Eighty Per Cent of East Riding Schools Report Budget Deficits

EIGHTY-FOUR out of the 102 maintained schools in the East Riding of Yorkshire are currently reporting an in-year deficit for the 2025–26 financial period, highlighting significant financial strain across the local education sector.

The scale of the fiscal challenge facing schools, whose budgets are funded by the Department for Education (DfE), was laid bare in recent reports. The schools budget is forecast to be in deficit by £18.3 million for 2025–26. A substantial majority of this shortfall—£16.1 million—is related to forecast expenditure on enhanced education provision for pupils with high needs, which officials attribute primarily to inadequate funding levels provided by the DfE.

The long-standing issue of spending on high needs consistently exceeding allocated funding has led to significant annual deficits. The cumulative deficit on the Dedicated Schools Grant (DSG) reserve now stands at a considerable £54.2 million.

Finance Director Julian Neilson says this years figures are a concern.

“In terms of the school's budget funded by the Department for Education, there is a forecast deficit of £18.3 million.

As we've had in previous years, substantial part of that relates to the high needs funding for children with special educational needs and disabilities. 16.1 million pounds of the forecast deficit relates to that funding.

And that has led to a accumulated deficit which now stands at a forecast 54.2 million pounds by the end of the financial year.”

Mr Neilson also confirmed the high number of schools currently grappling with financial difficulties, noting that a portion of these schools have inherited debt from prior years:

“84 of the 102 maintained schools are reporting an in-year deficit in 25/26.

26 of those are reporting a cumulative funding deficit in terms of funding from previous years combined with funding this year. And we are working closely with those schools across children, families and schools directorate, people services and finance to support those schools, help them review their financial plans alongside their operational plans and there'll be further meetings with those schools who need support to support them and monitor progress.”

Without successful mitigation measures, the overall deficit balance is forecast to grow exponentially in the coming years. This deficit balance is subject to oversight by the DfE through the Council’s deficit management plan.

The Council says that targeted support has been provided to schools throughout the summer term through meetings involving schools, and representatives from the Children, Families and Schools directorate, People Services and Finance. These collaborative efforts have focused on helping schools to reduce their projected deficits by reviewing key operational areas such as class structures, staffing levels, and admission numbers, ensuring alignment with each school’s size and strategic need. Further follow-up meetings are scheduled for the autumn term to continue monitoring progress.

Council reports stress the need for a national solution to the funding crisis as a matter of the utmost urgency. The financial challenges faced locally are not unique, according to the Finance Director:

“Although there was no action from the government on tackling those deficits in the spending review as these do exist across many local authorities across the country and many in a much higher deficit position than us.

We are expecting a a white paper on SEND reform this autumn and we are also expecting some form of announcement on treatment of deficits alongside the local government finance settlement to be published in December.”

While the government did not act on high needs funding deficits in the Spending Review, it has been confirmed that the statutory override for high needs funding deficits—an accountancy loophole in place since 2019—will continue for a further two years. The use of this technical accounting practice prevents local authorities from declaring effective bankruptcy due to these deficits, but Council officials warn that it "does nothing to address the underlying issues".