School and council deficits
Where school budgets and council high-needs budgets are in deficit, year by year: council-run schools and academies apart, and each council's dedicated schools grant (DSG) balance.
Most of a school's money goes on people: over 80% of schools' costs are staff costs. So when pay and other costs rise faster than funding, or a school loses pupils and the money that comes with each one, the budget is squeezed quickly and staffing is the only big thing left to cut. In 2024–25 and 2025–26, mainstream school funding per pupil grew by 2 percentage points less than school costs, partly because rising special needs costs took a large share of the extra money. A deficit usually comes from several of these pressures at once, not one bad decision. (IFS, p.62, 63)
What helps: a recovery plan agreed with the council or trust that brings the budget back into balance over a few years, regular forecasts that governors check, and early conversations about pupil numbers and special needs funding.
Council-run schools report for April to March (CFR returns) and academies for September to August (academy accounts returns). Figures for all schools together stop at 2024-25, the latest year with academy accounts; later years are council-run schools only.
Negative is a deficit carried forward, in cash terms.
The statutory override
Councils' special needs (high needs) budgets have been allowed to run deficits since 2019 under a 'statutory override' due to end in 2028; total deficits are forecast to reach £14 billion. (IFS, p.61)
Statutory override: since 2020-21 DSG deficits are held in a separate unusable reserve rather than met from council general funds. The override runs to the end of 2027-28. Under the February 2026 approach, the High Needs Stability Grant pays 90% of each LA's eligible DSG deficit at 31 March 2026 from autumn 2026, so 2026-27 balances will fall sharply.
Councils and special needs
- Councils' special needs (high needs) budgets have been allowed to run deficits since 2019 under a 'statutory override' due to end in 2028; total deficits are forecast to reach £14 billion. (IFS, p.61) Statutory override: since 2020-21 DSG deficits are held in a separate unusable reserve rather than met from council general funds. The override runs to the end of 2027-28. Under the February 2026 approach, the High Needs Stability Grant pays 90% of each LA's eligible DSG deficit at 31 March 2026 from autumn 2026, so 2026-27 balances will fall sharply.
- Councils top up a mainstream school's costs for a pupil with special needs above £6,000 a year from their high needs budget. (IFS, p.46)
- Council spending on special needs transport and assessments has more than doubled in real terms since 2019–20, up £1.1 billion. (IFS, p.52)
- Councils' central spending on the schools they run fell from £230 to £180 per pupil between 2016–17 and 2023–24, while academy trusts' rose from £240 to £510. (IFS, p.56)
- Councils can adjust the national funding formula for schools in their area, but cannot make big or complicated changes. (IFS, p.46)
- About 5.3% of pupils in England now have an EHCP, up from just below 3% historically. (IFS, p.58)
- Independent special school places cost on average over £60,000 a year and take over £2 billion of high needs spending, for only 6% of pupils with EHCPs. (IFS, p.59)
Safety valve and delivering better value are DfE programmes for councils with large high-needs deficits; safety valve closed in April 2026 and was replaced by the High Needs Stability Grant. Council-run schools report for April to March (CFR returns) and academies for September to August (academy accounts returns). Figures for all schools together stop at 2024-25, the latest year with academy accounts; later years are council-run schools only.
| Council | Council-run schools in deficit | Council-run deficits 2023-24 | Council-run deficits 2024-25 | Council-run deficits 2025-26 | Academies in deficit 2024-25 | Academy deficits 2022-23 | Academy deficits 2023-24 | Academy deficits 2024-25 | High-needs (DSG) balance | DfE programme |
|---|---|---|---|---|---|---|---|---|---|---|
43.9% (18 of 41) | £3.0m £416 per pupil | £6.1m £488 per pupil | £11.2m £774 per pupil | 15.0% (3 of 20) | £226k £328 per pupil | £307k £701 per pupil | £634k £950 per pupil | -£2.5m -£56 per pupil | — | |
40.5% (34 of 84) | £2.6m £331 per pupil | £7.3m £641 per pupil | £11.7m £1,004 per pupil | 24.4% (11 of 45) | £660k £346 per pupil | £1.4m £358 per pupil | £1.6m £224 per pupil | +£4.4m +£71 per pupil | — | |
19.2% (5 of 26) | £220k £155 per pupil | £51k £36 per pupil | £89k £74 per pupil | 1.6% (1 of 61) | £84k £232 per pupil | £19k £47 per pupil | £75k £183 per pupil | -£19.3m -£557 per pupil | Safety valve | |
0.0% (0 of 5) | £19k £58 per pupil | £0 | £0 | 23.6% (17 of 72) | £1.4m £680 per pupil | £3.2m £813 per pupil | £2.6m £559 per pupil | -£46.5m -£1,724 per pupil | Safety valve | |
26.7% (8 of 30) | £382k £269 per pupil | £592k £408 per pupil | £1.1m £376 per pupil | 7.5% (3 of 40) | £506k £449 per pupil | £1.7m £802 per pupil | £228k £269 per pupil | -£1.7m -£55 per pupil | — | |
31.2% (5 of 16) | £572k £358 per pupil | £927k £696 per pupil | £1.5m £848 per pupil | 11.8% (8 of 68) | £570k £341 per pupil | £1.1m £390 per pupil | £942k £388 per pupil | -£22.4m -£524 per pupil | Safety valve | |
23.8% (44 of 185) | £10.9m £1,253 per pupil | £12.1m £1,306 per pupil | £15.2m £1,309 per pupil | 8.9% (21 of 237) | £1.2m £219 per pupil | £992k £145 per pupil | £5.8m £590 per pupil | +£57.9m +£292 per pupil | Delivering better value | |
3.8% (2 of 52) | £431k £229 per pupil | £412k £285 per pupil | £287k £528 per pupil | 16.7% (4 of 24) | £630k £658 per pupil | £641k £838 per pupil | £617k £637 per pupil | -£5.1m -£182 per pupil | — | |
0.0% (0 of 6) | £0 | £0 | £0 | 11.8% (4 of 34) | £2.5m £1,852 per pupil | £4.6m £3,414 per pupil | £6.0m £4,872 per pupil | -£7.3m -£390 per pupil | Safety valve | |
20.3% (15 of 74) | £227k £168 per pupil | £210k £102 per pupil | £764k £196 per pupil | 2.2% (1 of 45) | £959k £1,656 per pupil | £2k £4 per pupil | £185k £851 per pupil | -£19.2m -£373 per pupil | Safety valve | |
21.4% (3 of 14) | £1.1m £2,606 per pupil | £2.4m £3,841 per pupil | £3.2m £4,877 per pupil | 13.3% (11 of 83) | £6.9m £2,169 per pupil | £8.7m £1,533 per pupil | £1.6m £248 per pupil | -£179.8m -£3,425 per pupil | Delivering better value |
Sources: DfE Financial Benchmarking and Insights Tool data (CFR returns for council-run schools, April to March; academy accounts returns, September to August), Get Information about Schools, DfE section 251 outturn (DSG balances), the Charity Commission register and the IFS annual report on education spending in England 2025–26 (IFS figures in 2025–26 prices, November 2025 deflator). Open Government Licence v3.0. How these figures are worked out