A new survey has discovered that almost thirty of England’s largest councils could be forced to declare bankruptcy by 2027, should their SEND deficits be put onto their budgets.
The survey, from the County Councils Network, has found that 26 of the largest councils in the country are facing significant financial challenges related to their projected special educational needs and disability deficits. These have the potential to triple overnight, with this forcing 60% more councils towards insolvency.
Deficits have come about thanks to increases in costs and demand for SEND services. These deficits have now become unmanageable, sitting at £4 billion nationally and expected to rise to £5.9 billion next year. They are, however, being left off councils’ budget books thanks to ‘statutory overrides’.
The ‘statutory override’ accountancy method is set to expire in March 2026, which could then result in further financial struggles for councils.
Some of the findings from the report, which targeted local authority Chief Executives, include:
- Due to increasing costs, 16 county and rural unitary authorities predict they are at risk of issuing a Section 114 notice before 2027
- Should the statutory override expire, there could be a 60% increase in the number of councils at risk of bankruptcy
- Eight in ten respondents said that they were unable to build up more reserves to offset their SEND deficits should the override end
- Writing off deficits, or extending the override, would not be enough to deal with the fundamental financial struggles relating to the SEND system
County Councils Network’s Special Educational Needs and Disabilities Spokesperson, Cllr Kate Foale, commented:
“The current SEND system works for no-one. It does not work for parents, young people and councils alike and during the last decade demand and costs have spiralled out of control, leaving local authorities with deficits that are unmanageable. This is despite local authorities doing everything in their power to address costs.
“Today’s survey shows the reality of what would happen if these deficits are not addressed and the statutory override removed: an immediate financial emergency that would lead to dozens of councils declaring bankruptcy in the next 18 months, and only four out of 38 surveyed surviving the decade. Considering only six councils in the whole of England have declared bankruptcy in the last ten years, this is an eye-opening figure and each and every S114 Notice would be catastrophic for local services.
“With the clock ticking to March 2026 when these deficits are placed back onto councils’ budget books, the government must provide immediate clarity on a national solution for eliminating or managing councils’ deficits. But this is only one part of the solution. We also need root and branch reform of the SEND system to address the key issues driving demand and cost, including flipping the system to make mainstream schools more inclusive for SEND pupils.”
With this in mind, the CCN’s submission to the Budget and Spending Review consultation has called for the government to provide ‘immediate clarity’ and a ‘national solution’ over how the Treasury intends to deal with high needs deficits.
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