Agenda item

Joshua Amahwe, Head of Finance CYPS, to present

Joshua Amahwe, Head of Finance CYPS, together with Niall Devlin, Service Director, Education and Inclusion, reported that the 5 year Safety Valve Agreement had ended on 31^st March, 2026.  The submitted report outlined the performance against the approved Safety Valve Agreement (with the Department of Education) over the 5 years of the Programme as well as the recovery plans in place to enable Rotherham to achieve financial sustainability.

The report also highlighted the financial position of the Dedicated Schools Grant (DSG) High Needs Budget in 2025-26 and the cumulative deficit position in the last year of the Safety Valve Programme.

The Safety Valve Agreement had provided a clear and ambitious framework for developing enhanced inclusive provision to meet children’s SEND across the Borough.  Rotherham had delivered all the conditions of its Safety Valve Agreement and had made significant progress in meeting the agreed financial recovery plan.  Key achievements against the agreed conditions over the 5 year period were set out in the report but included focus on strengthening mainstream inclusion, increased specialist provision as well as improving the financial sustainability of the whole High Needs SEND budget.

Over the 5 year period, the whole Programme had been closely monitored by the Council and the submission of quarterly reports/various challenge sessions with the DfE.  There had been growth in local capacity in terms of the number of SEND places in Rotherham with in excess of 500 special school places created in Rotherham as well as the creation of 10 SEND resource basis within mainstream schools and the extension of some special schools and the PRU.

Massive inroads had been made in mainstream schools by improving the level of inclusion.  A high number of pupils were now supported within mainstream provision opposed to placement in specialist provision although there continued to be an increase in specialist school provision.

At the outset of the SVA, there had been a cumulative deficit of approximately £21.2M; part of that reduction stemmed from the financial support received as well as the recovery actions.  A financial deficit of £3.6M was reported for the High Needs Budget for 2025-26 and had been transferred to the DSG reserves account.  This reflected increased demand within the SEND system including rising numbers of pupils with EHCPs in mainstream and specialist settings alongside inflationary cost pressures.  Under the current regulations, the deficit was carried forward into the next financial year as part of the statutory protection the Government had put in place to ensure local authorities were not burdened with the deficit in DSG.

The Government had announced a High Needs Stability Grant which would fund up to 90% of historic DSG deficits accumulated by 31^st March 2026 with local authorities expected to fund the remaining 10%.  Based on the proposed funding methodology, the Council was expected to receive approximately £0.6M reducing its residual DSG deficit of £2.9M as at 31^st March 2026.

The Grant formed part of the transition to a reformed SEND system and complemented the continuation of the statutory DSG deficit override which remained in place until 31^st March 2028.  Access to the Stability Grant would be conditional on each authority submitting a Local SEND Reform Plan and securing approval from the Department for Education.

Local authorities were required to submit their Local SEND Reform Plan by 19^th June 2026 setting out how they would transition to the reformed SEND system and increase early intervention, inclusion and mainstream capacity.  Plans must demonstrate a clear pathway towards the Government’s vision for a more inclusive SEND system.

It was expected that the Stability Grant funding would continue during the transition although funding would be proportionate rather than unlimited.  Local authorities would be required to maintain robust financial management whilst continuing to deliver appropriate, high quality support for children and young people with SEND.  Delivery of approved Local SEND Reform Plans would be a key component of the approach.  Given the funding uncertainty, it was difficult at present to assess how much the DfE would support the ongoing in-year High Needs deficits.  The position would continue to need to be closely managed and factored into the Council’s budget setting processes.

Discussion ensued with the following issues raised:-

-        Approval of the Local SEND Reform Plan was important as it released future funding in terms of addressing the cumulative deficit

-        Modelling work had been carried out to assess what the next 2-3 years would look like based on projected numbers of pupils expected to be in the system and accessing support.  It was expected to be in the region of £19M and took account of the recovery actions of the plans in place

-        The £19M was made up of the £2.9M carried forward from 2025/26, anticipated £7M for 2026/27 and approximately £9M for 2027/28

-        The Government had indicated that it was looking to provide financial support up to 2027/28 in terms of the High Needs Stability Grant

-        Based on Government guidance, there was a complicated formula for SVA authorities which did not give 90% funding for 2025/26 but would  be applicable once out of the SVA

-        The expectation that the 90% would be ongoing came from the Fair Funding Review, discussions with the DfE and the need to address the ongoing pressure on the system

Resolved:-  (1)  That the performance against the Safety Valve Agreement and the recovery actions to manage the Dedicated School Grant (DSG) deficit in Rotherham be noted.

(2)  That the 2025/26 financial position of the DSG High Needs Budget and cumulative DSG deficit at the end of the Safety Valve Programme be noted.