Councils call for more bailouts as SEND deficits to top £10bn

Ministers must be prepared to write off SEND deficits accrued over the next two years, councils have warned, after predicting they will rise to £10 billion even after historic debts are wiped.

The government is wiping 90 per cent of deficits built up by April 2026 in return for approved local SEND reform plans.

Analysis by FE Week’s sister title Schools Week shows this could cost the government nearly £6 billion, which will be paid later this year.

But councils will then continue to build up deficits until 2028, when the government will take responsibility for cost pressures in the system.

Ministers said in March they would continue to take an appropriate and proportionate approach, but that support would not be unlimited.

Today, the County Council Network warned deficits could hit a record £10.4 billion in just two years. The Office for Budget Responsibility previously forecast deficits over the next two years would total more than £9 billion.

‘Financial catastrophe’

The CCN said councils had seen a “sharp increase” in applications for education, health and care plans (EHCPs) since government SEND reforms were announced in February.

Reforms propose that EHCPs be reserved for pupils with the most “complex needs” from 2035.

The number of pupils with EHCPs rose by 13 per cent between January 2025 and January 2026.

A survey by the Association of Local Authorities Treasurer Societies of 89 councils found that even after accounting for the write-off of historic deficits, councils believe the shortfall could reach £4.8 billion by March 2027 and £10.4 billion by March 2028.

The network said the DfE should give a “cast iron commitment” to wipe out deficits accrued until March 2028.

The CCN said “anything less” than removing 90 per cent of remaining debts by 2029 will cause “financial catastrophe” for many town halls. Even then, one in 10 surveyed councils said this support may not be enough to avoid bankruptcy.

‘Not out of the woods’

Linden Kemkaran, SEND spokesperson for the CCN, said while the bailout is a “lifeline” for councils, they are “not out of the woods”.

“Despite this, we have little clarity from government on how much support we will receive, and when.

“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.”

A government spokesperson said: “We inherited a SEND system under immense strain, and have always recognised that both deficits and EHCP applications will continue to rise before our reforms are fully rolled out.

“On top of grants to pay off 90 per cent of council deficits, we’re investing billions to make sure every community has easy, early access to specialists like speech and language therapists, and so councils can deliver their tailored local reform plans.”

The spokesperson said government will reveal details of further support by March 2028.