Durham County Council’s Cabinet has given the green light for maintained schools to set deficit budgets for the coming year, a move that allows some to spend beyond their income once reserves run dry. The decision, made at a meeting on 1 July, was published on the council’s democracy website on 3 July.
The approved item, titled ‘Maintained Schools Budget Plans and Permission to Set Deficit Budgets 2026/27’, was a joint report from the Corporate Director of Resources and the Corporate Director of Children and Young People’s Services. The new policy for the 2026/27 financial year marks a shift from the usual requirement for schools to balance their books, signalling the strain that rising costs and stretched funding are placing on local education.
This step comes as the council itself wrestles with a projected deficit of £9.546 million in 2026/27, with a further £42.448 million forecast over the following three years. Having already found £288 million in savings over 15 years, the authority holds £34.5 million in reserves, but finance chief Councillor Darren Grimes has called the figures “depressing” and “no joke”. Advisors have warned that leaning too heavily on reserves is not a sustainable path, as other councils that have done so quickly fell into financial distress.
The policy only applies to schools after they have exhausted their own reserves, and it is designed as a temporary pressure valve rather than a permanent fix. While the full impact on individual schools is not yet clear, such deficits historically force difficult choices around staffing numbers, class sizes, and the breadth of services available to pupils and families.
Leaders of the Reform UK-led administration have stressed that the move is a necessary response to severe financial challenges, including soaring costs in adult and children’s social care, home to school transport, and increased employer National Insurance contributions. No school will set a deficit budget lightly, but the Cabinet’s approval gives headteachers a formal route to navigate the mounting financial pressures without immediate cuts that could damage children’s learning.
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