More than half of councils responsible for special educational needs provision will not be able to balance their books when a “statutory override” ends next year, a survey has suggested.
Councils are able to keep high needs deficits – where the cost of providing support outstrips the special educational needs and disabilities (Send) budgets available to councils – off their main revenue accounts.
But the measure that enables them to do this, known as a statutory override, runs out in March 2026 – and the Local Government Association (LGA) has warned that many councils could become insolvent.
A survey of chief finance officers in 60 single-tier and county councils in England found that 53% of councils would not be able to set a balanced budget in 2026-27 if the override ends with no alternative.
This rises to 63% who said they would not be able to set a balanced budget in 2027-28 and 65% in 2028-29 without the statutory override or a suitable alternative, according to the LGA poll in January.
The LGA is calling on the Government to urgently address the issue in its 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.
The number of children and young people on support plans for Send has risen over the past decade, according to Government figures.
There were 575,963 children and young people in England with education, health and care (EHC) plans, which set out the provision of Send support needed, in January 2024 – a 140% increase since 2015.
Arooj Shah, who chairs 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 focuses 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.”
Chancellor Rachel Reeves announced in her first Budget in November that £1 billion of funding will go towards supporting the Send system.
In December, the Government said it had earmarked £740 million of funding to create more specialist places in mainstream schools for children with Send.
The funding, which forms part of the £6.7 billion of education spending announced in the Budget, can be used to adapt classrooms to be more accessible for children with Send, and to create specialist facilities within mainstream schools to deliver more support.
Julia Harnden, funding specialist at the Association of School and College Leaders (ASCL), said: “It is not just the fact that many councils are set to go bust because funding for special educational needs has not kept pace with demand which is the problem, it is also the risk that the money that is available ends up going into plugging deficits rather than actually supporting young people.
“We absolutely agree with the LGA that local authority high needs deficits must be written off by the Government.
“This must be done with an injection of funding separate from the education budget, and it must be accompanied by reform and adequate funding to rescue the special educational needs system.”