Councils on brink of bankruptcy over 'outdated' special educational needs funding crisis
More than three-quarters of England’s largest councils are at risk of going bankrupt by 2027 due to deficits in special education needs and disabilities (Send) spending, a new survey has found.
The County Councils Network, which represents 37 local authorities including North Yorkshire and the East Riding, has warned that the government must take urgent action on local government finance in next week’s Budget.
New data analysis has found that rising demand and costs has led to the largest councils in England amassing “unmanageable” Send deficits of £2 billion this year.
The current system has been described by politicians in Yorkshire as “outdated and doesn’t represent the current demands and needs of children and their families”.
The deficits are currently being kept off councils’ budgets due to an accountancy method called “statutory override”, however this is due to expire in March 2026.
This could cause 26 of the 38 councils surveyed by the CCN to issue a Section 114 notice, which effectively declares the local authority bankrupt.
While the survey was carried out anonymously, both North Yorkshire Council and the East Riding have told the Yorkshire Post that the rise in Send demand is one of their biggest outlays.
“The real pressure we’re getting at the moment is on Send, and on the transport of pupils with Send,” he told the Yorkshire Post.
“I don’t want to single out one individual occurrence, but we do have one child that we’re having to look after and that child is costing £1.2 million a year.
“That is the sort of scale of cost that we can be facing for an individual child, and there are more of those children coming into the system.”
This is exacerbated by the rural nature of North Yorkshire, with Coun Les adding: “It’s the right thing to do to actually provide [transport] for them, but we can’t deny there’s a budget implication for that.”
While in the East Riding of Yorkshire, the council receives the lowest amount of per pupil Send funding in the country.
Councillor Victoria Aitken, cabinet member for children, families and education said: “The way Send funding is calculated is outdated and doesn’t represent the current demands and needs of children and their families.”
If the East Riding of Yorkshire received the average national funding per pupil, the council would have £17.4 million extra each year for Send provision.
“The effect of lower funding in children’s services contributes significantly to the wider council budget, and if we received appropriate funding for high needs, our overall council position would be significantly more manageable,” Coin Aitken added.
“Whilst we know there is some outstanding work from schools and professionals, there is a real strain on the system, and we need this to change.”
This comes as a report from the Local Government Association found that one in four councils in England say they will have to apply for an emergency government bailout over the next two years to stave off bankruptcy.
Four out of five local authorities identified Send services as one of their top five pressures.
A Government spokesperson said: "We are focused on fixing the foundations of local government by rebuilding the sector from the ground up and stand ready to speak to any council that is experiencing financial difficulties.
“For too long children and young people with Send have been let down by a system that is not working and we are determined to tackle these issues head-on, improving children's life chances with better inclusivity and expertise within mainstream schools.
“There is no ‘magic wand’ to fix these deep-rooted issues, but we have already started with Ofsted reform, our curriculum review, and more training for early years staff, and will continue to act as quickly as possible to create the change that is so desperately needed.”