The ‘Ticking Timebomb’ That Could Bankrupt UK Councils: The Hidden Cost of SEND Spending

Local councils across England are facing an unprecedented financial crisis due to soaring expenditures on Special Educational Needs and Disabilities (SEND) services. With deficits mounting and temporary financial protections set to expire, the solvency of dozens of councils is under threat. Some experts warn that without urgent reform, the financial burden of SEND services could push local governments to the brink of bankruptcy by 2026.

The Growing SEND Funding Deficit

Over the past decade, the number of Education, Health, and Care Plans (EHCPs) issued to children with special needs has surged by 140%. While this reflects greater awareness and demand for support, funding has failed to keep pace. Local authorities are now struggling to cover the costs, which include specialized education, transportation, and private school placements.

According to a recent report:

• West Sussex County Council has accumulated a £131 million SEND deficit, projected to rise to £459 million by 2029.
• Warwickshire County Council expected to place 470 children in independent special schools at an average annual cost of £55,000 per child—this was later revised to 556 children at £66,000 per child, leading to an £11 million overspend.
• Nationally, the total SEND funding deficit is projected to exceed £4.6 billion within the next few years.

The Statutory Override Expiry: A Looming Deadline

A crucial financial measure currently shielding councils from insolvency is the “statutory override”, a temporary accounting rule introduced by the government. This rule allows councils to exclude their SEND budget deficits from official balance sheets. However, this exemption expires in March 2026, meaning councils will have to integrate these deficits into their overall budgets—potentially leading to mass insolvencies.

Without a renewed statutory override or increased government funding, between 60 and 70 councils could face bankruptcy within two years.

Why Are SEND Costs So High?

1. Dependence on Expensive Private Schools

Due to a shortage of state-run SEND provisions, councils rely heavily on independent specialist schools, which charge significantly higher fees. For instance, private SEND school placements cost local authorities an average of £66,000 per pupil per year, compared to £20,000 in state-funded provisions.

2. Legal Challenges and Tribunal Costs

Parents of children with special needs have the right to appeal SEND-related decisions in tribunals. In many cases, councils lose these cases and must increase funding for EHCPs, adding millions in legal costs and additional funding commitments.

3. Increased Demand for SEND Services

The number of children diagnosed with special needs is rising, with factors such as better early diagnosis, increased advocacy, and policy changes contributing to demand. However, funding from the Department for Education (DfE) has not kept pace with these trends.

Potential Consequences: What Happens if Councils Go Bankrupt?

If councils cannot balance their budgets due to SEND deficits, they may be forced to:

• Reduce public services (e.g., road maintenance, social care, libraries, and community programs).
• Increase council taxes beyond usual limits. Some councils have already sought permission to raise council tax rates above 5% to manage costs.
• Request emergency financial aid from the central government, which is unlikely to cover the entire deficit.

Government Response and Possible Solutions

The UK government is expected to release a white paper on SEND reform later in 2025. Some of the proposed measures include:

• Limiting parental rights to appeal EHCP decisions, reducing the number of costly legal battles councils face.
• Prioritizing investment in state-run SEND provisions to decrease dependence on expensive private placements.
• Increasing funding allocations for local authorities, though no concrete financial commitments have been made.

Local councils are urging the government to either extend the statutory override beyond 2026 or wipe out SEND deficits through central funding—a decision that remains uncertain.

Final Words

With the March 2026 deadline fast approaching, councils, parents, and policymakers face tough decisions. If no intervention occurs, many councils may become financially unviable, leading to drastic cuts in essential services.

As the crisis unfolds, one thing is clear: without immediate action, the financial survival of dozens of English councils is at risk.

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