The County Councils Network (CCN) has warned that special educational needs and disabilities (SEND) debt could trigger a "financial catastrophe" for local councils, with deficits projected to reach £10.4billion by March 2028.
Councillors said the looming debt could hit the huge figure just 18 months after a government bailout. The CCN said local authorities are "not out of the woods" despite ministers writing off 90% of accumulated SEND deficits up to the 2025-26 financial year.
Bailout described as a lifeline
Linden Kemkaran, SEND spokeswoman for the CCN, said: "It is no exaggeration to say that the Government's SEND bailout, due within weeks this autumn, is a lifeline. But whilst this bailout addresses yesterday's debt, councils are not out of the woods, and tomorrow's deficits are already building at an even faster pace.
"Despite this, we have little clarity from Government on how much support we will receive – and when. Anything less than paying down 90% of this new debt would be a financial catastrophe for councils. These deficits have not accumulated because councils have chosen to spend recklessly: they are the result of having to meet rapidly growing statutory demand, which has only intensified this year, without funding keeping pace."
Record EHCP numbers drive rising costs
In January this year, the number of young people on Education, Health and Care Plans (EHCPs) reached a record high of 718,000 – a 13% jump over 12 months. Council leaders have seen a sharp increase in applications for EHCPs as parents, carers and schools look to secure a support plan before any Government reforms begin.
Consequently, costs to councils are rising exponentially and their deficits are building up again, despite the Government paying down 90% of deficits accumulated up to March this year through a High Needs Stability Grant, due to be paid later this autumn.
Deficits re-accruing despite bailout
The Government is providing over £5billion this autumn to clear SEND deficits built up to March 2026. But even after accounting for the upcoming bailout, councils say their deficits are re-accruing and could reach £4.8billion by March 2027. This is then set to more than double over the following 12 months, to a record high of £10.4billion by March 2028.
Ms Kemkaran said: "If councils are left carrying billions of pounds of SEND debt, it will not just be a problem for local authorities.
"Taxpayers and local communities will ultimately bear the consequences as councils face impossible choices about how to protect frontline services while managing debts that have accrued through no fault of their own. We need clarity from ministers, followed by concrete action to support councils to pay down deficits."
The Government has been contacted for comment.
