Councils on Brink of Insolvency Amidst Escalating Special Educational Needs Deficits
A stark warning has emerged from the local government sector: without substantial reform, the majority of councils are facing insolvency due to mounting deficits in Special Educational Needs (SEND) provision. Research conducted by the Local Government Association (LGA) reveals a critical financial precipice for local authorities, with significant implications for the future of support for children with SEND.
The findings indicate a deeply concerning trend. A staggering 79 per cent of councils anticipate an inability to balance their budgets by 2028. This is the year when the statutory override, which currently shields SEND overspends from appearing on their balance sheets, is set to expire. This deadline looms large, and the current trajectory suggests a fiscal crisis for numerous local authorities.
While the Government has stated its intention that local authorities will not be expected to shoulder SEND costs independently after the override ends, the reality on the ground appears far more complex. In a survey of 87 local authorities, an overwhelming 94 per cent of respondents indicated that they would likely continue to face budget overspends related to SEND, even if their existing deficit were to be cleared in 2028. This suggests that the fundamental issues driving these deficits are systemic and require more than a financial reprieve.
Furthermore, nearly half of the surveyed councils reported that they expect to increase their SEND budget overspending at an even faster rate than they have in the past. This indicates a potential acceleration of the financial strain, exacerbating the already precarious situation.
Councillor Amanda Hopgood, who chairs the LGA’s children, young people, and families committee, articulated the severity of the crisis. “Under the current system,” she stated, “the rise in support needs has left many councils buckling under the strain. The huge costs in providing support are threatening most councils with insolvency.” Her words underscore the immense pressure on local government resources to meet the growing demand for SEND services.
The financial health of dedicated schools grants is also in jeopardy. An alarming 95 per cent of councils reported a deficit in their dedicated schools grant for the 2025/26 academic year. This deficit in a core funding stream further complicates the ability of local authorities to allocate necessary resources to SEND provision.
In response to this critical situation, the LGA is actively lobbying the Government. Their primary call to action is for the Government to write off existing SEND deficits held by councils as part of the final local government finance settlement. Crucially, they are also urging that the forthcoming reforms outlined in the Schools White Paper genuinely facilitate more children with SEND receiving support within mainstream school settings.
The perspective from those on the front lines of education also highlights the urgency. Paul Whiteman, general secretary of the NAHT school leaders’ union, commented that “Even where councils are accumulating deficits, the support they are stretching to still often falls short of what schools and families require.” He emphasised the critical need for both systemic reform and significant investment to address these shortcomings, advocating for these to be central to the upcoming White Paper.
A significant portion of the discussion surrounding the Government’s SEND reforms has centred on Education, Health, and Care Plans (EHCPs). These legally binding documents outline the specific support to which a young person with SEND is entitled. The escalating number of EHCPs has directly contributed to soaring expenditure for councils. Some proposals have suggested legislative changes to restrict EHCPs to only the most severely affected children, a suggestion that has understandably raised concerns among many parents of children with SEND.
The sheer volume of EHCPs issued has seen a dramatic increase. As of January 2025, the number stood at 638,745, a substantial leap from 353,995 recorded in 2019. This exponential growth in demand for formalised support plans is a key driver of the financial pressures faced by local authorities.
Despite these pressures, Education minister Georgia Gould has previously affirmed that “there will always be a legal right to additional support” for young people with SEND. This statement, while reassuring in principle, does not fully address the practical challenges of funding and delivering that support effectively.
New polling data from Teacher Tapp, surveying 9,000 teachers for the Social Market Foundation, reveals a sentiment among educators that aligns with a potential shift in approach. More than half of teachers (58 per cent) expressed a preference for reducing the reliance on EHCPs, instead advocating for the reallocation of funds towards earlier intervention strategies and classroom-based support. This suggests a desire for a more preventative and integrated approach to SEND provision.
The financial outlook, as projected by the Office for Budget Responsibility, indicates a substantial gap of £6 billion between anticipated funding and the projected costs of SEND by 2028/29. The Government has indicated that this shortfall will be absorbed within the broader government budget, rather than being directly funded by schools.
The forthcoming Schools White Paper, anticipated in the coming weeks, is expected to detail the Government’s comprehensive plans for SEND reform. A Department for Education spokesperson stated their commitment to “changing the school system and ending the postcode lottery so children with SEND get the right support earlier, when and where they need it.” The success of these reforms will hinge on their ability to effectively address the escalating financial deficits and ensure timely, appropriate support for all children with SEND.
