Cheshire East's current £46.9m deficit on its special educational needs budget is forecast to rise to a whopping £306.9m by 2028.

Across the country, councils are struggling with massive deficits in their DSG (dedicated schools grant) budget as a result of high needs cost pressures. This is because funding has not matched soaring demand and spiralling costs.

And the outlook is bleak, with Cheshire East's director of children's services, Deborah Woodcock, warning: "The current position is not sustainable, and the deficit is being managed through a temporary accounting override. The arrangements beyond March 2026 are not confirmed by the Department for Levelling Up, Housing and Communities.

"There are no current national arrangements for this deficit to be addressed, and use of local funding is not viable. Currently there is insufficient general fund balance (reserves)."

The matter is due to be discussed at Monday's meeting of the council's children and families committee.

A report due to go to that meeting from the children's services director states: "The council is facing increasing levels of pressure from expenditure on pupils with SEND. This exceeds the increases in the Department for Education's (DfE) funding allocations and has led to the council's DSG (dedicated schools grant) reserve being in a deficit position of £46.9m at 31 March 2023."

The report states that, without mitigation, the council would be facing a DSG reserve deficit of £535.7m in five years' time and that 'even with an ambitious level of mitigations being achieved' the deficit will be at £306.9m by 2028.

DSG deficit figures over the next five years (Image - Cheshire East Council)

Already the council is anticipating a hefty increase in the deficit by the end of this financial year 2023/4 – with it rising to £85.9m (£91.2m unmitigated).

The report states: "This deficit is forecast to increase in value and it is not recoverable under current forecasts."

Cheshire East took part in the DfE's delivering better value programme (DBV) during 2022/23 and the external DBV consultants validated the forecasting work done by the council. As part of the programme, the council bid for funding and was awarded £1m to support a transformational change programme with the aim of becoming more sustainable in the future.

But, the report to next week's meeting says, the opportunities identified within the programme were not sufficient with the current mitigations within the DSG management plan, to address the recurring in-year overspends and deficit position.

Later this year Cheshire East will take part in the safety valve intervention programme with the DfE .

This will build on the work and priority areas identified through the DBV programme.

The report to the committee states: "Being part of the safety value programme we will need to demonstrate sufficiently that their DSG management plans create lasting sustainability, including reaching an in-year balance as quickly as possible, and will provide improved support for children and young people, then the department will enter into an agreement with the authority, subject to ministerial approval.

"This will require a fundamentally rewritten management plan, which will be presented to full council on the December 11 for approval."

The children and families committee meeting takes place at 10am on Monday, 18 September at the council's Westfields HQ at Sandbach.

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