Councils’ SEND deficits are continuing to grow rapidly and are on course to reach a record £10.4 billion by March 2028, despite a government bailout.
Figures from the County Councils Network (CCN), based on from a survey of local authorities by the Association of Local Authorities Treasurer Societies (ALATS), show that whilst the government is currently providing over £5 billion to clear SEND deficits built up to March 2026, rapidly rising demand during this year means that the debt is accumulating almost instantly.
In January this year, the number of young people on EHCPs reached a record high of 718,000 – a 13% rise in a year.
Pre-emptive action
Council leaders say they have seen a sharp increase in applications for EHCPs as parents, carers and schools look to secure a support plans before any changes to the system, announced in February, kick in.
As a result, costs to councils are rising exponentially and deficits building up again, despite government paying down 90% of deficits accumulated up to March this year through a ‘High Needs Stability Grant’, due to be paid later this autumn.
Council leaders warn that despite this grant they are ‘not out of the woods’. Even after accounting for the autumn SEND deficit bailout, councils say their deficits are re-accruing and could reach £4.8bn by March 2027.
This is then set to more than double over the following twelve months – to a record high of £10.4bn by March 2028.
The CCN has called for a ‘cast iron’ commitment from the new government to wipe out the deficits that continue to accumulate rapidly by March 2028, fully absorb SEND costs beyond that date, and press ahead with full reform of the system to stop costs spiralling and to improve outcomes for children.
The network is calling for a write off deficits for both 2026/27 and 2027/28 to prevent this debt from piling up.
We need clarity from ministers, followed by concrete action to support councils to pay down deficits
The CCN says that ‘anything less’ than removing 90% of remaining debt by 2028 will cause a financial catastrophe for many local authorities – and one in 10 of surveyed councils warning that even this may not be enough to avoid bankruptcy.
Since 2019, councils’ debt has been kept off budget sheets using an accountancy mechanism called the statutory override. This is due to expire in March 2028, when the Department of Education is set to take over responsibility for SEND expenditure.
But councils are concerned about what happens to SEND deficits before that date. Whilst the majority of local authorities’ debts to March 2026 are to be paid off the government promised an ‘appropriate and proportionate’ in future but ministers have said this would ‘not be unlimited’.
Since then, there has been no clarity on what this means in practice, or how the government intends to absorb councils’ SEND costs in less than two years’ time.
Wiping out deficits
The CCN is also calling for government to provide certainty to local government on how it intends to address these challenges, including a commitment from ministers to take on SEND expenditure in 2028, as set out by the previous administration, and provide urgent details on how much of the remaining deficits will be wiped out – and when.
The network is also warning ministers that they cannot ‘cherry pick’ the easiest parts of proposed SEND reforms and jettison the least popular. Councils argue the reforms will only succeed – and both drive down costs for councils and improve experiences for young people – if they are enacted in full.
Councillor Linden Kemkaran, the CCN’s SEND lead, said: “The government’s SEND bailout this autumn is a lifeline. But whilst this bailout addresses yesterday’s debt, tomorrow’s deficits are already building at an even faster pace. Despite this, we have little clarity from government on how much support we will receive – and when.
“Anything less than paying down 90% of this new debt would be a financial catastrophe for councils. These deficits have not accumulated because councils have chosen to spend recklessly: they are the result of having to meet rapidly growing statutory demand, which has only intensified this year, without funding keeping pace.
“If councils are left carrying billions of pounds of SEND debt, it will not just be a problem for local authorities.
“Taxpayers and local communities will ultimately bear the consequences as councils face impossible choices about how to protect frontline services while managing debts that have accrued through no fault of their own.
“We need clarity from ministers, followed by concrete action to support councils to pay down deficits.
“Meanwhile, the system remains broken. As well as councils absorbing skyrocketing costs, children and young people will face increasingly long waits for support, and educational outcomes will continue to flatline.
“Ministers now need to provide certainty that they will deliver the full package of reforms needed to ensure the system works much better for young people, schools and councils.”
Owen Mapley, chief executive of the Chartered Institute of Public Finance, said: “The continued escalation of SEND deficits exposes a serious failure to align statutory responsibilities with funding levels.
“Local government chief financial officers have been calling attention to this disconnect for years as it undermines proper financial management practice.”
