The spending watchdog should publish annual forecasts for high-needs spending and deficits, a think tank has said, as analysis shows the cost of the SEND system could soon outstrip that of entire government departments.
The Institute for Fiscal Studies (IFS) estimated high-needs spending will rise to £15 billion a year by 2029, and councils’ SEND deficits will swell to £8 billion by 2028.
It means spending on SEND alone would be much larger than the total budgets of several government departments, including the Ministry of Justice.
The IFS said that “given the scale and growth of spending, and the risks that they pose, the Office for Budget Responsibility should produce and publish annual forecasts for high-needs spending and high-needs deficits”.
The think tank warned that councils had “little control” over SEND spending, as it is determined by statutory provision set out in education, health and care plans (EHCPs).
The number of plans in place in England has almost doubled since 2016, with spending failing to keep pace with rising demand and costs.
Deficits could reach £8bn
Councils have amassed huge deficits, with the IFS predicting the overall debt level could reach £8 billion by 2028.
This is when the “statutory override” – a budgeting mechanism allowing councils to keep their SEND deficits off their main balance sheets – is due to end after a recent government extension.
Ministers are already facing criticism over their SEND reforms, due to be set out in a white paper this term. One adviser said scrapping EHCPs was under consideration.
The Local Government Association has called for councils’ SEND deficits to be wiped as part of the reforms.
Amanda Hopgood, chair of its children, young people and families committee, said: “We need an inclusive system where an EHCP is not always necessary, with a workforce that has the capacity and right skills, and investment in early intervention.
“The government must also address the outdated legislation that leaves councils facing rising and unsustainable costs, particularly in home-to-school transport, where demand has increased sharply but councils have little flexibility under current law.”
Massive rise in EHCPs
Spending on high needs has ballooned by 66 per cent from £7.5 billion in 2016, to at least £12 billion this year.
A further £3 billion increase by 2029 is likely if the system is not reformed, the IFS warned.
The huge increase in EHCPs, particularly for pupils with autism spectrum disorder (ASD) or attention deficit hyperactivity disorder (ADHD), is driving the rise.
The number of children with EHCPs for ASD almost tripled from 54,000 in 2015 to 149,000 in 2025, accounting for 40 per cent of the total increase in EHCPs.
The number of children with EHCPs for social, emotional and mental health needs, which includes ADHD, has also more than doubled, from 28,000 to 71,000.
The IFS said a “large part of this increase in recognised need is due to increased awareness of these conditions, although there may also be increases in underlying prevalence”.
But “past squeezes on school budgets may also have acted as an incentive for parents and schools to seek EHCPs in order to access extra resources”.
It warned that the continued spending pressures, “without top-ups to school spending plans – will likely imply real-terms cuts to mainstream school spending per pupil”.
‘Fragmented system’
As the number of children with EHCPs has soared, so has the number claiming child disability living allowance.
The IFS noted that “substantial overlap” between children receiving special educational support and children receiving support for a disability through the benefit system.
“This overlap suggests common factors are driving the large rise in identified need for both.”
Mark Franks, the director of welfare at the Nuffield Foundation, said the current system was “fragmented and hasn’t kept pace with the changing needs of the population.
“As demand and costs continue to rise, there is a strong case for holistic review of the system to ensure resources are directed where they are needed most and can achieve the greatest benefit.”
The IFS report found that boys, older children and those from poorer families were more likely to have EHCPs – meaning any changes would have “big impacts” on the distribution of support to these groups.
The research also found “big differences across ethnic groups in the share of children receiving additional support”.
For example, 2 per cent of Indian 12 to 15-year-olds had an EHCP, compared with 4.3 per cent of white British pupils and 5.7 per cent of black Caribbean pupils.
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