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Multiple English councils face potential bankruptcy due to re-emerging concealed debt related to special educational needs | Financial Crisis Looming

The dire straits of England’s special educational needs and disability (Send) crisis show no signs of improvement. According to a Guardian investigation, councils are set to overspend on Send services by nearly £2 billion in the coming year. This expenditure surge is predicted to drive up the accumulated deficits to at least £5.2 billion by the end of March 2026.

The financial implications are severe, as the massive deficit, which has been hidden off local authority books for seven years through accounting maneuvers, will be brought back onto the balance sheets at the end of March 2026. This could potentially lead to immediate bankruptcy for numerous town halls.

The government faces a monumental challenge in managing not only the increasing historical debt related to Send but also in curbing future spending, which seems relentless. No easy solutions are in sight.

Previous efforts to rein in Send spending included the provision of millions of pounds in “safety valve” grants to numerous councils. These were intended to foster more efficient management of parental demand for Send support. The success of these schemes in reducing costs has been minimal, with only a few of the 131 councils that responded to the Guardian indicating they expect to avoid deficit next year. Many of those nearing a balanced budget foresee promptly falling back into deficit once the grant funding ceases.

Councils are pressing for legislative changes to give them more control over who receives specialized Send support and where such education is delivered. On the other hand, parents and activists argue that such measures will not address the root issue, which stems from mainstream schools’ inability to meet the needs of Send pupils. Critics warn that rationing access to education, health, and care plans won’t solve the fundamental problem, and they urge the government to deal with the council debts and enhance early intervention and inclusion programs.

The government has pledged an additional £1 billion for Send services and plans to create 10,000 more specialized places in mainstream schools. A white paper is expected later in the year, signaling the government’s commitment to overhaul the Send system. However, decisions on addressing the deficits have not been made yet.

Jane Hayman, Norfolk county council’s director for Send and inclusion, acknowledges the system as ‘broken’, criticizing how it opposes parents against schools and forecasts Norfolk’s deficit to reach £183 million soon. Hayman anticipates government intervention to prevent such substantial losses.

Not everyone shares Hayman’s optimism. Mike Cox, Bournemouth, Christchurch and Poole council’s deputy leader, with an expected deficit of £168 million by the end of March 2026, believes the government will continue to delay addressing the issue, only making matters worse.

Source: https://www.theguardian.com/education/2025/mar/30/english-councils-send-debt-analysis

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