BANKRUPTCY will have to be declared by Somerset Council next April unless the Government changes the way special needs education is funded.

The crunch will come on March 31 with the expiry of a dedicated schools grant (DGS) ‘statutory override’ introduced by Government five years ago.

The override allows councils to keep DSG overspends off their balance sheet, reducing the need for authorities to issue a section 114 bankruptcy notice when they were unable to balance their budgets.

Somerset’s DSG deficit it predicted to break the £100 million mark by the end of the financial year as demand for special educational needs and disabilities (SEND) teaching soars.

The unitary council will be left with no alternative but to issue a section 114 notice on April 1, the day after the DSG override runs out.

A council spokesman said: “We can confirm Somerset Council, along with many other local authorities, will need to issue a Section 114 notice if the override is not extended or otherwise fixed.”

An update on the situation is due to be discussed by councillors on Monday, June 30.

The news comes after Parliament’s Public Accounts Committee (PAC) revealed hundreds of local authorities faced a similar ‘financial cliff-edge’ driven in part also by the rise in employers’ National Insurance contributions.

PAC’s membership includes local MP Rachel Gilmour, whose Tiverton and Minehead constituency covers West Somerset and takes in parishes around Wellington and in the Culm Valley and Blackdown Hills.

The Department for Education (DfE) was asked by the committee to provide reassurances on the DSG override but did not do so.

The DfE is expected to bring forward plans for SEND reform in the autumn as part of a White Paper on schools.

PAC said there was ‘significant uncertainty’ over the future of local authorities, especially in light of the Government’s devolution programme and changes to adult social care which will come about after the Casey Commission publishes its findings in 2028.

Committee chairman Sir Geoffrey Clifton-Brown said: “The lack of urgent action to come forward with a plan to address the fast-approaching cliff edge for under-pressure authorities would seem to suggest the Government is comfortable with the current state of affairs as normalised background noise.

“Even with concrete measures to put councils back on a proper long-term sustainable footing, once again the Government seems not to have taken a holistic view of the butterfly effect of its other policies.

“To introduce major changes to National Insurance without taking into account the likely effect on an already tottering local government sector is a major misstep.

“Similarly, aspirations for wide-ranging reforms seem to be un-engaged with a reality in which local authorities do not have good and strong capacity to fundamentally change the way they work.

“Our report gives a wide overview of the various and severe challenges that local government faces.

“For the sake of everybody who relies on local authorities’ services, we hope decision-makers begin to take a similar overview in how policy is delivered.”