Final Local Government Finance Settlement

13th Feb 2026

What has been announced:

The Government has set out how it intends to address councils accumulated SEND deficits, confirming it will cover 90% of these shortfalls. A grant will be provided in Autumn 2026 to enable councils to clear their deficits, subject to each local authority submitting a local SEND reform plan and securing approval from the Department for Education (DfE).

What is the Dedicated Schools Grant (DSG)?

The Dedicated Schools Grant (DSG) is the main government funding for schools and SEND support. It includes the High Needs Block, which funds provision for children and young people with higher levels of SEND, including specialist placements, therapies and other high-cost support.

In many areas, the cost of supporting children and young people with SEND, particularly those with Education, Health and Care Plans (EHCPs), has exceeded the funding available. This has led to significant accumulated DSG deficits in council budgets.

What will happen now

As part of wider SEND reform:

Councils with a DSG deficit can apply for a High Needs Stability Grant to cover 90% of their eligible deficit.

The grant will be paid as a Section 31 grant in Autumn 2026, subject to DfE approval of a local SEND reform plan.

The reform plan must be developed in partnership with schools, health services, early years and post-16 providers.

The grant can only be used to reduce the deficit recorded in council accounts by 31 March 2026. It cannot be used for other purposes.

If conditions are not met, future funding may be reduced or withheld.

The NNPCF suggests that this announcement recognises that previous funding arrangements have not been sufficient to meet the needs of children and young people with SEND. It is now essential that future funding settlements are sustainable and properly resourced, so local authorities can not only meet their statutory duties but also improve outcomes. Children and young people with SEND must have their needs properly met and be supported to thrive alongside their peers.

What should Parent Carer Forums know?

In December, the DfE and NHS wrote to Chief Executives of Integrated Care Boards (ICBs) and local authorities asking them to develop a local SEND reform plan. Many Parent Carer Forums (PCFs) are already working with their local area partnerships to support this process.

The Partnership Maturity Assessment Tool and guidance ask local areas to assess their current practice against a maturity scale. Pillar One of this framework focuses on co-production with parents, carers, children and young people. Parent Carer Forums are referenced throughout this pillar, and co-production should be embedded throughout the development of the reform plan.

Parent Carer Forums should be actively engaged with their local area partnerships in shaping and influencing these plans.

Link to DfE Press Release: https://www.gov.uk/government/collections/final-local-government-finance-settlement-england-2026-2027-to-2028-2029#support-for-local-authorities-for-dedicated-schools-grant-deficits

Link to Explanatory note on the government’s approach Dedicated Schools Grant deficits https://www.gov.uk/government/publications/explanatory-note-on-the-governments-approach-to-dedicated-schools-grant-deficits/explanatory-note-on-the-governments-approach-dedicated-schools-grant-deficits