Half of councils warn of insolvency over SEND spending

A survey has found that over half of councils that support children with SEND have said they will become insolvent when a temporary accounting measure that keeps SEND spending deficits off their main balance sheets ends next year.

Councils are currently able to keep high needs deficits, where the cost of providing support outstrips the SEND budgets available to councils, off their main revenue accounts.

With no clarity on what will happen once the mechanism that enables them to do this, known as “statutory override”, expires in March 2026, many councils have said they will not be able to balance their books when this runs out, according to the survey by the Local Government Association.

If the override ends as planned with no alternative method for addressing deficits, 53 per cent of councils responding to the survey, responsible for SEND provision, say they will not be able to set a balanced budget in 2026/27, rising to 63 per cent in 2027/28 and 65 per cent in 2028/29.

The LGA is calling on the Government to urgently address the issue in the Spending Review, as part of a wider programme of reform of the SEND system.

It says the Government should write off councils’ high needs deficits, which are projected to rise to £5 billion next year. This is despite councils being expected to be spending £12 billion to support children with SEND.

Since reforms in the Children and Families Act 2014, the number of children and young people with Education, Health and Care plans (EHCPs), which outline the support a person is entitled to, has risen by 140 per cent from 240,183 in 2014/15to 575,973 in 2023/24.

The LGA says that while the £1 billion funding for SEND announced in the Budget was positive, the money is likely to be consumed by partially plugging existing deficits.

Cllr Arooj Shah, Chair of the LGA’s Children and Young People Board, said: “The ending of the statutory override threatens councils’ financial viability.

“Only by taking bold and brave action in the Spending Review and writing off councils’ high needs deficits can councils have the financial stability they need to ensure children with SEND get the support they need.

“But funding is only one of the challenges facing the SEND system.

“Putting councils on a stable financial footing has to be part of a comprehensive reform plan, which focusses on boosting inclusion in mainstream schools, early years settings and colleges, ensuring they have the capacity and expertise to meet the needs of children with SEND.”