Scores of English councils could face bankruptcy as hidden special educational needs debts resurface

The staggering costs associated with England’s special educational needs and disabilities (SEND) crisis show no signs of easing. A recent investigation has revealed that councils are on track to overspend by nearly £2 billion on SEND services over the coming year, pushing their total accumulated deficits to at least £5.2 billion by March 31 2026.

This date is critical, as it marks when the £5.2 billion debt—currently kept off local authority balance sheets through an accounting adjustment for the past seven years—is expected to be added back in, placing numerous councils at risk of immediate bankruptcy.

The government is left with a daunting challenge. It must not only address the mounting historical SEND debt but also find ways to control future SEND spending, which continues to rise unabated. Efforts by the previous administration aimed at curbing SEND expenditure through “safety valve” grants to numerous councils have had limited success in reducing costs.

Of the 131 councils that responded to the investigation, 79 entered grant agreements with the Department for Education (DfE), but remarkably only three are forecasting a non-deficit position for the next year. Many councils that have almost achieved a break-even point anticipate sliding back into debt once these grants are withdrawn.

The City of York council stands out as the only authority in the survey projecting a surplus for its accumulated SEND budget in the next year. However, its leadership has expressed caution, warning that without systemic changes, returning to a deficit is almost inevitable.

Calls for reform are met with contention. Councils advocate for amendments to legislation to allow them greater control over which children receive specialised SEND support. Parents vehemently oppose such moves, asserting that the true challenge lies in mainstream schools’ inability to adequately cater to SEND pupils’ needs.

There is growing unrest among parents grappling with the struggle to secure the necessary support for their children. It is widely felt that the current financial challenges facing councils should not be blamed on parents exercising their rights. Advocates argue that the government needs to write off these debts and implement a sustainable programme for early intervention support and improved inclusion.

In response to escalating needs, the government has allocated an additional £1 billion towards SEND services and is poised to create 10,000 more specialist places within mainstream schools. Nevertheless, it remains uncertain how effective these measures will be in establishing a financially viable system.

With significant deficits projected—such as Norfolk county council’s anticipated £183 million deficit and Bournemouth Christchurch and Poole council’s forecast of £168 million by March 31 2026—concerns mount. Observers fear that governmental inaction will only prolong the issues, leading to a larger and more challenging financial burden.