Nearly 20 councils in England ‘at risk of insolvency' due to Send costs

The Guardian

30-03-2025

Nearly 20 councils have warned publicly that they are at risk of insolvency because of multibillion pound debts caused by years of overspends on special educational needs support, the Guardian can reveal.
Overspending on special educational needs and disability (Send) services in England is forecast to grow by nearly £2bn over the next 12 months, a Guardian investigation shows.
Councils will see mounting special educational needs and disabilities (Send) deficits rise by 54% on average, with some anticipating accrued debts to increase by millions of pounds every month as they struggle to cope with soaring demand.
The deficits – currently totalling £3.4bn – will hit £5.2bn in 12 months' time. At least 18 councils have warned explictly the debts put them at risk of insolvency unless the government intervenes, with council estimates suggesting even more could go bust.
'The deficits are pushing councils all over England to the financial brink. The clock is ticking, and councils are being left in limbo with significant uncertainty over the future of services,' said William Burns, social care policy adviser for the Chartered Institute of Public Finance and Accountancy (Cipfa).
Mass defaults on Send deficits would cause chaos and damage other local services, said Cipfa, because councils which declare effective bankruptcy would be forced to drastically rein in spending in all areas, not just local schools. It estimates as many as 75 councils are at risk.
The spiralling debts were kept off council books by Tory ministers using an accounting fix called a 'statutory override' but this ends on 31 March 2026, when the debt returns to town hall balance sheets. Ministers must now decide whether to clear the debt, or extend the override until the deficits can be cleared safely.
The Send deficit ballooned under the last government, triggered by rapid increases in the cost of meeting education and health care plans (EHCPs) which give children the legal right to school support for conditions such as autism, and speech and language difficulty.
In 2015, 240,000 ECHPs were in place in England, more than doubling to 576,000 in 2024, according to Department for Education (DfE) statistics. Insufficient special needs capacity in state schools, and the high costs of Send placements in private specialist schools, have been driving overspends.
A government insider said: 'Those [council] forecasts can only have been based on the failing Tory system that we will change. Tackling the chaos that the Tories left in our Send system is a major priority for [the education secretary] Bridget Phillipson, so we can give every child the opportunity to get a brilliant education.'
A Guardian investigation shows at least 101 English councils – over two-thirds of the total – spent more than their allocated Send budget during the past year, with 18 councils breaching their annual allocations by over £30m.
Nearly nine out of 10 English upper-tier councils – of the 131 which responded in full to the FoI – will have an accumulated deficit on their high needs budgets by the end of next March, with one-in-four (32 out of the 131 who responded in full) now predicting debts of more than £50m and 15 debts of £100m or more.
Leeds city council, which covers chancellor Rachel Reeves's Leeds West and Pudsey constituency, has forecast its accumulated Send deficit will soar from £17.5m to £50m by the end of the next financial year, and warned the increase will put it at 'serious financial risk'.
Hampshire county council, which has England's largest forecast deficit at £312m, is projecting its debt to rise by £111m over the next year. In its budget reports, the council said that if the override was removed and the debt became a part of the organisation's deficit, 'a section 114 notice would become inevitable'.
Middlesbrough, one of England's most deprived authorities, said its forecast Send deficit will rise by more than quarter to £26m over the next 12 months. In council papers last month, it called this 'a critical risk to the council's financial viability, given that it will wipe out the council's general fund reserves.'
The average forecast accumulated deficit across the councils covered by the analysis is £40m by the end of March 2026, with 112 forecasting their accumulated high needs deficit will worsen over the next 12 months.
A DfE spokesperson said: 'The evidence is clear that the Send system has been on its knees for years – with too many children not having their needs met and parents forced to fight for support.
'It will take time, but as part of our Plan for Change we are thinking differently about what the Send system should look like, to spread opportunity, restore the confidence of families up and down the country and deliver the improvement they are crying out for.'