Rising school deficits, a special educational needs and disabilities (SEND) system that could “implode” and capital funding shortfalls were among a catalogue of problems that councils presented to MPs today.

Three senior council officials and three organisations representing local authorities spoke at the Commons Education Select Committee’s continuing inquiry into school funding.

Here were nine key points raised:

1. More schools are forecasting deficits

Half of schools in North Yorkshire are forecasting deficits by the end of the decade, Gary Fielding, the council’s corporate director of strategic resources, told MPs.

He said that two years ago, 11 per cent of schools in the area had a deficit, totalling £2.8 million, but that “one in two schools” now expects to have a deficit by the end of this decade.

When asked about schools in Surrey, Dave Hill, the county council’s executive director of children, families and learning, said he “recognised Gary’s figures”.

2. The SEND system could 'implode'

Mr Hill said Surrey County Council has £30m of pressure on its high-needs funding.

He said “that’s almost enough to trigger a 144 notice of the council not being able to run its core services", adding: "That is caused almost exclusively by the pressures on the high-needs block.”

Saying that the country was “close to national crisis on the funding of SEND”, he explained that the number of education, health and care plans being issued had risen “exponentially” in the past three years.

“I fear unless we can address the issues about SEND funding, the whole system will implode at some point,” Mr Hill warned.

3. Funding pressures are affecting standards

MPs asked whether funding pressures were causing education standards to drop – something for which regulator Ofsted had said its inspections provided no evidence.

Paul Carter, of the County Councils Network, said: "You are just starting to see, I think, the education attainment levels peaking and coming down the wrong way.”

He added: “Our key stage 4 results aren’t quite as good as they were two or three years ago in Kent.”

Anntoinette Bramble, chair of the Local Government Association’s (LGA) children and young people board and a councillor in Hackney, said standards in her borough were not dropping, but added: “My concern is that, over time, if you don’t fund the system properly, you could see a dip in results. Over time, results could be in jeopardy."

Yolande Burgess, strategy director of London Councils, instead focused on rising exclusion and home education rates.

“No, results are not going down; 94 per cent of schools in London are good or outstanding,” she said. “However, we are seeing exclusion results go up. Our community is not being served. That’s the worry. I think it’s cost-shunting.”

4. Capital funding is 'woefully short'

Mr Fields said North Yorkshire faced a £30m funding gap over the next five years to meet the need for more school places, amid the expansion of some market towns.

He told MPs: “The amount of basic-need funding is woefully short of [meeting] the needs that condition surveys come back and show.

“Just to keep abreast with development, we are looking at £30m over five years.”

5. More SEND tribunals are taking place

Mr Hill alerted MPs to a 55 per cent increase in SEND tribunal cases in Surrey over the past two years.

He said the council loses nine out of 10 cases, and each lost case costs the council between £30,000 and £40,000, which adds up to “many, many, many millions of pounds”.

Mr Hill told MPs that he had recently met the parents who brought a judicial review about SEND funding in Surrey.

He said: “We got to the point where we agreed to introduce something like a truth and reconciliation process so rather than anybody ending up in the tribunal, the moment when that becomes a dynamic, we will try to sit down and we will try to do something agreed and joint and collaborative rather than waste a load of money with officers, and frankly the parents too – I mean huge amounts of heartache.”

6. Small schools have been hit by the national funding formula

Small schools are losing out under the introduction of the government’s national funding formula for schools, MPs heard.

Mr Fielding said Wensleydale School, a secondary in North Yorkshire with 390 pupils and a catchment area of 600 square kilometres, was losing £150,000 of core funding.

“Small rural schools like that are a lynchpin of rural communities,” he added.

Mr Fielding warned of “collateral damage” if issues with the national funding formula were not resolved before it became a hard formula, when the money is given directly to schools without councils being able to alter allocations.

He said: “It needs to be able to cope with the issue of small schools. It needs to be able to cope with mobility – Armed Forces areas.”

7. Schools have made savings

The council representatives hit back at a claim by academies minister Lord Agnew that he would be able to identify wastage at any school – something he said he would wager a bottle of Champagne on.

Paul Carter told MPs that schools had made efficiencies, and “now the tank is running on empty”.

The three witnesses from organisations representing councils agreed with Education Select Committee chair Robert Halfon’s summary that Lord Agnew’s proposal was “actually not really possible given the efficiency savings already made”.

8. The scale of the SEND funding shortfall

There is a £500m shortfall in funding for children with SEND.

Anntoinette Bramble, of the LGA, said this was an initial finding of research by the organisation, which is due to be published in December or January.

9. Loss of council support for schools

Labour MP Emma Hardy asked if schools were having to pay for services that councils had previously provided.

Mr Fielding, from North Yorkshire County Council, cited areas such as school improvement, school leadership and help with school finances where the council now traded with schools.

He added: “Unfortunately, if you are running into financial difficulties, one of the first things you sacrifice is some of that bought-in service, so we are seeing schools struggling to pay for some of that, and the ones who are struggling are probably the ones who need it the most.”