LGA Warns of Financial Crisis as SEND Funding Pressures Mount on Councils

A new report from the Local Government Association (LGA) has revealed that over half of the councils in England responsible for supporting children and young people with special educational needs and disabilities (SEND) could face financial collapse within the next few years unless urgent government intervention is provided.

At the heart of the crisis is the expiration of the "statutory override", a temporary financial mechanism that allows councils to record SEND-related spending deficits separately from their general budgets. This provision, introduced in 2020 to ease immediate pressure, is due to expire in March 2026. Without it, councils will be forced to integrate these growing deficits into their main financial statements, potentially pushing many into unlawful budgets and triggering Section 114 notices, effectively declaring bankruptcy.

• 53% of councils report they will be unable to balance their budgets in 2026/27.
• This figure rises to 63% in 2027/28, and 65% in 2028/29, according to the LGA's survey.

This financial fragility stems from an explosion in demand for SEND services over the past decade. Since the Children and Families Act 2014 came into force, which aimed to improve support for children with additional needs, the number of young people requiring Education, Health and Care Plans (EHCPs) has surged by 140% from just over 240,000 in 2014/15 to nearly 576,000 in 2023/24.

While the intention of the 2014 reforms was to streamline support across education, health, and social care, councils have been left to manage this rapidly growing need without sufficient funding from central government. The result is a national SEND funding gap that continues to widen, with councils projected to face a combined high needs deficit of around £5 billion next year alone.

In response, the LGA is urgently calling on the government to use the upcoming Spending Review to address the crisis head on. Their central plea is for the Treasury to write off the accumulated SEND deficits, which are not the result of financial mismanagement, but of structural underfunding and policy-driven demand increases.

Cllr Arooj Shah, Chair of the LGA’s Children and Young People Board, warned that the looming removal of the statutory override poses not just a financial threat, but a profound risk to the continuity and quality of support for children with SEND.

“Without urgent action, councils will be left with impossible choices. Balancing the books could come at the cost of cutting back on other essential services—or failing the children and families who rely on SEND provision. We need a bold, long-term solution that reflects the reality on the ground,” she said.

The LGA is also calling for systemic reform, not just financial relief. This includes greater investment in mainstream inclusion, so that schools, early years providers, and colleges are better equipped to support pupils with additional needs in more inclusive settings. Currently, many children with SEND are being placed in specialist or independent provision due to lack of capacity or capability within mainstream education, a trend which is not only costly, but often avoidable with the right support in place.

The Association argues that a rebalancing of the system is essential, to not only reduce financial pressure on local authorities but to ensure that every child, regardless of need, has access to quality education close to home.

As councils brace for further funding uncertainty, the message from the LGA is clear: without decisive government action to address both the immediate financial burden and the long-term sustainability of the SEND system, the future of support for thousands of children and families is at serious risk.