Local authorities in England are facing a financial crisis driven by an unsustainable increase in the numbers of children with special educational needs and disabilities (SEND).

Internal reports indicate that as many as 70 councils are at risk of bankruptcy by March 2024, with significant implications for local governance and service delivery.

This situation arises from a combination of chronically underfunded services, a rapidly expanding demand for special education provisions, and systemic mismanagement of resources.

Data analysis from 108 councils indicates that the total SEND deficit in England could reach £5 billion within the next year, a stark rise from previous years when councils operated at a surplus.

For example, West Sussex County Council has projected a cumulative SEND deficit of approximately £131 million, which is expected to escalate to £225 million by March 2026 and potentially reach £459 million by 2029, if current trends persist.

The mounting deficits have primarily been attributed to a lack of sufficient mainstream SEND provision and an underestimation of the demand for education, health, and care plans (EHCPs), which grant children legal rights to SEND support.

As these deficits grow, councils are resorting to accounting overrides to keep them off their balance sheets, a temporary fix that is set to expire in March 2026, after which councils fear they may face insolvency.

Specific councils, such as Bournemouth, Christchurch and Poole, have begun discussing potential measures to address their projected £165 million SEND deficit.

Proposed options include suspending new EHCP assessments or withholding business rates from central government.

Both actions have been described as “unpalatable” and illegal, reflecting the precarious state of the system.

One of the significant financial strains stems from the escalating costs of private specialist school placements, which are often two to three times more expensive than state school placements.

For instance, Warwickshire County Council originally budgeted for 470 children to be placed in independent special schools at an average cost of £55,000 per child per year.

However, this estimate was revised to 556 children with an average yearly cost of £66,000, resulting in an anticipated overspend of £11 million on private SEND provision for the current fiscal year.

Councils are also grappling with various operational challenges, including delays in constructing new specialist schools, rising transportation costs for children requiring SEND transport, and disputes with headteachers over budget reallocations to address high-needs expenditures.

Efforts to implement local cost-containment strategies have generally failed to deliver intended savings.

As local authorities attempt to ration access to vital SEND services amidst budgetary pressures, parental dissatisfaction with the SEND system is on the rise.

Recent statistics reveal that councils expended £100 million on legal tribunals during the 2022-23 period to contest support for SEND children, with a staggering 99% of contested cases being lost.

Reforming the SEND system is expected to require substantial upfront investment and a commitment to resolving existing deficits while also balancing the demands of local councils against the legal rights of parents to access crucial SEND services for their children.

Government officials have acknowledged the necessity of systemic changes, describing the issue as a long-standing problem that has been neglected for years.

Efforts to reform the SEND framework have been characterized as one of the government's major challenges moving forward.