More than half of councils that support children with SEND warn of potential insolvency if “statutory override” runs out

More than half of councils that support children with special educational needs and disabilities (SEND) have warned they will become insolvent when the “statutory override” – a temporary accounting measure that keeps spending deficits relating to SEND off their main balance sheets – ends next year, a survey by the Local Government Association has found.

The override means that councils are to keep high needs deficits, where the cost of providing support outstrips the SEND budgets available to councils, off their main revenue accounts.

The LGA has warned of a lack of clarity over what will happen when the mechanism expires in March 2026.

Its research found that if the override ends as planned with no alternative method for addressing deficits, 53% of councils responding to the survey, responsible for SEND provision, said they would not be able to set a balanced budget in 2026/27, rising to 63% in 2027/28 and 65% in 2028/29.

The LGA called on the Government to urgently address the issue in the Spending Review, as part of a wider programme of reform of the SEND system.

It said the Government should write off councils’ high needs deficits, which are projected to rise to £5 billion next year. “This is despite councils being expected to be spending £12 billion to support children with SEND.”

The LGA highlighted how, since reforms in the Children and Families Act 2014, the number of children and young people with Education, Health and Care plans (EHCPs) had risen by 140% from 240,183 in 2014/15 to 575,973 in 2023/24.

It added that while the £1 billion funding for SEND announced in the Budget was positive, this money was likely to be consumed by partially plugging existing deficits.

Cllr Arooj Shah, Chair of the LGA’s Children and Young People Board, said: “The ending of the statutory override threatens councils’ financial viability.

“Only by taking bold and brave action in the Spending Review and writing off councils’ high needs deficits can councils have the financial stability they need to ensure children with SEND get the support they need.

“But funding is only one of the challenges facing the SEND system.

“Putting councils on a stable financial footing has to be part of a comprehensive reform plan, which focusses on boosting inclusion in mainstream schools, early years settings and colleges, ensuring they have the capacity and expertise to meet the needs of children with SEND.”

The Department for Education has been approached for comment.