Rising Special Education Costs Threaten Financial Stability of Councils: Report

File photo of a primary school pupil at work in a classroom on Feb. 8, 2012. PA

Local councils risk insolvency, driven by a sharp increase in demand for support for pupils with special education needs and disabilities (SEND), a report has found.

By 2026, councils are expected to be spending £12 billion on SEND services—up from £4 billion a decade ago—but will still be facing a £5 billion “funding black hole” due to demand, according to a report by Isos Partnership published on Thursday.

Reforms in 2014 which aimed to improve support for children introduced Education, Health, and Care Plans (ECHPs), which outline the needs and support for children with SEND and are paid for by state-funded local authorities.

The report, commissioned by the Local Government Association (LGA) and the County Councils Network, found that the number of children in receipt of ECHPs had more than doubled, increasing from 240,183 in 2015 to 575,973 in 2023/2024.

There are also a further 1.2 million children in schools who require SEND support, but who are below the statutory level for being eligible to have an EHCP.

Because rising costs exceed budgets, councils have been running deficits. These deficits have been held off councils’ balance sheets due to temporary statutory overrides which expire in March 2026. According to the report, local governments face a financial cliff edge, as there is “no obvious means of paying off or reconciling the money that has already been spent, and with no realistic prospect of being able to reduce expenditure in the future.”

A press release by the LGA accompanying the report said that if the statutory override ended tomorrow, “one in four councils surveyed for the report said that they would cease to be solvent within a year or less, with half stating they would cease to be solvent in three years or less.”

Attainment for SEND Has Not Improved

The report also found that despite SEND spending having tripled, the outcome for special needs pupils has not improved.

“There is little evidence to suggest that increased identification of SEND, increased placements in specialist provision, and increased expenditure have delivered better outcomes for children and young people, and better experiences for families,” the report said, noting that children with ECHPs have seen their performance flatline or decline across key educational milestones in the past decade.

It found that at the end of primary school in 2022/23, only 8 percent of pupils with EHCPs achieved the expected level in reading, writing, and maths, which is the same proportion who achieved those levels in 2016/17.

At secondary school level, only 30 percent of young people with EHCPs achieved Level 2 (ie, GCSE or equivalent) by age 19 compared with nearly 37 percent who achieved this benchmark in 2014/15.

Calls for Mainstreaming More SEND Pupils

Councils said that urgent reform of the SEND system is now unavoidable, and call for the Labour government to fulfil its manifesto pledge and work to mainstream more pupils with special needs into community schools.

Since 2014/2015, there has been a 60 percent increase children with EHCPs going to state-run special schools and a 132 increase in those attending independent special schools.

These placements cost an average per year of £25,000 for state-run and £58,500 for private schools, compared to £8,200 for supporting a child in a mainstream school.

However, the authors admit that “at present mainstream schools and settings do not have the resources, capacity or support they need to include children and young people with SEND as well as they could.”

Responding to the findings, Education Secretary Bridget Phillipson said the new Labour government is working on education reforms to support special needs children, including improving early interventions.

“We will restore parents’ trust that their child will get the support they need in mainstream school, if that is the right place for them. And that there will always be a place in special schools for children with the most complex needs,” Ms. Phillipson said.

Tribunal Disputes

The report also said that the current system is weighed down by tribunal disputes, where parents challenge the decision of local authorities on their ruling on special education needs provision.

The report recommends that a reformed SEND statutory framework “should include new, independent, non-judicial mechanisms for dealing with disagreements about decision-making” and where the SEND Tribunal would “refocus its work on resolving disability discrimination cases.”

Disability campaigners expressed concern that changing the disputes system would remove parents’ legal rights. The Disabled Children’s Partnership posted a response to the report—signed by several charities including Mencap, Sense, and the National Autistic Society—on social media platform X which said that changes to the arbitration system “would only risk more children and their families being failed, because these rights are an essential safeguard when nothing else has worked.”

Recent government figures show that in 98 percent of cases, tribunals side with the families and against local authorities.

PA Media contributed to this report.