Council could 'go bust' due to £63m debt 'time bomb'

Bristol City Council could "go bust" within 10 months if the government does not extend a deadline for it to plug a £63m hole in the school's budget, a councillor has warned.

The deficit has mostly built up due to the authority having to spend more money than planned supporting young people with special educational needs and disabilities (Send).

The council has permission from the government to carry over the debt next year, but there is no indication this deadline will be extended, and councillor Jonathan Hucker fears it has become a "ticking time bomb".

The Department for Education said through its Plan for Change project, it is "determined" to "restore the confidence of families".

The schools deficit is subject to an accounting mechanism known as a "statutory override" until March 2026, which allows the council to exclude it from its main budget.

But the government has not said this will be extended, or that it will provide the billions in funding required to Bristol and many other local authorities in similar situations to clear the debt, the Local Democracy Reporting Service said.

At a meeting of the audit committee on 29 May, Mr Hucker said the council is facing the prospect of having to declare bankruptcy.

"It is the most critical financial issue that the council faces," he said.

"If the government does not act, it is likely that the council will go bust at the end of this financial year."

Mr Hucker said he believed it was "very unlikely" the government would fund the deficit.

"It is a ticking time bomb. To withstand such a major financial shock would be difficult at the best of times."

Bristol City Council finance director Andy Rothery acknowledged there was "nothing on record" from the government about extending the override.

But he added the Department for Education (DfE) was conducting a major review of Send funding.

A DfE spokesperson said: "The evidence is clear that the SEND system has been on its knees for years – with too many children not having their needs met and parents forced to fight for support.

"It will take time, but through our Plan for Change, this government is determined to spread opportunity, restore the confidence of families up and down the country and deliver the improvement they are crying out for.

"We are already making progress by investing £1bn into SEND and £740m to encourage councils to create more specialist places in mainstream schools, paving the way for significant, long-term reform."

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