Here’s what you could have won – an alternative ‘mini’ Budget
SARAH CALKIN, EDITOR
27 September 2022 By Jessica Hill
Around 40 councils are set to receive funding to tackle their spiralling high needs deficits in return for implementing a strict reform plan as part of the government’s ‘safety valve’ programme, LGC understands.
With another 55 councils with less severe deficits already receiving support via the separate Delivering Better Value in Send programme, this means almost two thirds of local authorities with Send responsibiities will be part of a government programme aimed at slashing deficits now reported to amount to more than £2bn.
The safety valve programme was introduced in 2020 to support councils with the highest deficits on their high needs dedicated schools grant – the pot of funding used to deliver Send services – to draw up a recovery plan reforming their high needs systems and associated spending. The councils that sign up are held to account for their reform and deficit reduction targets via regular reporting to the Department for Education, which provides “support and challenge” to those councils, its guidance explains. In return for delivering required reforms, councils get additional funding to help pay off their accumulated deficits.
Because of the stringent conditions attached, councils with high deficits have not always shown eagerness to commit, and the programme is viewed as being a last resort to tackling their Send challenges.
DfE has only announced ‘safety valve’ agreements it has signed with 14 authorities – nine in 2021-22, worth over £300m, and five in 2020-21, worth almost £100m. It declined to tell LGC which other councils were involved or how many it expected to support through the programme.
However, LGC understands there are at least a dozen more in the immediate pipeline, and by the time the programme ends around 40 councils are expected to have received help.
LGC can reveal that those authorities invited this year to participate in the programme include Norfolk and Kent CCs, as well as Blackpool Council and Haringey LBC.
Another 55 councils with what DfE describes as “less severe but substantial” deficits are receiving dedicated support and funding this year under the £85m Delivering Better Value in Send programme, which sends specialist advisors from Newton Europe Limited and Chartered Institute of Public Finance & Accountancy into councils to tackle their deficits. Councils being helped in this way include Suffolk CC and Cheshire East Council.
The remaining authorities are being contacted and offered more general support by the Education & Skills Funding Agency.
But there are concerns the package of support currently on offer is still not enough to meet the scale of demand.
Analysis from the County Councils Network (CCN) and the Society of County Treasurers in July calculated council Send deficits this financial year are £2.4bn – six times higher than levels in 2018 –and warned this could rise to £3.6bn in 2025.
The Department for Levelling Up, Housing & Communities has put in place a ‘statutory override’ where councils’ Send deficits can be ringfenced from core council budgets, but this is due to end after the accounts for the current financial year are closed. From then onwards, councils will need to prove they can cover DSG deficits from their available reserves, or face the prospect of section 114 notices being issued declaring they cannot balance the books.
The DfE’s guidance notes on its intervention work says it will “hold the local authorities to account for delivery of reforms to their high needs systems, so that they can function sustainably and therefore in the best interests of the children and young people they serve”.
“These local authorities will be expected to reach an in-year balance on their DSG as quickly as possible, and over time eliminate their deficits,” they said. “The agreements will be closely monitored, and if the conditions set in the agreements are not being met, we will not hesitate to withhold payments.”
Large deficits have built up since 2014 Send reforms increased eligibility for Education, Health and Care Plans (EHCPs) which prompted a rise in demand for them, but with proportionally less capacity in mainstream schools and higher costs involved in transporting children to specialist schools.
But Tony McArdle, who leads on DfE’s safety valve negotiations with councils, told LGC it is unclear why the number of EHCPs is growing at the current rate.
He said “in a lot of areas”, authorities are delivering a “good Send service” which is “within the current financial balance”. But “the majority are really strained in terms of their finances”.
“There are authorities that have continued to do this well throughout. It’s all about the degree of prioritisation you give the issue and early intervention,” he continued.
“Those authorities that have taken it seriously, seen what’s coming, planned ahead and invested in early intervention and engagement with parents in particular, have not found themselves in anything like the level of distress that those who are in trouble have.
“The ones in most trouble either didn’t have their eye on the ball properly after the 2014 reforms or just haven’t managed it as well as they might.”
DfE did not comment on the number of councils involved in its programmes. Its Send and Alternative Provision green paper, which it consulted on in July, includes proposals for a new national framework for high needs funding banding and tariffs, which the department says will “offer clarity on the level of support expected”, and “put the system on a financially sustainable footing in the future”.
Blackpool Council
Blackpool is in discussions with DfE about developing a safety valve agreement. Ofsted and the Care Quality Commission published a report on Blackpool’s Send system in May which found it to be underperforming in four areas: lack of accountability in the area’s Send improvement strategy; duties around preparing children for adulthood, such as ensuring continuity of health care, not being fulfilled; poor communication with parents and long therapy waiting times. Since then, a cabinet report said there has been “considerable partnership activity” to strengthen Send delivery and a new Send head has been appointed.
Kent CC
Kent is currently in negotiations with the DfE to gain access to the Safety Valve funding, with a three year plan being drafted up. A financial agreement is expected to be agreed in the coming months. Kent’s schools’ delegated budgets are reporting an overspend of more than £51m, with the county understood to be spending £42m this year on school Send transport alone.
A recent cabinet report said the schools delegated overspend “reflects the impact of high demand for additional Send support and greater demand for specialist provision”.
The report continues: “The high needs deficit is the council’s single most significant financial challenge. Officers continue to work with [DfE] on the Safety Valve programme to reduce the impact on the authority.”
A report to its governance and audit committee said the discussions with DfE “require a firm commitment to change and to delivering better value for money”.
A redesign and re-configuration of Kent’s send service is currently underway and will form the basis from which the requirements of the Safety Valve programme will be met.
Norfolk CC
A report to a cabinet meeting in July confirmed the county is participating in the safety valve programme in 2022-23. It said that agreeing the dedicated schools grant (DSG) management plan was a “high priority to reduce and mitigate the financial risk associated with the DSG deficit position, but may also have budgetary implications for the council over the same period”.
Hounslow LBC
A report to Hounslow’s audit committee this week confirms it has been included in the programme “because of the size of its deficit – current and forecast – in the DSG”. It notes that “failure to deliver to the standard or timing required by the DfE…presents significant reputational, service delivery and financial risks”.
Haringey LBC
Councillors agreed unanimously at a recent cabinet meeting to join the safety valve programme, after being warned in a report that if growth in spending on the high needs block of the grant continues unchecked, the authority would face an £83m cumulative deficit in the DSG by 2028 – posing a “critical financial risk”.
Its current in-year DSG deficit is £4.6m. If the council can eliminate that within five years, the government will provide funding to bring down the cumulative deficit, currently £21.5m. To do so, Haringey will need to draw up “a series of detailed plans for systemic change and service transformation” that require DfE approval.
The council’s final plans to join the programme will be submitted in October, with DfE approval expected by December.
Haringey’s cabinet member for children, schools & families, Zena Brabazon (Lab) said: “The change and transformation required in joining the safety valve programme does represent a challenge for the Send service, but it’s one I firmly believe we can meet as this work is already underway.
“In partnership with key stakeholders in our schools; the wider education, health and care sectors; children, young people and their families, we are currently engaged on that change process of wider strategic transformation of Send services.”
Slough BC
Its audit committee papers this week highlight an “Implement Dedicated Schools Grant (DSG) recovery plan…also known as the Safety Valve programme”, with “progress being made with regular meetings” with the DfE.
or a new account to join the discussion. 
Private sector disruptors offer lessons in how to take a whole-system approach,…
More Sponsor Insight
Newcastle-under-Lyme Borough Council
High Peak Borough Council & Staffordshire Moorlands District Council
Oxfordshire County Council
Barnett Waddingham