Councils call for urgent action in Spending Review to address £1.3bn special educational needs deficit

England’s largest councils today call for urgent action in this year’s Spending Review to ward off a financial cliff edge due to a spiralling deficit for special educational needs services, which is set to grow to an ‘unmanageable’ £1.3bn in just two years’ time.

Local authorities say that the deficit – an eightfold increase in just five years – is the result of a dramatic rise in young people 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 £134m in 2018/19 to a projected £1.3bn in 2022/23.

The survey has been covered in The Guardian, Children and Young People Now, and the Local Government Chronicle. 

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.

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.

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.

In addition, 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 special educational needs, including placements for pupils and a focus on preventative services.

The government made available an extra £730m this year for high needs, in addition to a £780m injection last year for high-needs, but councils say this funding was used to cover pre-existing shortfalls.

With local authorities needing to start addressing their deficits in April 2023, CCN says its members are increasingly being ‘backed into a corner’ without using their reserves or taking funding from other key service areas or pandemic recovery initiatives.

Earlier this year the Department for Education reached an agreement with five local authorities, granting them millions in exchange for those councils reducing their deficits. None of these were councils in county areas, and CCN says that the government must set out a comprehensive solution for all authorities with significant and growing deficits.

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

Councils are seeing their deficits increase due to the number of children being eligible for EHCPs since legislation changes in 2014. The Children and Families Act that year extended the age limit, including raising it from 19 to 25, in which councils have a duty to provide support to young people with special educational needs.

Whilst the numbers have been rising since 2015, the survey’s respondents project a further rise of 49% in ECHP recipients from 2018 to 2023 – 74,000 young people – across the 40 council areas in the survey. The costs average several thousands per annum and include specific support for individuals who are eligible for these plans, home to school transport for eligible young people, and admin costs.

Cllr Keith Glazier, Children and Young People Spokesperson for the County Councils Network, said:

“The government’s legislation changes which extended the eligibility of Education, Health, and Care Plans were well intentioned but this dramatic rise 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.”

Notes to editor

• The survey was carried out by the Society of County Treasurers and the County Councils Network, during May 2021. The 40 councils included are all of the councils in CCN membership, as well as Bedford Council, Isle of Wight Council, Cheshire West and Chester Council, and Leicestershire County Council.
• The survey received a 100% response rate for the questions on a councils’ projected high-needs deficits and projections on Education, Health, and Care Plan numbers.
• The estimated spending in services for children is taken from an analysis by PricewaterhouseCoopers (PwC) for the County Councils Network, which projected a rise in spend in children’s services and education services for the 36 CCN member councils. More detail is on pages 20 and 22 of their report here.
• The County Councils Network (CCN) is the national voice for England’s county councils. It represents 23 county councils and 13 county unitary authorities. Collectively, they represent 25 million people, or 47% of the country’s population. For more information click here.
• The Society of County Treasurers represents the chief financial officers of the county councils in England as well as sixteen unitary councils that share similar interests in local government issues. Together, these authorities represent 47% of the population of England and provide services across 87% of its land area. For more information, click