11th November 2026
Special schools, pressure on individual school budgets, delayed savings and growing costs of additional support raise questions about how sustainable Highland Council's education finances really are.
At first glance, Highland Council's latest Education and Learning budget monitoring report might not appear particularly alarming. The service has an annual budget of £315.46 million and is forecasting an overspend of £793,000 for 2026/27. That represents just 0.25% of its budget.
However, looking beyond that headline figure reveals a much more complicated picture. There are substantial pressures in special schools, difficulties delivering planned savings, increasing costs associated with children requiring additional support and a growing reliance on vacancies, reserves and adjustments to school budgets.
The report, which is going before the Education Committee on 18 November, deserves more attention than the headline overspend might suggest.
Special schools are under considerable pressure
Perhaps the most significant immediate concern is the financial position of special schools.
The Council is forecasting an overspend of £1.079 million against the £7.038 million budget allocated to Additional Support – Special Schools. That is a substantial variation in a relatively small part of the overall education budget.
One explanation concerns Drummond School. Temporary additional support had originally been expected to be phased out during the current academic year. However, following improvement actions required after a recent inspection, that support is now expected to continue for the remainder of the school session.
This adds £294,000 to the forecast expenditure.
A further £184,000 relates to planned staff leave and associated backfill arrangements at St Clement's and St Duthus.
These figures raise questions extending beyond financial management. If additional staffing and support are necessary to meet inspection requirements and maintain appropriate provision, where will the money come from in future years?
The Council says senior officers are working with the schools to develop a more sustainable long-term model of support. That is welcome, but parents and the wider community will want reassurance that financial considerations will not undermine the quality of provision.
There are also pressures associated with children placed outside Highland, where other authorities recharge the Council for support services. The forecast pressure in Additional Support – Schools is £104,000, although management action has already reduced a previously anticipated staffing pressure.
The longer-term question is whether Highland has sufficient local provision for children with additional needs or whether the cost of external placements will continue to increase.
The £5.4 million savings challenge
Perhaps the most revealing part of the report is the savings programme.
Education and Learning is expected to deliver £5.413 million in savings during the financial year.
The Council reports that 13 savings measures, worth £2.349 million, are currently rated green and expected to be delivered in full.
However, six measures are rated red, meaning less than 90% of their planned savings are expected to be achieved during the financial year. Four of these are affected by implementation delays, with full delivery now anticipated after March 2027.
The Council is using earmarked reserves to cushion the financial impact of delayed savings.
That might help balance the current year's accounts, but it does not necessarily resolve the underlying problem. If savings are postponed rather than delivered, the financial pressure can simply move into another year.
One particular measure deserves attention.
Are schools being asked to find savings they cannot afford?
A £1.8 million saving is expected through adjustments to Devolved School Management, usually referred to as DSM.
This is the system through which schools manage their allocated budgets, including the ability to carry forward certain unspent balances into the following financial year.
The intention was to bring Highland's arrangements into line with Scottish national averages, allowing schools to carry forward a 2% surplus.
However, the Council is now forecasting that only £1.3 million of the £1.8 million saving will be achieved this year, leaving a £500,000 shortfall.
This is not an entirely new problem. The saving was originally approved in March 2024, and the arrangements have already been adjusted in previous years.
The important question is how much further school budgets can be squeezed.
Schools need some financial flexibility. Head teachers have to manage unexpected expenditure, staff requirements, equipment and other costs. Carry-forward balances are not necessarily evidence of money that can simply be taken away without consequences.
If schools are continually being asked to reduce their reserves to help balance the Council's overall budget, there is a risk that they will have less capacity to deal with problems when they arise.
Councillors should be asking whether these adjustments represent genuine efficiencies or whether they are simply transferring financial pressure to individual schools.
Vacancies are becoming an important part of the savings strategy
Another recurring feature of the report is the reliance on staff vacancies and turnover.
The service is forecasting an underspend of £389,000 against its staffing budget. This helps offset an overspend of £1.088 million in other expenditure and a £100,000 shortfall in grant income.
Some savings are being achieved by removing vacant posts, while others depend on staff retiring or leaving and not being replaced immediately.
There is a reasonable argument for removing posts that are no longer necessary. However, there is a difference between genuine efficiency savings and leaving vacancies unfilled because the money is needed elsewhere.
The Council says it is managing recruitment carefully while maintaining frontline services. Members should nevertheless be asking for evidence of the effect on schools and support services.
For example, the savings programme includes £821,000 from non-teaching staff turnover across primary and secondary schools. The full saving is currently forecast to be achieved, but the Council acknowledges that lower staff turnover could put this at risk.
The financial position is therefore partly dependent on staff movements that the Council cannot entirely control.
Childcare costs are also increasing
Parents using additional childcare hours will also be affected by another part of the savings programme.
The Council is increasing charges for additional early learning and childcare hours beyond the 1,140 funded hours, as well as school-age childcare.
The hourly rate is increasing from £5.05 to £5.30 in 2026/27, rising further to £5.57 in 2027/28 and £5.85 in 2028/29.
These increases are expected to generate £169,000 over three years.
The Council says previous fee increases have had little effect on demand, giving it confidence that the additional income will be achieved.
However, this deserves consideration against the wider cost-of-living pressures facing families. Childcare is an important part of enabling parents to work, and additional charges can become a significant expense for households needing longer hours.
There is also a residual pressure of £546,000 relating to payments to early learning and childcare partner providers from the previous financial year. This is one of the outstanding financial pressures that the service is continuing to manage.
High Life Highland faces another reduction
The report also includes a three-year programme of reductions in the management fee paid to High Life Highland.
The planned reductions total £516,000, rising from £96,000 in 2026/27 to £168,000 in 2027/28 and £252,000 in 2028/29.
The Council expects these savings to come from increased customer numbers, targeted price increases and staffing savings arising from management restructuring.
High Life Highland operates a wide range of facilities and services, including leisure centres, libraries and cultural activities.
The financial risk identified by the Council is that increased income might not materialise if customer numbers fall or higher charges fail to generate the expected revenue.
For communities across the Highlands, the important issue will be whether these reductions have any consequences for local facilities and services, particularly in smaller communities where alternatives are limited.
What happens when the reserves run out?
One of the recurring themes throughout the report is the use of reserves to manage financial pressures.
Reserves can be useful. They allow councils to deal with unexpected costs and provide time to implement changes without making sudden reductions in services.
However, they cannot provide a permanent solution to recurring overspending or savings that repeatedly fail to materialise.
The Council's own financial strategy for Education and Learning covers the period 2026 to 2029. It recognises the need to improve financial forecasting, strengthen accountability and identify risks earlier.
Those are sensible objectives, but the real test will be whether the service can reduce its underlying financial pressures rather than continually moving them between budgets and financial years.
Questions Highland councillors should be asking
There are several issues that deserve proper scrutiny when the report reaches committee.
How much will the additional support required by special schools cost in future years? Is Highland providing sufficient local places for children with additional needs, or are external placements becoming an increasingly expensive necessity?
How much further can school budgets be adjusted before head teachers lose the financial flexibility needed to manage their schools?
Are vacancies genuinely surplus to requirements, or are some services operating with fewer staff than they need?
What happens if the planned savings are not delivered and earmarked reserves become insufficient to cover the shortfall?
And perhaps most importantly, how will the Council demonstrate that these savings are not affecting educational standards, children's wellbeing and the support available to families?
The headline figure is not the whole story
It would be unfair to suggest that Highland Council is losing control of its education finances. A forecast overspend of £793,000 against a budget of more than £315 million is relatively modest, and the report demonstrates that officers are monitoring pressures and taking action.
But financial management should not be judged solely by whether the final accounts balance.
The pressure on special schools, the difficulty delivering the £1.8 million DSM saving, the use of vacancies to reduce staffing expenditure and the reliance on reserves to manage delayed savings all deserve attention.
Education is one of the Council's largest areas of expenditure, but it is also one of its most important responsibilities. The financial challenge is not simply to spend less. It is to ensure that available resources are being used effectively while maintaining the quality of education and support that children and young people need.
The real question for Highland councillors is whether the current savings programme is producing a genuinely sustainable financial position or simply postponing some difficult decisions until another year.
A balanced budget is important, but what matters most is what that budget actually delivers for children, schools and communities across the Highlands.
The full report can be seen at Item 5 https://www.highland.gov.uk/meetings/meeting/5435/education-committee