English councils warn special needs support deficits may reach £10bn by 2028

Traders Union
All News
Financial News
Councils warn £10bn SEND deficit

Highlights

English councils project a cumulative special needs support deficit of £10.4bn by March 2028 despite a recent £5bn bailout.
The number of children with education, health and care plans (EHCPs) rose 13 percent to 718,838 in the year to January, the fastest growth in six years.
Government reforms tightening EHCP eligibility will not take effect until 2029-30, with Treasury committing an additional £3.5bn for 2028-29 and risks of even higher deficits as demand accelerates.

Projected deficits build before reforms begin

As reported by Financial Times, English councils say spending on special educational needs and disabilities is set to generate a £10bn deficit by 2028 despite a multibillion-pound government bailout earlier this year.

Local authority leaders are seeking another rescue package from central government, arguing that anything less than covering most of the new debt would leave councils facing severe financial strain. The pressure centres on education, health and care plans, or EHCPs, which give children legal entitlement to extra support in schools.

The number of children with EHCPs rises 13 per cent to 718,838 in the year to January, the fastest increase in the previous six years. Councils say the number has doubled in less than a decade, creating statutory costs that local budgets cannot absorb as demand continues to outpace funding.

A survey by the County Councils Network of local authority finance officers forecasts major further overspends in 2026-27 and 2027-28, before central government takes on responsibility for the costs. Based on returns from 73 per cent of councils, the network estimates cumulative overspends of £10.4bn by March 2028.

Funding risks and wider impact on local services

Ministers set out plans in January to tighten eligibility for EHCP-related legal rights so they apply only to pupils with the most severe needs, while mainstream schools are expected to provide stronger support for children with lower-level difficulties. But after concern over a Labour backbench rebellion, the changes do not take effect until the 2029-30 school year, with the Treasury promising an extra £3.5bn to meet central government costs in 2028-29.

Councils already receive a £5bn bailout to cover 90 per cent of accumulated overspends until March this year, yet local leaders say new deficits are continuing to build. Linden Kemkaran, leader of Kent County Council for Reform UK and SEND spokesperson for the County Councils Network, says councils are not spending recklessly but are responding to rapidly growing statutory demand without matching funding.

The County Councils Network says assessment requests from member councils rise sharply this year after the government announces its reform plans in February, suggesting earlier projections of 840,000 EHCPs by 2028-29 are likely to be exceeded. Darcey Snape of the Institute for Fiscal Studies says official forecasts from the Office for Budget Responsibility already build significant overspends into Budget calculations, but warns deficits could still climb higher if families rush to secure EHCPs before eligibility changes begin.

A government spokesperson says ministers accept that councils will need further support with deficits, adding that the administration inherits a SEND system under intense strain and expects both deficits and EHCP applications to keep rising before reforms are fully rolled out.

U.S. social housing providers’ funding challenges were the focus of our earlier coverage, noting that operating margins and credit ratings stayed broadly stable through 2025 and early 2026 even as budget pressure intensified. We outlined how appropriations, including for Section 8, have not kept pace with rising operating and deferred maintenance costs, while portfolio expansion and greater use of bond markets could weaken debt profiles unless growth is tightly managed.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.