LOCAL GOVERNMENT
2025
Lancashire County Council Educational Finance Review
Lancashire County Council: Education Finance Review
Article Content
£40.846m
DSG deficit reported for 2024/25
£40m+
Of the overspend from the High Needs Block
£69.53m
Forecast deficit by March 2026 on current trends
£18.429m
Reserve brought forward, now exhausted
12
Practical recommended actions identified
The challenge
Lancashire County Council asked Castlerigg Consulting to review the way education financial grants were being managed, governed and planned. The Council wanted an independent view of current financial management practice, the policy and regulatory framework around education grants, and how compliance was being achieved.
The brief also asked us to look at how finance and education worked together: how roles and responsibilities were understood, how the Dedicated Schools Grant was monitored and reported, and how financial planning was linked to changing service demand, particularly in relation to SEND and the High Needs Block.
This was sensitive work. The Council was already responding to a challenging national funding environment and increasing demand for specialist education support. Our role was to provide a clear, practical and constructive review that helped the Council strengthen its own arrangements without presenting the issue as a failure of individual teams.
What we did
We reviewed the existing approach to DSG financial management, including monitoring, governance, policy documentation and the relationship between finance and education planning. We combined document review with structured stakeholder engagement across finance and education, using the findings to test how well the current arrangements supported compliance, accountability and joined-up decision making.
We looked at the whole system rather than treating the work as a narrow finance review. That meant considering statutory duties, Schools Forum governance, council decision-making, financial forecasting, demand modelling, SEND transformation, and the way information moved between teams and into senior governance.
What we found
Compliance vs. planning
Grant compliance was managed carefully, but the wider planning model needed to become more integrated — spread across several finance roles and teams.
DSG visibility
The DSG position needed stronger visibility within wider council governance, with a clearer line between Schools Forum consultation and council accountability.
SEND demand
Financial planning could not be separated from service transformation — demand, cost, backlog and operating model changes needed to be modelled together.
Recommendations
1
Reaffirm accountability
Reaffirm the Council’s accountability for DSG expenditure and clarify the role of senior education leadership in relation to grant funding.
2
Strengthen governance
Strengthen how DSG planning is brought into council governance, budget setting, MTFS planning and member reporting.
3
A joint planning cycle
Establish a joint financial planning cycle across Finance and Education, supported by regular demand and financial capacity modelling.
4
An integrated management plan
Develop an integrated DSG education and financial management plan, linked to SEND transformation.
The outcome
The review provided Lancashire County Council with a clear set of findings and a phased action plan for improvement. It helped translate a complex funding and governance issue into a practical programme of work: clarifying accountability, improving the way finance and education plan together, strengthening reporting, and linking DSG management more directly to SEND transformation and wider council financial planning.
For Castlerigg, this commission reflected the way we work best: getting underneath a complex issue, listening carefully to the people involved, and producing recommendations that are clear enough to act on without losing sight of the operational realities councils are working within.
Let’s make change work, together.
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