The special needs spending crisis threatening to bankrupt Britain's councils

Telegraph

2 days ago

A bad day for Surrey-based solicitor Hayley Harding can start in the blink of an eye when her two children, Matthew and Connor, get upset.
Both boys, aged eight and 10, have autism and outbursts are rarely short-lived affairs.
'They can be very angry, loud, emotional. We have had days with Matthew where he's either crying or he's shouting, and that can go on for hours.
'I can't gloss over it. It's really hard. So to have the support of a school that is also trying to do the right thing by him is enormous,' Harding says.
Getting the right support took 10 months, a tribunal appeal and was 'one of the most stressful things I ever had to go through', says Harding.
That support is also the difference between her other son, Connor, being able to stay in school or not. Now she fears Sir Keir Starmer's government will take it away.
Children such as Harding's are at the forefront of the Government's anticipated reforms of Britain's 'broken' system of benefits for kids with special educational needs and disabilities, known as 'Send' children.
After backbench rebels thwarted attempts by the Prime Minister to overhaul ballooning sickness and disability payments for adults, this is the next battleground.
'It's extremely worrying,' says Harding.
Ministers are concerned about surging costs: funding for children who need help to get through day-to-day activities has risen by £4bn in real terms to £11bn a year since spring 2016.
It partly reflects the fact that far more children get diagnosed with behavioural conditions such as autism and ADHD, speech difficulties and mental health issues.
Since 2018, the number of children with so-called education, health and care plans (EHCPs) has also surged by 71pc.
This means there are 180,000 more children across England who, like Harding's sons, have legally binding documents spelling out the support to which they are entitled from local authorities.
These costs can include sending children to private schools, taxis to transport them to and fro, and one-on-one teachers.
Bridget Phillipson, the Education Secretary, has refused to rule out scrapping these plans to halt soaring spending.
'If the Government does nothing, the projection is that spending on high needs will go up by around £2bn between now and 2028 purely due to growth in projected numbers with special educational needs,' says Luke Sibieta, of the Institute for Fiscal Studies.
'It will be a very, very big financial pressure.'
The Local Government Association (LGA) and the County Councils Network issued a similar warning late last year: 'It is not hyperbole to say that it is becoming increasingly clear that Send represents an existential threat to the financial sustainability of local government.'
Ballooning black hole
This trajectory is storing up serious problems for the future.
But backbenchers fear ministers are once again trying to rush crucial reforms to save money, effectively balancing the books on the backs of the most vulnerable.
Such optics are hardly a vote-winner in Labour heartlands.
'The continued scaling back of state support for disabled children is not only morally indefensible, it's a breach of duty. We are a wealthy country; we can find the means to support children in need if we have the political will,' says Kim Johnson, the Labour MP for Liverpool Riverside.
'We must not accept the excuse of arbitrary fiscal rules to justify dismantling the protections and support that children with disabilities not only deserve, but are legally entitled to,' she adds.
It comes at a time when Rachel Reeves is desperately trying to balance Britain's books. Economists project her fiscal black hole could be as large as £30bn come autumn, putting the UK on track for another major round of tax rises.
If left unaddressed, spending on children with disabilities threatens to make Britain's financial woes worse in coming years, experts warn.
These costs have already made local authorities rack up debts approaching £5bn – a black hole which is only growing bigger.
Rather than tackling the shortfall head-on, subsequent governments have let local councils use an accounting trick to move disability spending off their main balance sheets. To prevent widespread insolvencies, this deadline was recently pushed back to 2028 from 2026.
'As the previous government did, they've been just kicking the can down the road. But that deficit is getting bigger over time. It's now around £4bn to 5bn. By 2028, it's going to be more like £8bn unless the Government changes something radically,' says Sibieta.
'It makes it more ridiculous, the bigger it gets. Councils will have to keep servicing the debt, because it is real debt they hold. So it will get more expensive, but it just becomes more absurd,' he warns.
The LGA found that more than half of the councils that support Send children would become insolvent overnight if these debts were brought back on their main balance sheet.
While these debts do not directly feed into council tax bills, the interest payments and other costs related to high-needs children such as transport very much do add to the pressure.
William Burns, at the Chartered Institute of Public Finance and Accountancy, says debt interest costs have piled another £1bn on local councils across the past four years.
The Government faces bleak prospects if it fails to grasp the nettle of reform, he warns.
'The worst-case scenario is they don't reform the system, the deficits keep piling up. There'll be billions and billions and billions of pounds, and even if we just pretend that's not real money, then the real liquidity issues are still going to bite,' Burns says.
'That's not just going to impact on services for children with special educational needs and disabilities; it's going to impact on all services that councils deliver. It will impact adult social care, roads and so on, and everything else that the council's doing.'
The pressures from spending on Send children as well as adult social care are so great that they will force councils to start taking the axe to spending in other areas, he adds.
In other words, bin collection, local libraries and fixing pothole-littered roads could all be under threat from the Send debt disaster.
Council tax rise
These struggles are well known by Tim Oliver, leader of Surrey County Council, which has one of the largest Send deficits in the country.
'At the end of the day, local government has to provide a balanced budget every year where we've got increasing demand for adult social care, for children's social care alongside Send, then something will have to give at some point,' says Oliver, who is also the chair of the County Councils Network.
'All the more discretionary areas – there aren't that many of them left – are the ones that will probably have to give way. Otherwise, we will see more and more councils requiring exceptional financial support just to keep their head above the water.'
The impact on local taxpayers is that 'we are going to see council tax being levied at the highest rate for forever, in theory, until there's a change of approach or change of government', he adds.
Harding, the solicitor with two autistic sons, does not dispute that the Send system is painfully dysfunctional. She has experienced this first-hand. But she believes the council bears some blame too.
'It's a system which requires you to actually mistrust every single thing that you're told along the way. Local authorities do have to hold their hands up and admit that they do not plan ahead effectively,' she says.
'If local authorities looked ahead to see where the needs were coming, then they could avoid children like Matthew from going to specialist schools where the cost is a lot higher – and you're talking about something like £50,000, £60,000, £70,000,' she says.
'It's quite harsh to try and blame our children for that when it's not their fault that the system hasn't kept up with their needs and the numbers.'