Schools in more than one in three areas of the country face cuts to their core funding next year as local authorities grapple with “mountainous” deficits in special educational needs spending.
Tes can reveal there are more than 60 areas of the country where councils are set to transfer money away from their core schools funding block into the high-needs block to meet special educational needs and disabilities cost pressures.
High-needs funding is used by local authorities to fund specialist places and to provide top-up funding for pupils whose needs cannot be readily met in mainstream schools.
The government last night announced plans for 90 per cent of council deficits in high needs spending accrued to the end of 2025-26 to be covered by central government.
A Tes investigation has revealed how councils across the country are already planning to move money out of their core schools funding pot in 2026-27 as they grapple with ongoing deficits.
Leaders warn that moving money away from mainstream schools puts their budgets under strain and makes it harder for them to meet the needs of pupils with SEND - at a time when the government is focused on inclusion.
Taking core schools funding for SEND
Councils are allowed to transfer up to 0.5 per cent of their core schools funding block into their high-needs block with the support of their local schools forum - a group that makes decisions on local funding allocations.
Transfers above 0.5 per cent require the education secretary’s approval.
Responses to questions from Tes and an analysis of schools forum minutes show that there are at least 73 areas of the country where councils have consulted on plans to transfer funding to the high-needs block for 2026-27.
These transfers are going ahead in at least 61 areas and there are three more where Tes is still chasing an update on the decision.
There are at least nine councils where local schools forums rejected plans for a transfer, but in at least three of these - Manchester, Hillingdon and Somerset - the authority is now seeking approval from the education secretary to make the transfer without forum support.
Forty councils told Tes they were not transferring funding this year.
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A multi-academy trust that runs 35 schools has described the ongoing transfer of funding between blocks as a “scandal”.
Annual accounts for Meridian Trust, which runs 19 primaries, 12 secondaries, three special schools and an all-through school, state: “The ubiquitous arguments regarding local authorities’ high-needs block transfers are a scandal that remains unacknowledged.”
Speaking to Tes, Mark Woods, the trust’s CEO, said: “Until this year in Cambridgeshire, from 2018 we only had one year where there wasn’t a block transfer. That is a significant sum of cash over a period of time in what is traditionally quite a low-funded authority.”
He added that the block transfer was a source of “frustration” because, when the government calculates what level of pay rises schools can afford, it does not take into account that some schools could be losing up to 1 per cent of their funding.
Mr Woods said: “Where might we have spent the money if we had had an extra £30,000 to £50,000 in each school [if the funding transfers had not happened]? It could have gone for an additional TA, I could have renewed a boiler, bought new books, renewed our laptops. Schools have a variety of different needs.”
SEND pressures
In the ongoing SEND crisis, councils across the country have faced mounting cost pressures and deficits, with real-terms council spending on SEND provision rising by two-thirds between 2015-16 and 2024-25.
And high-needs deficits are forecast to reach £14 billion by 2028.
A statutory override is currently keeping these deficits off councils’ books, but in a survey recently published by the Local Government Association, eight in 10 authorities said they would face effective insolvency if these debts were put on their balance sheets.
More than nine in 10 councils responding to the survey had a high-needs deficit. Ministers have now announced that 90 per cent of the deficits accrued to the end of this financial year will be covered by central government if councils get a SEND reform plan approved by the Department for Education.
Schools forum minutes show how local authorities are wrestling with the pressure of managing these deficits while ensuring schools have sufficient funding.
For example, Essex County Council has asked the DfE for permission to transfer 1 per cent of schools block funding to its high-needs block, after its local schools forum only approved a 0.5 per cent transfer.
Councillor Tony Ball, the council’s cabinet member for education, said the high-needs block faces a £431.8 million deficit by March 2030, with “key pressures” including increases in the volume and cost of education, health and care plans (EHCPs), independent school places and alternative education.
He added: “We have been clear with the government around the pressures we are facing and are calling for the fundamental transformation of the system.”
‘Perverse’ funding transfers
Dorset’s schools forum rejected a plan to transfer money to the high-needs block for the third year in a row.
Meeting minutes show that members were concerned that approving the transfer would create an expectation that schools would routinely subsidise the high-needs block.
Members also highlighted that the scale of the deficit meant that the proposed transfer would have minimal impact and that “schools are facing significant financial pressures”.
Schools would typically lose £5,000 to £30,000 per school under the transfer that “could be used to strengthen inclusive practice locally”, the minutes state.
Phil Haslett, deputy chair of the f40 group of local authorities, which was formed by the lowest-funded councils in the country, described the practice of funding transfers as “perverse”.
“All that happens is that schools then start applying for more EHCPs to access more funding,” he said.
“Many schools will tell you they don’t actually want the actual statutory plan itself. What they’re seeking is the resource...to be able to better meet children’s needs.
“You’re effectively taking funding away from the mainstream schools when you’re asking them to enhance their provision to meet need.”
School budgets under strain
Julia Harnden, deputy director of policy at the Association of School and College Leaders, said the transfers were an understandable response to the “massive pressure on [councils’] budgets and mountainous deficits, in many cases”.
“However, the result is that school budgets are then placed under even more strain. This impacts the provision schools can provide to all of their pupils, including those with additional needs,” she added.
Ms Harnden warned that the practice has become embedded in the system “for the simple reason that there isn’t enough funding for SEND provision, and this has been the case for many years”.
Government plans for a greater focus on SEND support in mainstream schools “will require a more sustainable funding model”, she said.
James Bowen, assistant general secretary of the NAHT school leaders’ union, echoed this call. “What should really be an exceptional arrangement has now become, in many regions, a baked-in feature of the funding system,” he said.
“Shifting money from one block to another is clearly not a sensible or sustainable long-term solution. There is simply no getting away from the fact that funding levels have not kept up with the demand in the system.”
A DfE spokesperson said: “We’re ending the postcode lottery of SEND provision by strengthening support and protecting parents’ rights - shaped directly by the views and experiences of those who know the system best.
“The changes will make sure children get support at the earliest stage, while bringing about financial sustainability for councils. We are clear that any deficit from 2028-29 onwards will be absorbed within the overall government budget.”
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