Dudley Council is drawing up plans to reduce spending on children with special educational needs and disabilities (SEND) after a £15m overspend, with a new financial report warning that the deficit could almost double to £94m within two years without significant reform.
The report, which will be debated by the council's cabinet on August 13, presents an improving picture for the authority's overall budget, but children's services remain a high-cost area. The ring-fenced Dedicated Schools Grant (DSG) is currently expected to show a £12.9m deficit for the 2025/26 financial year.
Government cash injection and rising pressures
An injection of government funding for early years provision has reduced the deficit on the overall budget, which was driven by high needs and SEND spending. However, the report, signed by Dudley's interim director of resources, Audra Statham, highlights the scale of the challenge.
“The financial pressures within the DSG High Needs Block reflect a national challenge facing local authorities, driven by increasing demand for SEND provision, growing complexity of need and rising placement costs,” the report states. “These pressures continue to place significant strain on local authority finances and reinforce the need for fundamental reform of the SEND system.”
Deficit could reach £94m
With the latest deficit added to previous years, the total shortfall in the DSG now stands at £52.8m. The government has committed to covering 90 percent of that amount. But Ms Statham's report warns that without significant reform, the DSG deficit could almost double in two years to £94m.
The report outlines the council's response: “The council is developing its Local SEND Reform Plan and Financial Recovery Plan, including detailed work to refine forecasts, identify mitigating actions and reduce future cost pressures.”
It adds: “Current forecasts remain subject to significant uncertainty. Demand for Education, Health and Care Needs Assessments (EHCNAs) and Education, Health and Care Plans (EHCPs) is expected to increase during 2026/27 and 2027/28 as reforms are implemented. In addition, the existing backlog of assessments may place further pressure on expenditure and could result in costs exceeding current projections.”
The council's plans are expected to be discussed further at the cabinet meeting, with the aim of stabilising finances while continuing to meet statutory duties for SEND provision.
