Dedicated Schools Grant
Ring-fenced Department for Education grant funding schools through English local authorities.
Deficits on the Dedicated Schools Grant reached £6.61bn across 292 English councils by the end of 2025-26, up 66% in a year, on Lowdown's sum of the 2025-26 returns released by the housing ministry on 17 September 2026.
Last refreshed: 7 October 2026 · Appears in 1 active topic
Council schools deficits hit £6.61bn. What happens when the override ends in 2028?
Timeline for Dedicated Schools Grant
Mentioned in: Sefton holds £3.2m against £104m deficit
Is Britain Actually Broke?Mentioned in: Warrington puts £34m of savings on adult care
Is Britain Actually Broke?Mentioned in: Thirty-six councils wait, none of them confirmed
Is Britain Actually Broke?Mentioned in: Government extends schools override to 2027-28
Is Britain Actually Broke?Background
The Dedicated Schools Grant (DSG) is the ring-fenced funding the Department for Education pays to English local authorities for schools. The department publishes each year's allocations on GOV.UK. Spending on special educational needs accounts for the overruns.
When councils overspend the grant, the shortfall goes into a DSG adjustment account instead of their general fund. A statutory override permits this and now runs until the end of 2027-28. The revenue outturn returns the Ministry of Housing, Communities and Local Government released on 17 September 2026 show how large those accounts have grown, although the ministry's headline release did not mention the figures.
County councils hold the largest balances, led by Hampshire at £346m. Sefton shows the sharpest exposure, with a £104m deficit against £3.2m of reserves. The end of the override is the point at which these balances stop being parked and start to press on council reserves.
The override shields council accounts until 2028
Overspends on the grant, driven by special educational needs, sit in a separate DSG adjustment account. A statutory override keeps that account away from councils' general finances, and the government has extended it to the end of 2027-28. The 2025-26 returns published on 17 September put the account at -£6.61bn across 292 authorities, up from -£3.99bn on 1 April 2025.
The grant's combined deficit is now 1.5 times the sector's £4.33bn of unallocated reserves. It is spread across 136 councils, and in 100 of them it is larger than the entire unallocated reserve. Ministers have promised a grant meeting 90% of deficits held on 31 March 2026, which on Lowdown's total leaves about £0.66bn with councils.
