SEND spend spotlight: the data keeping Labour up at night

The National Audit Office is expected to publish its report on the cost and performance of the special needs system in England next week.

It will put SEND spend in the spotlight right before the budget and spending review later this month. Schools Week looks at four of the most pressing concerns for the new Labour government …

1. The £2.5bn timebomb set to explode in 2026

Councils are predicting a deficit on their dedicated schools grant of £2.5 billion in 2024-25, up from £1.4 billion in 2023-24.

These are estimates, so actual spend could vary. But the further rise presents a very worrying outlook.

At present councils have accounting immunity, which means they can keep these ballooning deficits off their books – known as a statutory override.

This was due to end in 2023, but the Conservative government had to extend it until 2026 after ten councils said putting the deficits back on to their balance sheets would effectively make them bankrupt.  

Now half of councils say they could be insolvent within three years and a quarter within a year if it was removed, a survey by ISOS Partnership has found.

2. Record funding, but outcomes not improving

Despite councils falling into deficit – the high-needs budget has increased by a huge 65 per cent in the past five years to a record £10.3 billion.

However, there is little evidence to suggest outcomes for SEND pupils are improving.

Measuring outcomes for such pupils isn’t straightforward. But at key stage 2, the percentage of pupils with an education health and care plan (EHCP) achieving the expected level in reading, writing and maths has stagnated at about 7 to 8 per cent since the SEND reforms. 

This compares to a rise from 62 per cent to 70 per cent for pupils without special needs, the analysis found.

At key stage 4, the gap between SEND pupils and their peers “has remained stubbornly large and shows no evidence of closing”, the partnership warned. 

Given the wider funding blackholes Labour said it has inherited, this effectiveness of this increased spend is undoubtedly under close scrutiny.

3. Costly private SEND school spend soars

The extra cash is being eaten up partly because councils are increasingly using expensive private special schools.

Councils predict they will spend £1.7 billion on independent provision in 2024-25, a 206 per cent rise from the £576 million spent in 2015-16. 

On average, a place in an independent special school costs double what it does in a state school.

A Schools Week investigation last year found some private schools are run by companies backed by private equity investors and a Middle East sovereign wealth fund who are making millions as state school provision bursts at the seams. 

The previous government has since told some cash-strapped councils to rein in spend on independent special schools. But unless money can be found to build new state schools – or incentivise mainstream schools to be more inclusive – then it’s hard to see how this will change.

4. £1.2bn bailouts, just 1 council deficit wiped

Thirty-eight councils with the biggest SEND deficits have signed up to controversial “safety-valve” deals. 

The government gives them bailouts to help get spending under control, but only if they commit to introduce sweeping reforms. Others are facing legal cases from parents.

One council refused to sign a deal, saying the proposed cuts would essentially force it to break the law over the support it is required to provide.

Since 2020, bailouts totalling more than £1.2 billion have been promised. They are usually paid in intervals over five to seven years, and are dependent on councils meeting cost-cutting targets. Five have already been suspended because councils were not able to hit targets.

However, the Department for Education’s top civil servant, Susan Acland-Hood, admitted in May that only one council – the London borough of Richmond upon Thames – has been able to eliminate its deficit.