A growing deficit on its dedicated schools grant (DSG) could force Bournemouth, Christchurch and Poole (BCP) Council to issue a section 114 notice this year.

The authority’s DSG deficit soared from £3.6m in 2019 to £35.8m in March 2023 – and is projected to exceed £63m by March this year.

In 2020, the Government implemented a ‘statutory override’, under which DSG deficits can be excluded from councils’ main revenue budgets.

The override, which has since been extended, will end in March 2026.

When the override falls away, 'the council will technically be insolvent', according to a report by the authority. 

The report states: ‘If the deadline is not extended, then it is expected that the council’s director of finance would need to issue a section 114 notice in December 2024 as it would not be possible to set a balanced budget for 2025-26.’

Because of its high DSG deficit, BCP was invited to join the Department for Education’s (DfE) Safety Valve (SV) Programme, in which local authorities are asked to ‘develop plans to reform their high needs systems as quickly as possible to provide a good service within their available funding, normally by the end of a maximum five-year period’.

However, in January, the council’s children’s services overview and scrutiny committee heard that: ‘Despite significant efforts the local authority has been unable to provide a proposal which balances the budget within the five-year time period set down by the SV agreement framework.’

BCP’s portfolio holder for children and young people, Richard Burton, said: ‘We continue to work on a proposal which will balance future budgets when the statutory override expires and have requested that the timeline for this be extended from five to 15 years.

‘Work to achieve this is ongoing and no final decisions has been made.

‘We have not committed to any specific cuts or changes to funding and will not do so until we receive further correspondence from the DfE.’