Agenda item

Officers introduced the Budget & Spending report for Month 9.

Members were informed that Month 9 showed a pressure of £6.4m, an increase from £6.0m reported at Month 7. This increase was attributed to continuing asylum pressures as well as additional pressures within children’s social care, particularly the costs of children’s placements and children’s homes.

Officers reported that the directorate had achieved 96% of its £4.5m savings target, with no identified risks to the delivery of the remaining savings.

Officers advised that the DSG position had remained broadly stable compared with previous reports, with a projected in?year deficit of £9.6m. While demand continued to increase, particularly in advance of forthcoming SEND reforms, officers considered the position to be relatively positive. It was noted that significant progress had been made over recent years in stabilising DSG pressures.

In response to a question regarding the Government’s proposed 90% write?off of SEND deficits, officers explained that local authorities would be required to submit a SEND Reform Plan by late June, which would be subject to approval by the Secretary of State. Only once the plan was approved would the High Needs Stability Grant be released. If approved in the first submission round, payment was expected to be received in the autumn term, with a later payment in spring 2027 if approval was delayed. Officers noted that while some information had been received from Government, further clarity was still awaited.

Members asked whether the reduction in the DSG deficit had impacted outcomes for children with SEND. Officers responded that outcomes were closely monitored and that the main driver of cost reduction had been a move towards educating children locally and within maintained schools, rather than in high?cost independent placements. Officers were confident that outcomes remained strong, noting that maintained special schools in the borough delivered outstanding outcomes despite significantly lower costs that INMSS (Independent and Non-Maintained Special School) settings. However, there was increased demand and continued close monitoring was required.

Members sought clarification on the DSG deficit that would remain after the application of the 90% grant and how ongoing overspends would be addressed. Officers explained that the 90% included this year and so would go against the cumulative balance at the end of this financial year, meaning the £9.6m projected in?year deficit was included within that figure. Officers estimated that the authority could receive around £69m, leaving a residual deficit of approximately £6m. Officers highlighted that the in?year DSG deficit had reduced significantly over time, from £28m two years ago to £9.6m currently, demonstrating a strong downward trajectory. Members were advised that demand could increase further due to a surge in EHCP requests ahead of SEND reforms. It was noted that with the 90% paid off, the Council would save money within the General Fund on interest charges.

Members asked if there would be conditions on the 90% due to the historically high deficit. Officers advised that, with the exception of a suitable SEND reform plan being approved, officers were not aware of any other specific conditions linked to the funding and that the safety valve scheme had now closed. While Hillingdon may have previously been an outlier with its high deficit, it was now in a much stronger position compared to other authorities. Hillingdon had built up confidence with the DfE with its positive steps, and this had been recognised by a letter from the DfE. It was noted that Hillingdon had significantly lowered costs while improving outcomes. The 90% payment would be applied universally, and each local authority would have a SEND advisor and a financial advisor with the level of support tailored to each authority’s circumstances. Officers considered that the work already undertaken locally had placed the council in a strong position.

Members asked whether the reported savings were dependent on a reduction in demand. Officers responded that demand had not necessarily reduced but had been managed differently through changes to delivery models and investment in in?house provision. Savings had been achieved through measures such as increasing foster carer capacity and expanding in?house residential provision, which reduced reliance on more expensive external placements. It was noted that the 96% savings achievement reported at Month 9 had since increased to 100%.

Members queried a savings line relating to repeat pregnancies within social care. Officers clarified that this focused on supporting parents who had previously had children removed from their care, ensuring they were better prepared and supported if they had another child, thereby reducing the risk of repeat removals and associated costs.

Members asked about the £6.4m overspend. Officers explained that asylum pressures remained a significant and unpredictable driver of overspend, as well as the discrepancy between grants and costs. In addition, the current year had been a major period of transformation for children’s services, with substantial investment in foster carers (17 new households), in-house residential provision (12 additional beds), and new delivery models focused on early intervention and community?based support to prevent escalation to statutory intervention. While pressures would continue into the following year, officers were more confident due to budget realignment, better demand forecasting, and the embedding of new ways of working.

In response to a question about schools’ views on the changes being implemented, officers emphasised that schools were key partners in supporting children and were closely engaged at both strategic and locality levels. Schools were statutory safeguarding partners and were involved in strategic decision?making. Officers reported that feedback from schools had been positive.

Officers added that next year’s budget included approximately £12m of additional investment to reflect underlying demand pressures in children’s services, which were contributing to the current year’s overspend. Officers also noted that part of the increase in the forecast overspend during the year related to decisions around the use of capital receipts and transformation funding, rather than solely to service?level pressures.

RESOLVED: That the Committee noted the 2025/26 Month 9 budget monitoring position