Agenda item

DSG Deficit position attached

Schools balances update attached

Schools balances list attached

Craig Povey presented a report setting out the DSG position 2025 - 2026.

It was explained that the Council had a deficit position of £19.041 at the beginning of the 2025-26 financial year. During the financial year, the service has worked on making savings where possible, whilst facing increased demand.

Due to the ongoing significant demand for high needs funding, the Council has agreed a revised DSG deficit recovery plan with the Department for Education (DfE), which extends the period for deficit recovery until 2028-29.

The Council’s financial accounts have now been prepared with the DSG deficit position at the end of the 2024-25 financial year (pre audit) standing at £20.285m, an increased deficit position of £1.244m.

During 2025-26, the DfE announced the introduction of the High Needs Stability Grant for

Autumn 2026, which will fund 90% of the DSG Unusable Reserve at the end of 2025-26. The

Dedicated Schools Grant (DSG) statutory override is a temporary accounting rule in England

that allows local authorities to separate DSG deficits (particularly from High Needs/SEND

blocks) from their main revenue budgets. This protection prevents councils from breaching

their legal duty to set a balanced budget. In accordance with the Statutory override, the

unusable reserve is taken from the 2021-22 deficit position of £21.473m

2025-26 Closing School Balances

Nursery 114,016

Primary 78,820

Secondary 1,167,823

Special 929,193

Total 2,289,852

The update included at Appendix 1 is the School Balances detail per Bury School and explained that it should be noted that the number of schools which are in a deficit position has reduced from 12 at the end of 2024 - 25, to 9 at the end of the 2025-26 financial year.

There are 7 schools with a surplus above the recommended maximum percentage of 8% for Nursery, Primary and Special Schools and 5% for High Schools. These schools are shaded blue.

9 schools ended the year with a deficit, and these schools are shaded red. Schools are required to adhere to their budget limits but, in the event of an unplanned deficit occurring, this will be deducted from the following year’s budget share. Schools that aren’t able to produce a balanced budget for 2026-27 can request approval to set a deficit budget by submitting a deficit recovery management plan to the Executive Director of Children and Young People. The deficit should normally be recovered within two years. Of the 12 schools that ended 2024-25 with a deficit: 3 recovered the deficit in 2025-26;

7 have an approved deficit recovery plan;

1 has yet to agree a deficit recovery plan;

1 planned to balance in 2025-26, but still ended the year with a deficit. Of the 9 schools ending 2025-26 with a deficit: 7 already have an approved deficit recovery plan, 2 of which are subject to review;

1 plan is currently being prepared before submission for approval;

1 is converting to academy status during the summer term. The Director of Education has introduced Finance Improvement Group meetings with schools facing challenges in setting a balanced budget.

It was agreed:

That the contents of the report be noted