The Schools Forum met on Tuesday 30 June 2026 to discuss the Dedicated Schools Budget (DSG) revenue monitoring for the 2025-26 academic year and to review savings plans for 2026-27. Key discussions included noting the financial outturn for the previous year, which showed a deficit, and reviewing proposed changes to the terms of reference for the School Specific Contingency Fund.

Dedicated Schools Budget Revenue Monitoring 2025-26

Doris Mutegi, Head of Finance for Children's Services, presented the outturn position for the Dedicated Schools Grant (DSG) for the 2025-26 financial year. The overall DSG outturn was a deficit of £20.98 million, which was £1.9 million less than the budgeted deficit. This improvement was primarily due to an underspend in the Early Years Block, amounting to £3.39 million.

The High Needs Block, however, experienced an overspend of £0.82 million against a budgeted deficit of £22.9 million. This overspend was attributed to an increase in Full-Time Equivalent (FTE) pupil numbers. Specific areas of pressure included Alternative Provision, which had an overspend of £6.28 million, partly due to a strategic decision to reduce reliance on independent schools. Conversely, there was an underspend in Independent Schools of £3.99 million. Mainstream Top-ups also showed an underspend of £2.80 million, as the anticipated impact of clearing the Education, Health and Care Plan (EHCP) backlog had not yet fully affected payments to schools, with these pressures expected to emerge in the 2026-27 financial year.

The Early Years Block's underspend of £3.4 million was largely due to lower claims from settings for under-twos, compared to allocations based on census numbers. A prudent approach had been taken, with the underspend accrued in anticipation of potential clawback. The Schools Block had a £0.39 million overspend relating to the Growth Fund for planned places, which would be carried over into 2026-27.

The DSG deficit reserve at the start of the 2025-26 financial year was £24.5 million. The outturn position resulted in a closing deficit reserve of £45.5 million as of 31 March 2026. The High Needs Stability Grant, anticipated to cover 90% of the cumulative DSG deficit, was estimated at £40.95 million, which would leave a remaining deficit of £4.55 million. This grant is contingent on the approval of a local SEND reform plan by the Department for Education (DfE).

The Forum also noted that £6.4 million in savings had been delivered as planned in 2025-26, covering areas such as changes to the High Needs Block funding for Exceptional Support Requests, increased places in Alternative Provision (ARPs) and special schools, and delivering better value by supporting children in mainstream schools instead of independent or special schools.

Savings Plans for 2026-27

The Forum reviewed the plans for delivering £13.07 million in savings against the High Needs Block budget for the 2026-27 financial year. The projected deficit for the High Needs Block in 2026-27 was £30.3 million, incorporating these planned savings.

Key savings initiatives include:

• Retaining primary children in mainstream schools: A saving of £3.9 million is anticipated from retaining 2% of primary children within mainstream schools, aiming to release special school places and reduce reliance on independent school usage. This will be supported by skilling up schools through the Experts at Hand initiative.
• Increased autism capacity in mainstream: A saving of £2.05 million is projected from increasing autism capacity in mainstream settings to release special school places.
• Sufficiency strategy: This aims to deliver 72 additional places in special schools and ARPs for SEND pupils, contributing £2.89 million in savings.
• Step-down of provision: Proactive casework is expected to generate £2.32 million in savings by stepping down children and young people's provision.
• Frozen uplifts for special schools: A saving of £960,000 is planned by freezing uplifts for special schools.
• Hold back of CSBG for Independent Schools: £500,000 is to be saved by holding back the Children's Services Block Grant for independent schools.

Discussions highlighted the importance of early intervention and supporting early years colleagues to prevent needs from escalating. Dan Barton, Service Director for Education and Inclusion, acknowledged the potential to divert high-cost spend further upstream to early years support, though noted the challenges given the current significant overspend. The potential for a pilot programme to support parents in communicating with preschoolers was discussed, linking to the government's Best Start Family Hubs initiative.

Concerns were raised about the potential savings from the Portage Service, which provides occupational therapy for babies, with a view to finding alternative compensatory savings due to its perceived value. The Experts at Hand model was identified as crucial for delivering joined-up, early intervention and support for young people.

The Forum also discussed the financial pressures on special schools, particularly regarding staff pay rises and the static £10,000 place funding for special schools, which has not increased for 12 years. Dan Barton explained that the £10,000 figure is nationally determined and has been significantly eroded by inflation. He also noted the frustration for schools regarding the timing of EHCP funding, which is often paid only from the date of agreement rather than the submission date, leading to schools meeting costs without immediate reimbursement.

School Specific Contingency Fund Terms of Reference

Janice Freeman presented proposed changes to the School Specific Contingency Fund (SSCF) Terms of Reference. The SSCF assists maintained schools facing financial difficulties that could adversely affect pupil education.

Key proposed amendments include:

• No carry forward of unspent balances: Any unspent balance at the year-end will be absorbed back into the DSG deficit.
• Name change: The fund will now be referred to by the corporate director rather than an outdated title.
• Meeting timings: Adjustments to the timings of meetings.
• Eligibility for deficit: Applications will only be accepted from schools that are projected to be in deficit at the end of the financial year, removing the previous criterion allowing applications if an in-year deficit exceeded 2% of the budget share.
• Removal of COVID-19 claims: The line item for claiming COVID-19 costs has been removed.
• Cap on awards: Any award will be capped to bring the school budget to a break-even position, preventing the creation of a surplus budget.
• Redundancy costs: Clarification that redundancy costs are generally considered foreseen, as they are part of a financial plan. However, contingency may be considered if schools are misinformed about the exact cost of redundancies due to unforeseen uplifts.

The panel noted that 14 bids totalling £528,591 were received for the contingency fund, which had a budget of £98,615. Awards totalling £103,435 were agreed and prorated, meaning schools received 95% of their agreed awards. A reminder was issued that special needs costs are not covered by the contingency panel. The de-delegation committee will meet in late autumn term to discuss providing a sufficient pot for the SSCF for the following year, with an update expected at the November meeting.