Some councils will remain in financial trouble even after government SEND deficits intervention, and may face a clamour from families and schools to get statutory support before reforms.
After pledging to wipe 90 per cent of high-needs deficits and take on new cost pressures from 2028, the government this week effectively transferred financial responsibility for SEND children with all but the highest needs from councils to schools.
Proposals to end tribunals’ power to specify placements for SEND children and cap costs charged by independent special schools are aimed at reducing the financial pressures on councils.
Local government reaction has been broadly positive. The f40 group, which represents councils that receive the lowest levels of school funding, “strongly welcomed” the reforms.
Luke Sibieta, a research fellow at the Institute for Fiscal Studies, told Schools Week that shifting many of the SEND system’s responsibilities and funding from councils to schools is “unambiguously” good news for councils’ finances.
However, he added the reforms created incentives that could see councils’ high-needs deficits rise quicker in the run-up to reform implementation.
The government’s consultation on SEND reforms stated all children and young people with a special school place in September 2029 can remain in specialist education until the end of their education if they want to.
From 2029, children with an EHCP can keep it until at least the end of their educational “phase”.
By contrast, the government said it expects EHCP numbers to fall once reforms have bedded in.
Likely surge in EHCP requests
“This creates a strong incentive for parents and schools to push for assessments under the existing system rather than the new one,” former Department for Education senior policy adviser Sam Freedman wrote this week.
He predicted a rise in EHCP requests and possibly a spike in tribunal claims, “which would put even more pressure on a system already close to collapse”.
“There is a real risk that will happen,” Sibieta told Schools Week. “I suspect the government is aware of that risk.”
He said the bailout of councils’ high-needs deficits meant local authorities might not “fight tooth and nail” against EHCP applications and special school placement requests, but added the government could step in if demand does surge.
“They could change some guidance,” he said. “For instance, put in more specific expectations about the conditions that need to be satisfied for pupils to go to a special school. They could try to change some of the codes of practice or guidance in advance.”
The government’s projections of EHCP caseloads rising and then falling back by 2035 are not explicitly based on factoring in a rise in demand sparked by the white paper.
‘Low’ incentives to keep costs down
Asked in parliament this week whether councils would be properly funded to any short-term surge in EHCP applications, education secretary Bridget Phillipson did not directly address the issue.
There is also the issue of councils’ remaining high-needs deficits, which mostly start increasing again between this year’s 90 per cent bailout and 2028, when councils must incorporate those deficits into balanced budget commitments.
The LGA wants all dedicated schools grant deficits written off, plus more funding for SEND transport.
“If I was a council, I would be assuming there will be a similar bailout for the next two years,” said Sibieta.
“The bigger problem is how to manage councils in the meantime, because their incentives to keep costs down are now going to be very low.”
Phillipson was keen this week to emphasise that the bailouts are conditional, telling MPs they would only happen “if local authorities produce SEND plans that will deliver accountability and the places and support for children”.
She pointed to “affluent councils in affluent areas delivering incredibly poor-quality provision”.
Councils still in trouble
Even if the 90 per cent bailout is extended to cover all accumulated deficits up to 2028, Schools Week analysis shows some councils will remain in financial trouble.
Based on freedom of information data from 73 councils – calculated before this week’s reform plans – a 90 per cent bailout would leave five councils with a cumulative deficit of more than £20 million.
A further 10 councils would face remaining deficits of between £10 million and £20 million.
Some would face bigger post-bailout deficits in 2028 than they were projecting pre-bailout for 2025-26. Bradford, for example, is set to fall into a cumulative deficit for the first time this year, forecast at about £500,000 pre-bailout.
However, it is projected to grow from there, so even if 90 per cent of its entire forecast cumulative deficit to 2028 is wiped out, it would still be £8.2 million in the red in two years’ time.
Hampshire council would face the biggest post-bailout deficit in 2028, at £44.8 million.
A spokesperson said the council expected it would not have sufficient reserves to cover such large deficits by 2027-28, and added that until the 2026 bailout money is paid, it will lose about £14 million a year in lost investment income.
Funding ‘rebalanced’ towards schools
Funding for special educational needs will be overhauled with schools at the centre under the government’s reforms.
However, critics fear extra cash announced by ministers may not go far enough.
The government announced this week it will hand schools £1.6 billion over three years to become more inclusive, and will bolster high needs funding by £3.5 billion – new cash from the Treasury – from 2028, though it is not clear how much of this will go to schools.
Under the new system, schools will be expected to deliver the new universal, targeted and targeted plus layers of support, including through inclusion bases.
This is to reduce the bureaucracy and delays in the EHCP system by allowing schools to respond swiftly and flexibly within a mainstream setting to commonly occurring SEND needs.
However, the £1.6 billion in initial funding over three years across the country would equate to only small increases in budgets for individual schools, prompting concerns it won’t go far enough.
Many unanswered questions
Pepe Di’Iasio, general secretary of the Association of School and College Leaders, said there are “a lot of questions to answer” over funding, particularly how the published figures “translate to individual schools and their additional responsibilities for SEND provision” given the financial pressures many schools are under.
Jo Hutchinson, director for SEND and additional needs at the Education Policy Institute, said there was “no way that it’s going to add up to the kind of money per setting in every setting that would enable them to think about a different staffing model”.
The SEND reforms consultation paper said conditions would be placed on the inclusion funding to ensure it is spent on an improved inclusion offer, with settings and trust held accountable for it.
Hutchinson questioned how schools would get to decide on spending, or whether money would get “eaten up” on staffing the new inclusion bases.
Benedicte Yue, chief financial officer at the Oxfordshire-based River Learning Trust MAT, welcomed the reform package’s principles, but warned the additional funding could “quickly disappear” if the reforms are not implemented “at pace”.
The government has announced high-needs funding will rise by £3.5 billion in 2028.
Over time, more funding will be “rebalanced” from high-needs budgets to schools to reflect that they will be expected to deliver more provision themselves.
Yue told Schools Week that increasing schools’ core funding to deliver a more inclusive offer for children with moderate needs without an EHCP “provides greater stability in funding for schools to invest in the workforce and in their inclusion strategy”.
But she added that there weren’t enough details yet to assess if the funding would be sufficient.
By making schools the primary financial focus of the SEND system, there is a risk they could face the same financial challenges councils have.
“Unless the reforms are genuinely successful in meeting need earlier and better to the extent that fewer kids have needs that escalate, then there’s no particular reason why schools would have a better shot at balancing budgets versus rationing than local authorities,” said Hutchinson.
School clusters
The SEND reform consultation set out the government’s desire for all schools to become part of a local SEND group.
“We propose in the long term all schools will be required to pool a minimum level of funding within a local SEND group for inclusion, to support needs fairly across a group of schools,” the consultation said.
“This pooled funding will be used collectively to meet the needs of children with SEND including through sharing expertise, resourcing, staffing, support bases and commissioning of shared resources, such as specialist teachers.”
The proposal resembles local SEND “clusters” that have grown in popularity.
However, SEND policy consultant Dr Peter Gray, who has helped councils introduce the cluster model, told Schools Week what the government is proposing is subtly but critically different.
While clusters are funded collectively above the level of individual schools, the government’s plans involve schools putting their own funds into a pooled pot.
“The idea they seem to have is devolve to individual schools and then pool and reassemble,” he said.
“Once money goes to individual schools, they feel they own it and they’re sort of giving it back, and they’re doing other schools a favour.
“I think the psychology of giving schools money and then making them pool it is a bit unlikely in some ways.”
Yue also expressed concerns over the government’s pooling model. “Pulling back funding from schools to pool resources locally to buy-in collective services could lead to all sorts of disagreements.
“Devolving a proportion of the high-needs block directly to local clusters would, in my view, remove the perception that that money belongs to specific schools, and better support local collaboration and peer support.”
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