The figure is a best case scenario and could rise to £367m
Auditors have said the gap is “rapidly growing”(Image: Ben Birchall/PA Wire)
Cash-strapped Wirral Council could be facing a staggering black hole in its school finance budgets of more than £200m by the end of the decade. The figure would represent half of the local authority’s entire budget.
A stark warning came in auditor Grant Thornton’s most recent report into the council’s financial accounts for 2023-24. This was published ahead of an extraordinary meeting on January 14 called as the council teeters on the edge of a Section 114 notice and effectively bankruptcy.
Grant Thornton, the local authority’s external auditors, have raised a number of concerns about the council’s budget and made a recommendation under the law because they are not satisfied the council is able to deal with the problems it faces. This unusual step has fuelled tensions throughout the local authority with one person describing it as “armageddon.”
At the moment, any deficit in council school budgets, known as the Dedicated Schools Grant (DSG), is kept off the council’s revenue budget due to an override granted by the government in 2020 to councils across the country who were struggling to balance the books. This is because as demand for special educational needs and disabilities (SEND) provision has grown, costs in high needs budgets have shot up too.
The government’s override is due to end in March 2026 and councils across England may need to find nearly £5bn between them by then with 43% at risk of declaring bankruptcy as a result. Education Secretary Bridget Phillipson previously said schools have been “neglected to the point of crisis” and promised reform, though calls have been made to the government to write off this debt.
Concerns have been raised by the local authority’s School Forum as the budget gap keeps getting worse each year despite increases to school funding. In April 2023, the gap was £4.7m but a year later this had grown to just under £13m.
By March 2025, it is estimated to be £23.8m. This is set to increase even further with the latest estimate for March 2026 showing schools will go over budget by £41m.
If the government does not step in, the council will have to find this money and would likely have to declare bankruptcy. However more recent reports now suggest bankruptcy may now happen in the next few months without further government support, long before any school budget overspends have to be paid.
Auditors have warned the gap is “rapidly growing” and forecast it to reach £367,030,000 by March 2030 if no action is taken. This could be reduced to £208,739m in a best case scenario, the equivalent of 52% of the council’s current budget.
As a result, auditors have urged the council “to place a significant and urgent focus on developing and implementing interventions” due to this “significant weakness” and for the school’s budget black hole to be listed as a key risk for the council to manage going forward.
To combat this, the council is part of a Department for Education programme to improve SEND services and it is seeking to comply with a government notice issued to the local authority over SEND by October this year. These steps could lower the black hole to £98 by 2028 but it is still expected to go up.
The government has told the council they “are doing everything that [they] can and everything that is expected” with regular reports. The council says it is on track with 170 new places created in special schools in September 2024 as well as provision for 400 children over the next four years.
Wirral Council said this “reduces the reliance on more expensive independent provision which places the biggest pressure on the DSG budget.” For example, the Proactis contract portal said the local authority spent £5.5m this year on education at West Kirby School and College, a special independent school.