‘Unaffordable' SEN System Pushing Councils Towards Bankruptcy, MPs Say

School children playing during a break at a primary school in Yorkshire, England, on Nov. 27, 2019. Danny Lawson/PA Wire

The Public Accounts Committee (PAC) has called on the government to reform the “unaffordable” special education needs (SEN) system which is failing children and putting almost half of councils at risk of going bankrupt.

PAC, which examines the value for money of government expenditure, said in its report published on Wednesday that the SEN system has now become “unaffordable” for local authorities.

The report said councils are facing deficits totalling £4.6 billion by March 2026, “impacting their wider finances and potentially causing nearly half of English local authorities to be at risk of effectively going bankrupt.”

Sir Geoffrey Clifton-Brown MP, chairman of the committee, said in a statement: “Urgent warnings have long been issued to Government on the failing [SEN] system from every quarter.

“This is an emergency that has been allowed to run and run. Families in need of help have been forced to spend precious energy fighting for the support they are legally entitled to, and local authorities to bear an unsustainable financial burden.”

Growing Deficits

Since 2015, there has been a 140 percent increase in the number of children with education, health, and care (EHC) plans, which set out a legally-enforceable entitlement to specific SEN support.

Most local authorities have been overspending their annual high-needs budget every year since 2016/17, resulting in growing cumulative deficits. Other local authorities have had to dip into their reserves to cover SEN costs.

Since 2020, councils have been able to exclude these deficits from their main revenue budget—avoiding an impact on their overall fiscal position—but this only hides their deteriorating financial situation.

PAC notes that this exclusion arrangement will expire in March 2026, resulting in 66 local authorities (43 percent) being at risk of breaching their statutory duties on balancing their budgets, “and so would be effectively bankrupt.”

The warning comes as councils face increasing financial pressures, which could put other vital community services at risk.

In October, the County Councils Network (CCN) said that unless the government provides additional funding or radically rethinks the statutory responsibility of councils, local authorities will be reduced to little more than care service providers, forced to abandon providing other core services.

The CCN had said rising costs were owing to increased demand in children’s services, adult social care, and EHC plan-mandated home-to-school transport for SEN children.

‘Postcode Lottery’

The PAC report said that outcomes for children with special needs have not improved and that parents’ confidence in the system has been undermined.

It said that parents and children were experiencing long waiting times for assessments and support, with just half of EHC plans being issued within the statutory 20-week period.

The report also said that whether children received support depended on a “postcode lottery” or how well families can navigate “an often chaotic and adversarial system.”

The committee noted that the number of tribunal cases challenging councils’ negative decisions is rising.

While only 2.5 percent of local authority decisions on EHCs were appealed in 2023, tribunals found partly or fully in favour of parents in 98 percent of cases.

Clifton-Brown said the fact that 98 percent of cases are found in favour of families “is staggering, and can only demonstrate that we are forcing people to jump through bureaucratic hoops for no good reason.”

Improve Mainstream Provision

PAC recommended that within the next six months, the Department for Education (DfE) should set out provision for what the special education needs sector should look like, including improving the inclusion of SEN children within mainstream schools.

“Without urgent action, the [DfE] risks a lost generation of children leaving school without receiving the help they need,” report authors warned.

Children eating their lunch in the canteen at Royal High School Bath in Bath, England, on Nov. 29, 2023. PA

Councillor Arooj Shah, chairwoman of the Local Government Association’s Children and Young People Board, said in a statement that PAC was right to describe the “failing” SEN system as an emergency, “and its report reflects councils’ long-standing concerns over the need for more inclusive provision and the immense financial pressures on councils to be adequately addressed.”

Shah said that the government needs to urgently reform SEN provision to better support children and their families and ensure councils “are on a financially stable footing, with high needs deficits written off.”

“Otherwise, many councils will face a financial cliff-edge, and be faced with having to cut other services to balance budgets through no fault of their own, or their residents,” she said.

Responding to the report, schools minister Catherine McKinnell told reporters that the government has invested £1 billion into SEN as well as £740 million for councils to create more places in mainstream schools for children with special needs.

McKinnell said, “These problems are deep-rooted and will take time to fix but we remain steadfast in our commitment to deliver the change that exhausted families are crying out for by ensuring better earlier intervention and inclusion.”