| SPOTLIGHT |
Almost three quarters of England’s largest councils “could have to declare bankruptcy” by 2027 if the multi-billion-pound special educational needs and disabilities services (SEND) deficits they are faced with are placed onto their budget books, the County Councils Network (CCN) has claimed.
The CCN warned that 26 of the 38 county and rural unitary authorities could be at risk of issuing a Section 114 notice before 2027, including 18 authorities who could be insolvent ‘overnight’ in March 2026.
According to data analysis by the Society of County Treasurers (SCT) and the Association of Local Authority Treasurers (ALATs), rising demand and costs have resulted in England’s 38 county and largest unitary authorities in England accumulating SEND deficits of £2bn this year, a figure estimated to rise to £2.7bn in 2025/26.
CCN noted: “Nationally, these deficits are now estimated to be £4bn this year, growing to £5.9bn next year. These deficits are being kept off councils’ budget books due to an accountancy method called the ‘statutory override’ which is due to expire in March 2026.”
The network has called on the Government to provide “immediate clarity” and a “national solution” on how the Treasury plans to manage councils’ high needs deficits if the override comes to an end in March 2026 as currently planned.
Its survey of local authority chief executives and analysis of SEND deficits found that:
CCN said it is “vital” that reforms are implemented within the next 18 months, adding that these should include a new national framework, reforms to the tribunal system, and changes to make mainstream schools more inclusive and supportive for SEND pupils to “reduce the overreliance on special school placements”.
Cllr Kate Foale, Special Educational Needs and Disabilities Spokesperson for the County Councils Network, said: “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 to 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.”
A Government spokesperson said: "We are focused on fixing the foundations of local government by rebuilding the sector from the ground up and stand ready to speak to any council that is experiencing financial difficulties.
“For too long children and young people with SEND have been let down by a system that is not working and we are determined to tackle these issues head-on, improving children's life chances with better inclusivity and expertise within mainstream schools.
“There is no ‘magic wand’ to fix these deep-rooted issues, but we have already started with Ofsted reform, our curriculum review, and more training for early years staff, and will continue to act as quickly as possible to create the change that is so desperately needed.”
Lottie Winson
