Bucks Council could declare ‘effective bankruptcy,' director warns

Michael Jarrett said this could be the outcome if a deficit for special educational needs and disabilities (SEND) rose further and government help was not offered.

The council officer clarified the authority’s gloomy economic outlook during this week’s schools forum meeting.

He was answering a question from special school representative Bradley Taylor about whether Bucks Council would be among the authorities that will declare effective bankruptcy once something called the ‘statutory override’ expires in March 2026.

Under this method of accounting, the government allows councils to hold a negative reserve to address special educational needs and disabilities (SEND) deficits.

In other words, it currently allows councils to keep these debts off their books, separate from their main revenue budgets.

Once the statutory override ends in 2026/27, Mr Jarrett said Bucks Council would not be on the edge of effective bankruptcy ‘straight away’.

However, if it is not extended, the council would be among a second wave of authorities to declare effective bankruptcy later this decade, Mr Jarrett explained.

The education chief said the two years after the statutory override is due to end will see a further 55 per cent of councils declaring effective bankruptcy, which they do by issuing a ‘Section 114 notice’.

Explaining this, Mr Jarrett said: “The amount of money that is coming into the local authority is not sufficient to be able to meet its statutory responsibilities.

“That is effectively where we find ourselves in. I think we are in the second phase of that batch of local authorities that would have to serve a Section 114 notice.”

The education chief said this meant ‘every bit of the council’s reserve that would be left’ would be used to offset the deficit for the ‘high needs block’.

The high needs block is a pot of top-up funding the government gives councils to provide support for students with SEND who require additional resources to participate in education.

A £44.3m deficit for the high needs block has been projected by March 2026, which the council says will exceed its general fund balance, which is currently £42.7m.

The council is carrying out ongoing risk assessments against its available reserves, according to its report for the schools forum.

It reads: “If the deficit exceeds the totality of available reserves, then a S114 Notice would be required.

“There is sufficient funding within available reserves to cover the forecast deficit for the 2025/26 financial year.

“The government has explicitly set out the challenges with existing and accumulating deficits and we will await details to be released in the spring/summer of 2025 of how any transition from current arrangements to a potential reformed system will work alongside and decision to remove the statutory override.”