The majority of local council debt accrued through spending on special educational needs provision will be covered by the government, ministers have announced.
has said 90 per cent of the high-needs deficits accrued up to the end of the current academic year, projected to total more than £5 billion, will be paid off by grant funding, as long as councils get Department for Education approval for a local special educational needs and disabilities reform plan.
The government will also provide advisers to help councils ensure that future SEND spending is “effective, efficient and focused on improving outcomes for children and young people”.
The announcement comes after a recent survey showed that around eight in 10 councils would face insolvency if their high-needs deficits - built up through spending on SEND - were brought back on to their books.
At the moment, a statutory override is in place that keeps these debts off local authorities’ accounts, but this is due to come to an end in 2028.
Councils’ rising SEND deficits
In the , it said money would be available to councils through a new High Needs Stability Grant.
It added: “We are committed to working closely with authorities to minimise the impact of continued deficit spending.
“As part of this, we are sharing best practice from previous programmes - including Safety Valve and Delivering Better Value - to support local authorities to develop local plans.
“Additionally, we will provide each local area with advisers to help ensure that spending is effective, efficient and focused on improving outcomes for children and young people.”
The grant will be paid to councils in autumn 2026. The government has said that resolving deficits accrued to the end of 2025-26 could cut the cost of financing the existing debt by £300 million by 2027-28.
It has also said it will confirm the details on further support for deficits arising in 2026‑27 and 2027‑28 before the statutory override on deficits ends in March 2028.
“Local authorities can expect that we will continue to take an appropriate and proportionate approach, though it will not be unlimited,” the government said.
The government has also said that because this new approach will be more “generous than the support most local authorities would have received through Safety Valve agreements, this programme will end”.
The County Councils Network welcomed the deficit announcement and said it “will be a significant relief to our member councils with the deficit set to reach £6.6 billion nationally by the end of next month”.
The government is expected to lay out its plans to reform the SEND system in the coming weeks through a delayed schools White Paper.
Bill Revans, SEND spokesperson for the County Councils Network, said: “Looking ahead, it is vital that the schools White Paper sets out comprehensive reform to the SEND system”.
Louise Gittins, chair of the Local Government Association, said: “This is recognition that these costs are not of councils’ making and have accrued due to a broken system that is urgently in need of reform. However, fully writing off historic and future high-needs deficits remains critical.”
She added: “Overall budget-setting will be another hugely challenging task for many councils this year and beyond. It is crucial that government works with councils on reform of key services, including SEND and adult social care.”
The government had announced in the autumn Budget that from 2028 it would manage future SEND costs from within the overall government budget, meaning deficits would no longer sit at local council level.
The Office for Budget Responsibility raised concerns when it warned that this could result in a 4.9 per cent fall in per-pupil spending if the government funds a £6 billion black hole from the Department for Education’s core schools budget.
The government has, however, previously insisted that council SEND deficits will be absorbed into the overall government budget rather than being taken from schools, and that the OBR’s projections do not account for the impact of SEND reforms that ministers are bringing forward.
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