Councils in England warn of mass bankruptcies as Send deficits soar

The Guardian

13-06-2025

Council leaders in England have warned that a multi-billion pound deficit from years of overspending on special educational needs has become a 'burning platform' that will push scores of councils into bankruptcy within months.
They say time is running out to resolve rapidly growing shortfalls and are concerned the government gave no indication in Wednesday's spending review how it will deal with Send debts, which are expected to exceed £5bn by next March.
Official figures show a sharp rise in the number of children receiving special needs support in England, along with an increase in tribunal cases brought by parents challenging council refusals of Send provision for their children.
Ministers confirmed on Wednesday they will publish a schools white paper in the autumn containing measures aimed at drastically reducing eligibility for Send support, potentially by raising the threshold for access to education, health and care plans (EHCPs).
EHCPs give children and young people up to the age of 25 the legal right to support from local authorities for conditions such as autism spectrum disorder, social, emotional and mental health needs, including attention deficit hyperactivity disorder, and speech, language and communication needs.
Councils fear the white paper will not immediately slow the rapid increase in Send spending in recent years. A Guardian investigation in March revealed accrued Send deficits would rise by 54% over the coming year to more than £5.2bn.
At least 15 councils will have accumulated Send deficits exceeding £100m by next March, with one in four predicting debts of more than £50m. Two-thirds overspent their allocated Send budgets last year, with 18 councils exceeding them by more than £30m.
An accounting measure, known as a statutory override, has allowed councils to keep the accrued deficits off their balance sheets. The override is due to end on 31 March, leaving large numbers of councils in effect insolvent.
Councils declaring effective bankruptcy would affect all areas of provision, shed hundreds of jobs, and force them to sell off assets such as buildings and land.
Tim Oliver, chair of the County Councils Network, said: 'The mounting Send service deficits are the burning platform for many local authorities yet there was no resolution in the spending review.
'We are now nine months away from a financial cliff edge when these multi-billion deficits are placed on to councils' budget books, potentially rendering half of England's county and unitary councils insolvent overnight.'
The Chartered Institute of Public Finance and Accountancy (Cipfa) said uncertainty over the deficit 'seriously undermined' councils' financial planning, leaving them potentially unable to meet their legal obligations to set a balanced budget.
A Cipfa spokesperson said: 'The government continues to leave local authorities in the dark about the future of the Send system and their financial sustainability. By the time ministers provide clarity on the statutory override councils will already be well into their budget-setting processes.'
Nearly one in five pupils in England have special educational needs, according to figures published by the Department for Education, including 482,600 children with EHCPs, an increase of 11% in just 12 months. A further 1.28 million pupils require special needs support without having an EHCP, meaning there are a total of 1.7 million pupils with special needs.
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Separate figures show parents are engaging in legal battles with councils over the plans in record numbers. The Ministry of Justice said 23,800 appeals over EHCPs were received by the courts in the year to March, a 36% annual increase.
Hampshire county council, which has England's largest cumulative Send deficit, projected to be £312m by the end of March, said it will be forced to declare effective bankruptcy if no solution to the deficit is forthcoming.
Bournemouth, Christchurch and Poole (BCP) council, which has projected a Send deficit of £165m by next March, said it had taken out a £57m loan to ensure it could cover rising demand for Send services this year.
'Unless the government tells us very soon [how it will deal with historic send deficits] we are going to have to issue a section 114 notice (a formal declaration of effective bankruptcy),' said Mike Cox, BCP cabinet member for finance.
Penny Carpenter, cabinet member for children's services at Norfolk county council, which has a projected deficit of £183m, said: 'The lack of clarity and assurance from on future funding is deeply frustrating. The current financial pressures are unsustainable and severely hinder our ability to plan effectively.'
The Ministry for Housing, Communities and Local Government was approached for comment.