Hull City Council could face severe financial challenges around what it spends on schools, with significant pressures being placed on the authority through increasing demand for Special Education Needs and Disabilities (SEND) provision. The budget was discussed in a Cabinet meeting earlier this week, with the council facing a growing deficit of more than £40million.
Although the figures are alarming, the government announced earlier this year it would pay off most debts after a warning that eight in ten councils could face bankruptcy from SEND deficits. But the government support is not indefinite, and the statutory override that keeps the specific overspend on education off the council’s balance sheet could come to an end in less than 18 months’ time.
Councillors shared their deep concern in the Cabinet meeting in Hull, promising to analyse cost-savings and mitigation measures. But worries remain that demand for specialist education and the growing demand for transport to school means the financial headache is only going to get worse.
According to the council’s second formal revenue budget monitoring report for 2026/27, the local authority faces a projected £8.3million overspend on its General Fund, with a £17.9million in-year deficit in the Dedicated Schools Grant (DSG).
This is threatening to increase the authority’s cumulative ring-fenced schools deficit to £42.3m by the end of this financial year. Papers presented in front of the Cabinet show that the ongoing demand and expenditure for children with complex educational needs is driving much of the overspend.
Steadily rising demand for specialist support in Hull
Across Hull, the number of pupils requiring Education, Health and Care Plans (EHCPs) has steadily climbed, far outpacing what schools and support workers can deliver. A continued growth in statutory obligations leaves the council legally required to provide costly tailored educational and health support – placing unprecedented structural pressure on the council’s resources.
Councillors are promising to meet the challenge head on, but are insisting that the expensive demand for specialist education can’t just be met by local council taxes, and are urging central government to do more.
“This is not a place any of us want to be in,” Sarita Robinson (Liberal Democrat – Derringham ward) told the Cabinet meeting. “Not all work can be done internally, the government has to take responsibility and look at profiteering from private companies.”
Documents from the Cabinet meeting make clear these challenges are visible across several key delivery areas, notably in Hull’s home-to-school transport service. The report identifies severe sufficiency issues for specialist school places within the city boundaries, meaning many vulnerable pupils cannot be accommodated close to home.
This means the Hull City Council is occasionally funding transport to out-of-area specialist settings – a cost which is being compounded by higher fuel prices and things like the minimum wage and staff costs going up again.
Beyond transport, children’s services face severe financial headwinds from external placement costs. Because local, in-house specialist capacity cannot keep pace with the severity and volume of complex needs, the council can be forced to commission expensive external residential and care placements. This combination of rising unit prices, private market dependency, and climbing case volumes is testing Hull City Council balance sheets.
A growing deficit for Hull City Council
The Dedicated Schools Grant funds early-years, schools, and high needs provision. Hull City Council’s forecasted in-year DSG shortfall of £17.9m highlights the systemic mismatch between central government formula funding and the reality of local SEND demand.
This ongoing gap is set to push Hull’s total DSG deficit to an unsustainable £42.3m by March 2027, highlighting a structural crisis shared by many councils across the country.
Speaking after the Cabinet meeting, Hull City Council leader Cllr Mike Ross recognised the ‘massive demand’ around the changing face of education expectations and funding.
“It is absolutely crucial that those who need the support get it, that’s why we are investing in long term solutions for specialist SEND solutions,” he said.
The authority has had some success with bringing further specialist SEND support into schools. And as part of strategic work in the area, the council has also had a thumbs-up from the Department for Education which has signed off a comprehensive new SEND plan for Hull.
This long document sent to Westminster outlines how Hull City Council will implement the government’s education reforms and means much of the council’s historical deficits relating to SEND will be wiped out.
As part of this, the government gave local authorities targets for reducing reliance on EHCPs and are hopeful of a less fragmented support offer in the region.
However, there are concerns that demand is going to shoot up ahead of the reforms coming in, with one report earlier this summer predicting one in ten families might rush to secure EHCPs. William Burns, a social care policy adviser for the Chartered Institute of Public Finance and Accountancy, said new financial pressures were inevitable.
“The government’s own modelling suggests demand for EHCPs could return to today’s levels by 2035, yet current levels of demand are already placing severe strain on the system. It is therefore difficult to see how recreating today’s volume of need, even within a reformed framework, can be considered a sustainable end state,” he said.
Council is facing unprecedented challenges
Documents shared at the Cabinet meeting in Hull show there are 2,300 high needs pupils in mainstream schools with EHCPs in 2025/26, with the council spending an average of almost £9,000 on each pupil in that setting. Once independent and specialist schools are included in the totals, then the council is supporting 4,268 pupils across its high needs block. This is costing the local authority just over £60million across the year.
And according to the council’s Joint Strategic Needs Assessment, Hull has a higher percentage of children with SEND than most places in England – only Rotherham has a higher percentage in Yorkshire. The council’s data shows that ten-years-ago 6,883 pupils in Hull had any type SEND requirement, which equates to about 17% of the school cohort. This has since increased to almost 10,000 pupils today which means roughly 23% of the school cohort.
“Resourcing this demand is a massive challenge,” admitted Cllr Mike Ross. He explained there is demand for bespoke education plans to support children’s needs across the whole city.
And there is no one simple reason for the rising demand for SEND provision in schools, Cllr Ross explained. He said the impact of Covid-19 lockdowns on young people could be one aspect, as could improved accessibility and visibility of the support available.
“There is a collective role for all of us in this,” he added. “We have to recognise that local government finance is always incredibly difficult, particularly when it is led by demand.”
A balancing act ahead of a financial cliff edge
However, despite the hard work of teachers, the wider education system and Hull City Council, this week’s meeting proves that provision of SEND education in Hull could face something of a cliff edge in less than 18-months time.
The statutory override that means the government is ignoring the council’s deficit ends in March 2028. If it simply expires, then the level of money owed would bankrupt the council. However, this is very unlikely.
What is more likely to happen, is that the reform of SEND in Hull could be absorbed by central government departments such as the Department for Education. This would potentially mean more stringent government oversight over the council’s inclusion strategies, mainstream school capacity, and placement decisions to rein in private, high-cost specialist provision.
Hull’s leadership has formally written to the Prime Minister, Chancellor, and Secretary of State ahead of the upcoming Local Government Funding Settlement, arguing that high levels of urban deprivation and inflation are inadequately recognised in the national ‘Fair Funding’ calculations. This penalises places like Hull, which have the highest support needs.
Cllr Ross explained why a new government intervention on funding for the city was so crucial: “People in Hull deserve a fair deal from the Government, and the council is determined to make sure our city gets the funding it needs. For too long, Hull has been underfunded while other parts of the country have received more support,” he said.
As part of the local leaders letter to government, an urgent meeting with the Prime Minister, Chancellor and Secretary of State was requested to deliver the fair funding the city was promised.
“I will keep fighting to make sure Hull gets its fair share and to protect basic services for local people but we need more support from the Government,” added Cllr Ross.
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