Slough Council's £27m school budget blackhole could be plugged

No financial oversight and effectively ignoring the dedicated schools grant (DSG), a ring-fenced allocation of government money to fund local schools and educational services, has led the blackhole to expand to £41.4m by 2026/27 if no action is taken.

Back in 2015/16, the council, which effectively declared bankruptcy in 2021 and faces a £357m deficit as well as a £760m borrowing bill, faced a £4.9m deficit in the DSG but that could grow by eight times that amount.

This is mainly due to the overspending in the high needs block, funds used to support children and young people with special educational needs and disabilities, and the council not balancing the DSG in-year in previous years as they were not required to do so.

READ MORE: Slough's schools deficit could rise to £43m in two years

If left unchanged, this would have impacted the local authority’s fragile reserves and would have gone further negative by £40m.

But progress has been made to reduce Slough Council’s DSG overspend, and finance officers now believe they will be facing a £27m deficit by 2026/27 – a £14.4m reduction.

Finance chief Steven Mair told councillors sitting on the overview and scrutiny meeting that if the local authority can prove that they are spending below budget every quarter, the Department for Education (DfE) could be ‘minded to’ write off the overspend.

However, it relies on the DfE having confidence in the council’s plans to mitigate the DSG blackhole.

Slough Borough Council's chief finance officer Steven Mair (Image: Slough Borough Council)

Mr Mair warned members: “It does mean a very close eye needs to be kept on this in the future because you cannot afford to let it slip because you will lose that potential benefit should the DfE choose to support us and we will know by the end of February if they will or not.”

If the DfE does not agree to write off the deficit, Mr Mair said the council will have to finance that £27m itself. On the other hand, if the DfE agrees, it won’t pay it off in one go but by piecemeal over several years.

READ MORE: Slough Council warned further damning reports on accounts

Speaking at the meeting on Wednesday, February 22, Cllr Rob Anderson (Lab: Britwell & Northborough), lead member for financial oversight, said: “If we achieve this and get the DfE to effectively write off the £27m and stage pay us in the future, that will be the first additional money we had to solve.

“All the things we’ve been talking about tonight and for the last 18 months have been all about us dealing with our own problems in different ways, but this could potentially be some additional funding that we will get in.”