‘Funding black hole’: councils grapple with ‘catastrophic’ debt for SEN children

Local authorities in England are grappling with a £2.4bn “funding black hole” for special educational needs, according to new analysis, with councils warning the impact on young people could be “catastrophic”.

Rising demand has resulted in councils’ SEN deficits growing six-fold since 2018, according to analysis by the County Councils Network (CCN) and the Society of County Treasurers. A third more children have become eligible for extra funding support over the past three years and the number now stands at 473,000 children.

The CCN is warning that the government’s planned SEN reforms later this year – which will try to reduce the “postcode lottery” in services and make the system less adversarial – will not be enough to plug the deficit that could rise to £3.6bn without action.

Keith Glazier, a councillor and spokesperson for children’s services at CCN, said many council leaders viewed the debts as “unmanageable”.

Glazier said: “Over the last five years, councils have not shirked from taking hard decisions on SEN support in order to try to make services financially sustainable, but we are swimming against the tide. Rising demand each year has meant our deficits have increased six-fold since 2018.”

The CCN is calling for the government to write off the deficit to avoid councils being forced to make “catastrophic financial decisions” or face possible insolvency once the government lifts its current temporary ringfencing of SEN deficits, potentially in a year’s time. This would give local authorities time for the reforms to be implemented, enabling them to start on “a blank slate”, Glazier added.

The reason for the deficit is that more children became eligible for education, health and care plans after legislative changes in 2014, at the same time as support for SEN pupils in mainstream schools has fallen and specialist schools have closed, hitting rural councils especially hard, said the CCN.

In its response to the government consultation on planned reforms to the SEN system, the CCN said the proposals could help with the pressures councils are facing due to increased demand, but these would not be “an overnight fix” and would not erase the deficits that have built up over the last five years.

The government’s reforms package includes £1.4bn for councils to pay for new SEN school places and improve existing provision, and £70m for broader reforms aimed at standardising support across the UK. It also includes funding for councils to help decrease their deficits, but CCN said this programme only covers 55 out of 151 councils and should be expanded further.

A Department for Education spokesperson said: “Councils are responsible for providing the right support for children in their areas but we know there is variation in how the system works, which is why proposals in our special educational needs and disability (Send) and alternative provision green paper will create a fairer, more inclusive system that also drives value for money.

“We are putting unprecedented investment into the high needs budget, meaning it will be worth £9.7bn by 2023-24, as well as creating tens of thousands of new school places for children with Send, or who require alternative provision over the next three years. We are also providing new guidance and research to help councils target their funding effectively so that young people in their area are supported.”