Councils call for urgent action on £1.3bn SEN deficit

England’s largest councils have called for urgent action in this year’s Spending Review to ward off a financial cliff edge due to a spiralling deficit in special educational needs services.

Set to grow to an ‘unmanageable’ £1.3 billion in just two years’ time, local authorities say that the deficit – an eightfold increase in just five years – is the result of an explosion of children being eligible for Education, Care, and Health Plans (EHCPs) and threatens councils’ finances and their ability to support recovery efforts from the pandemic.

A new survey compiled by the County Councils Network (CCN) and the Society of County Treasurers shows that for 40 authorities in county areas their high-needs deficits have ballooned from £134 million in 2018/19 to a projected £1.3 billion in 2022/23.

The government has said that councils do not need to start addressing these deficits until 2023, allowing councils to carry over their school budget deficits until April that year. CCN says this has provided councils with some breathing space but is little more than a sticking plaster.

Nonetheless, councils say the size of this deficit in two years’ time will be unmanageable and extremely difficult to pay off without taking large sums of money earmarked for other council services.

The CCN is calling for urgent action in the Spending Review this year, including a substantial injection of funding into the system, so councils can begin to address their deficits now and bring them to manageable levels, now rather than let them grow further.

Additionally, CCN says it is paramount that a government review of special educational needs services, set up in 2019,  is concluded as soon as possible. This review must address the root cause of growing high needs deficits and provide local authorities with the means and levers to start addressing these huge shortfalls.

CCN says that the review must address the long-term issues within SEN, including placements for pupils and a focus on preventative services.

Councils are facing an already challenging financial climate, with county authorities’ estimated spending on services for children expected to rise by an additional £1.3 billion from 2018 to 2023.

Keith Glazier, Children and Young People Spokesperson for the CCN, said: “The government’s legislation changes which extended the eligibility of Education, Health, and Care Plans were well intentioned but this explosion in demand has not been met with the necessary increase in funding, whilst reforms remain unpublished two years on from being announced. The ability to roll-over these deficits until 2023 is welcome, but nothing more than a sticking plaster.

“We have a statutory and moral obligation to support these young people, but local authorities are building up significant deficits. With limited options and a lack of funding available, we are being backed into a corner and face a financial cliff edge in two years’ time when these deficits will be on our budget books and will need to be addressed. This could mean we take funds from other services or money from our pandemic recovery efforts.

“We need urgent action from the government to provide substantive resource in this year’s Spending Review so we can begin to address these deficits now rather than let them grow to unmanageable levels. Ministers should also publish the special educational needs review as soon as possible – and reform must address the root cause why the vast bulk of councils in the country are building up unsustainable deficits.”