check to the town hall? Not quite. It operates through a very specific mechanism called the High Needs Stability Grant, which is being paid from this autumn, meaning it falls squarely within this current financial year. But there is a major condition attached. There's always a condition. Always. To see a single penny of that grant, the council must have an approved local SEND reform plan.

An approved plan. The funding is completely conditional on that plan being signed off. The council itself has to cover the remaining 10 % of their historic deficit. Let's unpack that condition because that is where the pain sits. If the government covers roughly four and a half billion, that leaves councils collectively on the hook for about 500 million pounds. To find 10 % of a deficit that huge, a council has to look inward. And what about the accounting rules? Councils have been terrified of these deficits suddenly becoming legally recognizable and wiping out their ability to function.

That is the statutory override. Right. It is essentially an accounting shield that legally allows a council to keep its high needs deficit off its main balance sheet so it doesn't technically bankrupt them. And what happens to that shield? Alongside this new grant, that statutory override was extended back in June 2025, and it now runs to the end of 2027 to 28. So the accounting shield stays up while the history is cleared. So when I look at October 28th, I don't need to worry about the chancellor deciding whether or not to rescue council's historic send deficits.

That is done. The history is dealt with. The history is dealt with. But that naturally brings us into column two. What is genuinely open? Because clearing the debt from up to March this year doesn't stop a council from overspending again tomorrow. That is exactly the issue. The February statement that cleared out the historic deficits was incredibly careful about the language it used regarding the deficits that come after March this year. The new debt. Right. The deficits building up right now in 2026 to 2027 and beyond.

Regarding those future deficits, the statement said the government, and I'll quote this exactly, will continue to take an appropriate and proportionate approach, though it will not be unlimited. Not unlimited. If you are a finance director, that is the exact phrase that makes your blood run cold. Oh, absolutely. Because not unlimited means the tap is eventually going to be turned off and you are going to be left holding the bag. It is the ultimate open question. You have councils that are still spending significantly more on high needs than they are funded for.

The statutory override, that accounting shield we just talked about, expires in March 2028. Right. Nobody has published what happens to the new debt. when that shield drops. The budget is exactly the sort of vehicle that could answer this question, but it doesn't have to. Okay. I follow the logic of the three columns, but I have to push back here. Go for it. If the core money is settled, the 2 billion real terms, the 4 .7 billion cash, and if the historic deficits are handled with 90 % written off, if all of that is locked in column one, Why am I still nervous?

Why does every head I know treat budget day like a weather warning? Well, you are nervous because those settled numbers we just walked through, they are national averages. Right. And you don't run an average school. You run a specific building with specific data. Break that down for me. How does the national average betray the local reality? Let's take that 1 .1 % per pupil real growth on a national spreadsheet that looks like stability. Think about the mathematical mechanism of a school budget. If you are sitting in a school with falling rolls, if your pupil intake drops by 10 or 15 kids, your fixed costs don't change.

You still have to heat the same building, run the same lighting, and pay your core staff. Yeah, exactly. But because your funding is driven by per pupil numbers, a falling roll means your total budget physically shrinks. That 1 .1 % increase per child does absolutely nothing to plug the gap of the missing children. It actually results in a budget cut for your specific school. Right, because my payroll doesn't shrink just because I have three fewer kids in year seven. Exactly. And I imagine the capital side operates the same way.

It does. The 2 .4 billion pounds a year for the school rebuilding program is a list. It's not a check given to every head teacher. You're either on it or you're not. Your building is either on that specific list or it isn't. A massive national average doesn't fix your leaky roof if the department hasn't selected you. And what about the send pressure? Because that feels like the biggest variable of all. That is where the phrase not unlimited lands directly on your desk. That warning about future deficits doesn't land in Westminster.

It lands on the local council. And who decides your school's top -up rates for children with additional needs? Well, the council does, usually through the schools forum, where local heads and council officials sit down and carve up the high needs block. Exactly. The budget can't change your allocation for this current year. But what it does change is the intense pressure on the people setting next year's allocation. I see. If the council knows the national bailout is not unlimited, and they still have to find the remaining 10 % of their historic deficit, they have to balance their books somehow.

Right. They do that by squeezing the local SEND reform plan. And that pressure flows straight down to the individual school level through tightened top -up rates. So the anxiety we are all feeling as school leaders, it is completely rational. We aren't overreacting. We are just aiming our anxiety at the wrong document. We are staring at the chancellor's red box when we should be staring at our local council's high -needs plan. Precisely. That local plan is the very thing the February grant is conditional on. That is where the actual financial squeeze will happen for you.

That reframes things entirely. Let's move to column three then, the day itself, the 28th of October. If the structural realities are mostly sitting in columns one and two, what is my actual checklist as a school leader when the chancellor stands up? You need to run three specific checks in this exact order as you listen to the speech or read the treasury summary. In order. Got it. Check one. Is there any line in the budget that revises the school's revenue settlement from the spending review? So you're looking to see if they touch the $2 billion real terms or the $4 .

7 billion cash. Right. Is there a line that explicitly changes those numbers? If there isn't, then column one holds. The settlement stands and you can comfortably go to your governor and say the core funding remains exactly as promised. OK, what is check two? Check two is entirely about the send of future. You are looking for anything regarding high needs deficits after 2026. Future deficits. Yeah. Are they providing a specific new number, a new funding mechanism or a firm date for what replaces the statutory override when it ends in 2028?

This is us waiting to see if they cash the not unlimited sentence. That is the not unlimited sentence being cashed in reality. If an answer to that is in the budget, it instantly becomes the single biggest send funding story of the year. Right. But if it isn't there, the question stays open and you have to plan your budget, assuming your council will be heavily squeezing your top up rates to survive. And check three, because we've covered core revenue and send. Check three focuses on the hidden impacts.

Look for the things a budget usually does to a school without ever actually using the word school. Okay, like what? You're looking closely for anything that changes staff costs, changes to employer pension contributions, changes to pay assumptions, adjustments to national insurance. Because you have to remember how that 1 .1 % per pupil growth is calculated. It is measured in real terms against the Treasury's measure of inflation. which is a general basket of goods in the economy. It is not measured against my payroll. And payroll is the vast, overwhelming majority of any school's budget.

Exactly. If employer costs jump by even a fraction of a percent, that 1 .1 % per pupil growth gets completely eaten alive before it even hits my bank account. It disappears instantly. So if I am synthesizing this for the governor who asked me the question this morning, the honest answer, the one that actually replaces, we'll see, is this. Let's hear it. The budget cannot cut the money we have already been allocated for this year. It might reveal what happens to council send deficits after 2028, which affects us indirectly.

But the main thing to watch on the day isn't a headline announcement about schools money. It's the granular details around staff costs. That is the exact answer. And the beauty of that framework is that it holds up whether the chancellor is feeling incredibly generous or completely austere. It works either way. because it is based on understanding which mechanical questions are genuinely open, rather than trying to predict political weather. Let's take that logic and apply it practically, because this hits differently depending on the specific setting you are leading.

Let's walk this through three different rooms. Let's start in a primary room. If you are a primary school leader right now, your biggest financial risk is the falling roll. As we established, national per pupil growth is real. But if your reception intake is down, your total school budget is shrinking, regardless of inflation. So if you are in the primary room, you need to check your local demographic role before you check the budget. Without a doubt, the role dictates everything. Now let's dip into a secondary school room.

Right, the second room. In that space, the primary risk is usually the physical building. You are managing a massive physical footprint. That 2 .4 billion pounds a year for the school rebuilding program is a rigid list. Your priority is finding out if your building is on that list because the budget document on the 28th of October will not tell you. And then we step into the third room, the specialist setting. Yeah. If you are leading a specialist school, your ultimate risk is the council's high needs plan.

The stakes there are astronomical because your place funding and your top -ups flow directly from a local authority budget that just had 90 % of its history wiped out, but with absolutely zero promises about its future survival. Which is why the focus has to shift away from Westminster and back to your local authority. If you take one practical action from our discussion today, let it be this. Have a break today. Go into the staff room. Stand by the kettle and ask a very simple, direct question to whoever's standing next to you.

Ask them what? Just ask, does anyone here actually know what our council's local sin reform plan says? Wow. The exact plan the February grant is conditional on. Because that document is what is going to dictate our reality. And, you know, the irony here is profound. The biggest financial risk to our school survival isn't being decided in parliament in five weeks time. It was buried in a conditional grant requirement back in February. And it's being quietly negotiated at the local schools forum right now while everyone is distracted by the chancellor.

Right. If nobody by that kettle knows what is in that local plan, we are flying completely blind into next year's budget. You are. So we have the columns. We have the framework. Let me ask you directly. On the 29th of October, the morning after the chancellor speaks, when that governor walks in and asks, what did the budget do to us? Are you prepared to answer with the three checks? Was the settlement revised? Were post -2026 deficits addressed? Did staff costs change? Rather than just shrugging and saying, we'll see.

I am. We finally have a concrete way to answer them. So let's lock this in for everyone listening on their way in. Four things off the drive to take with you today. One, the core school's revenue and capital numbers for next year were set in the spending review in June 2025. That's the £2 billion real terms growth, a £4 .7 billion cash increase by 2028 -29, and 1 .1 % per pupil. Two, the historic send deficit decision is already made. 90 % of around £5 billion is being paid this financial year, strictly conditional on a local plan.

And the statutory override is extended to March 20, 28. Three, the genuinely open question is the future deficits after March this year. The government will take an appropriate and proportionate approach, though it will not be unlimited. The budget could answer that open question. It doesn't have to. Four, on the day itself, you run three specific checks. The revenue settlement, post -2026 deficits, and staff costs. Everything else is weather. Both voices on this show are synthesized. The judgment isn't. Safe trip in. See you at the gates.