Local authorities across England are warning that spiralling Special Educational Needs and Disabilities (SEND) costs could push cumulative deficits beyond £10bn by 2028, despite a multi-billion-pound government intervention designed to ease financial pressures.
New figures from the County Councils Network (CCN), based on a survey conducted by the Association of Local Authority Treasurer Societies (ALATS), reveal that SEND deficits are growing at an accelerating rate and could reach a record £10.4bn by March 2028.
The warning comes despite the government providing more than £5bn this autumn through a High Needs Stability Grant to eliminate most SEND deficits accrued up to March 2026.
Demand for EHCPs Continues to Rise
Council leaders say rapidly increasing demand for Education, Health and Care Plans (EHCPs) is driving costs higher than ever. In January, the number of children and young people with an EHCP reached a record 718,000, representing a 13% increase over the previous year.
The increase has been linked, in part, to anticipation surrounding proposed SEND reforms announced by government earlier this year. Local authorities report a surge in applications from parents, carers and schools seeking to secure support plans ahead of any potential changes to the system.
As a result, although historic deficits are being addressed through government funding, councils say new financial pressures are accumulating almost immediately.
Deficits Rebuilding at Record Pace
According to the CCN, SEND deficits could rise again to £4.8bn by March 2027, even after the government's bailout is factored in.
Without further intervention, that figure is forecast to more than double within a year, reaching £10.4bn by March 2028.
The organisation is urging ministers to commit now to writing off the deficits anticipated during both 2026/27 and 2027/28, warning that failure to do so could have severe consequences for council finances.
The concern is heightened by the planned expiry of the statutory override in March 2028. This accounting mechanism has allowed councils to keep SEND deficits off their main balance sheets since 2019.
While the Department for Education is expected to assume responsibility for SEND expenditure from 2028, local authorities say there remains significant uncertainty about how growing deficits in the intervening years will be managed.
Councils Seek Greater Certainty
The CCN is calling on government to provide a clear commitment on future funding arrangements and confirm how much of the growing debt burden will be absorbed before the statutory override ends.
Council leaders also argue that proposed SEND reforms must be implemented in full if the system is to deliver better outcomes for children while improving long-term financial sustainability.
Sector Leaders Sound Alarm
Cllr Linden Kemkaran, SEND spokesperson for the County Councils Network, said:
"It is no exaggeration to say that the government’s SEND bailout, due within weeks this Autumn, is a lifeline”.
”But whilst this bailout addresses yesterday’s debt councils are not out of the woods and tomorrow’s deficits are already building at an even faster pace. Despite this, we have little clarity from government on how much support we will receive – and when.
"Anything less than paying down 90% of this new debt would be a financial catastrophe for councils. These deficits have not accumulated because councils have chosen to spend recklessly: they are the result of having to meet rapidly growing statutory demand, which has only intensified this year, without funding keeping pace.
"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. We need clarity from ministers, followed by concrete action to support councils to pay down deficits.
Meanwhile, the system remains broken. As well as councils absorbing skyrocketing costs, children and young people will face increasingly long waits for support, and educational outcomes will continue to flatline. New ministers now need to provide certainty that they will deliver the full package of reforms needed to ensure the system works much better for young people, schools and councils.”
Owen Mapley, Chief Executive of the Chartered Institute of Public Finance, said:
"The continued escalation of SEND deficits exposes a serious failure to align statutory responsibilities with funding levels. Local government chief financial officers have been calling attention to this disconnect for years as it undermines proper financial management practice.
"The system needs funding certainty, reform and a framework that supports both better outcomes for children with SEND and long-term financial resilience for councils. Anything less falls short of good public financial management.”
A spokesperson for the Association of Local Authority Treasurers said:
"The Association of Local Authority Treasurers welcomes the support from the Government to address the historic deficits up to March 2026 that have accumulated over the past decade. Given the exponential increases in the number of EHCPs and the associated costs it is now essential that further clarity on the support packages for the costs from April 2026 is provided urgently alongside the necessary policy reforms for Local Authority Chief Finance Officers (Section 151 officers) to be able to continue to sign off that Council budgets are able to be balanced.
"Without clarity on this funding, there is significant financial uncertainty for both 2026/27 and 2027/28. This uncertainty, alongside the wider financial challenges facing many local authorities, will result in Section 151 Officers being unable to sign off balanced and robust budgets for 2027/28 and beyond”.
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