Local authorities warn the government’s special educational needs reforms will not address councils’ £2.4bn deficit

Councils in England have seen their deficits in special educational needs (SEN) top a record £2.4bn this year, as local authority leaders warn the government’s proposed reforms will not address this substantive funding black hole.

New analysis from the County Councils Network (CCN) and the Society of County Treasurers reveals that local authority deficits in SEN are now at approximately £2.4bn in 2022-23 – six times higher than levels in 2018 – with councils warning they face ‘catastrophic financial decisions’ if this debt is not written off. If nothing changes, this figure could rise to £3.6bn in 2025.

The figures come as the government looks to reform the SEN system, with a consultation on its proposals closing last week. In its response, CCN says that the government’s proposals could ultimately help with the demand-led pressures councils face in SEN services, but warn they are not an overnight fix and therefore will not erase the current deficits built up over the last five years.

Councils in county areas account for half of the deficit accrued by all 152 of England’s councils with responsibility for SEN – £1.2bn. Those rural councils have been hit particularly hard by the combination of rising demand for Education, Health and Care Plans (EHCPs), proportionally less capacity in mainstream schools and fewer specialist schools, and higher costs of providing school transport for pupils.

The government has in place a ‘statutory override’ where councils’ SEN deficits can be ringfenced away from their core council budget and this is expected to be extended for next year.

But local authority leaders warn the size of their deficits have grown to ‘unmanageable’ levels and have called on the government to write off these deficits so they do not face ‘catastrophic financial decisions’ or possibly insolvency once the statutory override expires.

CCN says that scrapping the deficits, coupled with the government’s reforms being introduced later this to address demand in SEN, would allow councils a blank slate in providing these vital services in a few years’ time.

These deficits have been built up as a result of rising demand for support from young people. Legislation changes in 2014 increased the eligibility of EHCPs. In England they have risen ever since – rising by a third in the last three years alone: from 354,000 to 473,000.

Last year 42,000 pupils started an EHCP – 116 a day. Some of these young people requiring hundreds of thousands of pounds a year to support. At the same time, there has been a reduction in support available for SEN pupils in mainstream schools, leading more to apply for EHCPs.

In its SEN consultation response, CCN argues that while improvements to services are required, the challenging financial situation facing councils across the country is not caused by council mismanagement , but rising demand for EHCPs and inadequate funding from government since 2015.

The government’s reforms package includes £1.4bn to support new SEN school places, alongside building more special schools, as well as moves towards ensuring that mainstream schools have the capacity to support more children with SEN. CCN says these measures could help in the long-term but will not address councils’ present funding black hole.

The package also includes a ‘Safety Valve’ programme, where individual councils are provided with funding to decrease their deficits alongside implementing changes to their SEN support locally. CCN says that this this programme, which only extends to 55 councils presently, should be expanded out further.

Cllr Keith Glazier, County Councils Network Children’s Services Spokesperson, said:

“Over the last five years, councils have not shirked from taking hard decisions on SEN support in order to try and make services financially sustainable, but we are swimming against the tide. Rising demand each year has meant our deficits have increased six-fold since 2018.

“With councils’ deficits now at £2.4bn many council leaders believe the scale of their debts are unmanageable. This is why we are urging the government to write off these deficits, otherwise we face catastrophic financial decisions through no fault of our own or local parents.

“Importantly, this will also buy local authorities and the government time for its new reforms to be implemented, which should address the significant demand-led pressures councils are currently facing. Therefore, councils will be able to start on a blank slate with far less strain on our budgets, so we can better support those with SEN.

“However, for these reforms to be a success, schools and parents need to work collaboratively and constructively with local authorities to ensure these reforms tackle parts of the system that are not working presently.”

Notes to editor

• You can download CCN’s response to the government’s SEN consultation here.
• The data in this press release is from a survey carried out by the Society of County Treasurers (SCT) during June. The SCT received 80 responses out of 151 local authorities, a 53% response rate. These figures were then aggregated up to provide a total figure for all 151 councils.
• The figures on the total number of EHCPs, and new EHCPs begun, were taken from this government dataset here.