More than a third of councils with 鈥渟afety-valve鈥 deals to plug high-needs deficits face bankruptcy, despite being set to receive more than 拢1 billion in government bailouts before the end of the decade. Since 2021, 38 councils with eye-watering SEND deficits have had to strike deals that give them annual cash injections in return for savings plans 鈥 with strings attached. In 2020 the government overrode standard accounting rules, letting councils keep dedicated schools grant (DSG) deficits off their general revenue books, which enabled them to set overall balanced budgets. That override is set to end in 2026, after which it was hoped councils would have eradicated these deficits. But more than a third (38 per cent) of the 28 safety-valve councils that responded to a freedom of information request admitted they were at risk of issuing a section 114 notice 鈥 meaning they could not balance their budgets 鈥 in the next three years. This was partly driven by the escalating cost of SEND provision. Section 114s restrict council spending to the statutory minimum, forcing more curbs to SEND services. ‘Not on track’ Stoke-on-Trent said it was facing 鈥渁 risk of section 114 due to pressures and demands across all of children鈥檚 services鈥. It was 鈥渘ot on track鈥 to balance its DSG deficit by 2025, as agreed in its safety-valve deal, with its officers in 鈥渃onstant dialogue with the DfE鈥. North Tyneside鈥檚 risk of not being able to ensure financial sustainability without raiding reserves is currently flagged as an 鈥淎1 risk鈥 with 鈥渧ery high likelihood鈥. However, the authority said this did not mean that it expected to issue a section 114 notice between now and 2028. Bath and North East Somerset is one of five councils whose safety-valve deals are currently 鈥渟ubject to review鈥 after it failed to hit spending targets. The authority joined the programme in 2022-23, securing a deal for 拢19.2 million 鈥 but after overspending in its high-needs block by 拢9.3 million in 2023-24, 鈥済rant payments have been suspended鈥, council papers said. Scott Gardner, senior SEND accountant for Achieving for Children, which runs Richmond鈥檚 children鈥檚 services, said it had been 鈥渉ighlighted by the DfE as a success of the [safety valve] programme鈥. 鈥淗owever if the funding ceases there is a high risk that within five years the borough will be in the same financial position it was before [it] was introduced.鈥 Dorset is 鈥渕aking progress鈥, but this has 鈥渘ot yet translated into financial savings or efficiencies鈥. The council expected to end the 2022-23 financial year with a 拢10.4 million high-needs deficit, but it almost doubled to 拢19.7 million. In March 2024 its 拢24 million deficit was more than triple a predicted 拢7 million. Council officers recently met with DfE colleagues to 鈥渇ind a way forward鈥. ‘We’ll be effectively bankrupt’ Bristol鈥檚 DSG deficit rose to 拢58.6 million at the end of 2023-24. It received only 拢21.5 million in safety-valve funding from the DfE to offset this, leaving it carrying over a 拢37.1 million deficit into this year. Steven Peacock, its chief executive, warned recently of the SEND bailout: 鈥淚f we get this wrong, we’ll be effectively bankrupt.鈥 Councils are also missing their targets to reduce EHCPs under the agreements, as demand for SEND support soars. More families are also objecting to council decisions. In 2022-23 the number of SEN appeal outcomes rose by a third to 12,000, of which 8,000 were decided by tribunal. Ninety-eight per cent of tribunals found in favour of families, up two percentage points on the year before. A third of the responding safety-valve councils said the risk of them not being able to deliver their statutory duties for SEND children had risen in the previous year, with a quarter saying it had remained unchanged. Catriona Moore All but one of Bath and North East Somerset鈥檚 three special schools and six resource bases are 鈥渇ull or oversubscribed鈥. It has 鈥渟truggled to meet its statutory duties鈥 and 鈥渉ad to rely on expensive out of area placements鈥. A new SEND advice service the council is launching in September will aim to reduce EHCPs鈥 and to 鈥渇ocus on data鈥. Councils are also being hampered by disorganised commissioning of SEND services. In the 32 Ofsted area since January 2023, almost a third were graded 3 (with systematic failings), another third 1 (typically positive), while almost half were 2 (inconsistent). Catriona Moore, policy manager at the Independent Provider of Special Education Advice, warned recently that safety-valve councils鈥 targets, which include reducing EHC needs assessments, risk councils 鈥渆xposing themselves to more legal challenges than ever鈥.