Merton Council has been given a £28.8 million bailout by the government after it faced a huge gap in its school funding.

The Department for Education stepped in after the authority was identified as having a “very high deficit” in its dedicated schools grant.

This is the money given to local councils which can only be used on funding schools.

The financial troubles in Merton included a £37.6m gap in 2021-22 and to address this shortfall the council was given £11.6 million at the end of the financial year.

The rest of the money will be given to the council over the next five years in around £3.5 million a year.

This rescue package will only go part of the way in filling the expected £44.5m gap at the end of 2022/23 and the £49.8m deficit forecast in the following year.

Merton Council has one of the largest deficits in the DSG in the country after just Surrey and Devon and gets the fourth highest bailout.

The “safety valve funding” comes with a management plan which the council had to agree to in order to receive the money.

The agreement, published at the end of March, said the council should: “Strengthen the SEN Support offer available in mainstream schools to reduce escalation of children and young people’s needs and manage demand for [education health care plans]. This should include targeted investment on effective early intervention.”

As condition of the cash injection, Merton Council has to report on the progress of the plan to the government at least four times a year.

In its 2022-26 business plan which was approved in March, the council said part of the strain on the budget is an increase in demand for special needs school placements which has grew from 1,075 in 2016 to 2,252 in 2020.

In the report it said 80 new SEND places will be created in 2022 which it hopes will reduce the need to rely on private schools.

The report said: “A new issue arising in 2018/19, was the deficit on the Dedicated Schools Budget, a common issue across London and elsewhere and the gap has continued to grow year on year.

"However, the scale of the deficit as reported to cabinet has a significant impact on the council’s resources and potentially the financial resilience of the authority.”

Merton Council was contacted for further comment.