Councils warn SEND funding pressures risk insolvency without structural reform

Local authorities across England have warned that escalating costs associated with supporting children and young people with special educational needs and disabilities (SEND) are creating unsustainable financial pressures, with the majority of councils indicating they may be unable to balance future budgets without significant reform.

The concerns follow the publication of survey findings by the Local Government Association (LGA), which highlight the growing financial and operational strain within the SEND system, alongside calls for urgent government intervention.

According to the LGA, increasing demand for SEND support remains the primary driver of cost escalation. As of January 2025, nearly 640,000 children and young people had an Education, Health and Care Plan (EHCP), with numbers rising consistently since the framework was introduced in 2014.

Although councils have emphasised their statutory commitment to meeting the needs of children and young people with SEND, they have warned that current funding arrangements are failing to keep pace with demand, placing significant pressure on local authority resources and service delivery.

Most councils currently carry substantial deficits within their High Needs Dedicated Schools Grant (DSG) budgets. The survey found that 95% of responding authorities reported High Needs DSG deficits, reflecting overspends where SEND expenditure exceeds allocated funding.

At present, councils are permitted to manage these deficits through a temporary accounting measure known as the “statutory override,” which prevents these liabilities from appearing on councils’ main balance sheets. However, the override is scheduled to end in March 2028.

The LGA survey indicates that, once the override expires and deficits are transferred to general fund accounts, 79% of responding councils anticipate being unable to set a legally balanced budget for the 2028/29 financial year. The Office for Budget Responsibility has forecast that cumulative High Needs deficits could reach £14 billion by 2027/28.

The LGA has urged the government to address the issue through the forthcoming Local Government Finance Settlement, including calls to write off existing High Needs deficits. Local authorities argue that without such intervention, the financial sustainability of children’s services and other statutory functions could be compromised.

However, the LGA has also stressed that deficit relief alone would not resolve the underlying pressures. Survey respondents indicated that, in the absence of wider system reform, overspending on SEND provision would likely continue, leading to the re-emergence of deficits.