Councils could need to find nearly £5bn by 2026 across England or face bankruptcy and massive cuts to services
Councils could need to find nearly £5bn by 2026 across England or face bankruptcy and massive cuts to services
Three councils across Merseyside could face having to find more than £80m in two years as costs and demands to provide education for vulnerable children continue to spiral. However costs could go up even further, leaving councils having to find more money unless the government steps in.
For this current year, Wirral schools are expected to see a in-year budget black hole of nearly £13m which is being driven by rising costs providing for children with high needs of £74.1m, with an unexpected rise of £1.3m related to special educational needs. This deficit is expected to be nearly £26m by 2025 and could rise even more by 2026.
Wirral Council is currently under pressure to improve services for children with special education needs and disabilities (SEND) following an improvement notice issued earlier this year. This threatens possible government intervention by October 2025 and the council plans to invest £3.9m in the service over two years though staff and parents told the ECHO the situation was worse than ever.
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In July, a school forum report for Knowsley found schools were expected to go over budget due to high needs pressures by £13.446m this year and £19.7m next year. This means by 2025, the deficit is expected to be £33.1m.
Over in Sefton, the situation looks similar with the budget black hole there expected to be over £38m by 2024, driven by an in-year overspend of £19.3m. In 2020, the figure was £5.43m.
A critical report published today by the National Audit Office (NAO) found government funding for children and young people with SEND reached £10.7bn this year, 43% of councils were at risk of declaring bankruptcy as a result of high needs costs by March 2026 with councils across England possibly needing to find £5bn by that year.
The government in 2022 agreed the councils could keep the high needs budget gap off its council services balance sheet for three years. However this statutory override is expected to expire in 2026 leaving councils across the UK potentially having to find between £4.3 and £4.9bn to balance the books that year and the NAO said it expects things to get worse going forward.
The NAO report looked into the provision of special education needs and disability (SEND) services across England which are provided by local councils and overseen by the Department for Education. It currently estimates a £3.4bn gap between forecasted costs and funding by 2028.
Since 2014, demand for educational health and care plans (EHCP) have risen by 140% and locally, reports show numbers have nearly tripled in Wirral since 2019 forcing “unmanageable” working conditions on staff who are having to take time off sick and lengthy delays for families desperate for support. Now more than half a million children have plans across England increasing costs for councils.
The NAO said it has “significant doubts that current actions [by the government] will resolve the challenges facing the system” and no stakeholders thought they will be effective. The NAO also said the government has not identified a solution to the crisis, adding: “The government needs to think urgently about how its current investment can be better spent, including through more inclusive education, identifying and addressing needs earlier, and developing a whole-system approach to help achieve its objectives.”
Responding to the report, the Local Government Association’s representative for children, Cllr Arooj Shah said councils faced “a financial cliff-edge,” adding: “This report is yet another indictment of a failing SEND system that is not meeting the care and support needs of children with special needs.
“In next week’s Budget we are hoping that the Government will set out how it will reform and adequately fund the SEND system, so children get the support they desperately need.
“In particular we are hoping this will include writing off all high needs deficits to ensure councils are not faced with having to cut other services to balance budgets through no fault of their own, or their residents.”
However unlike budget black holes in Sefton, Wirral, and Knowsley, things are looking more positive for Liverpool and St Helens. Liverpool School Forum papers from June said £5.6m was expected to be left over at the end of the year which will be carried into the next year while for St Helens, this figure is expected to be £1.8m.
Responding to the report. Education Secretary Bridget Phillipson said it “exposes a system that has been neglected to the point of crisis, with children and families with SEND quite simply being failed on every measure.
“Every child and young person deserves the best life chances and the opportunity to achieve and thrive. But at the moment far too few are being given that chance in a system that is too skewed towards specialist provision and over-reliant on EHC plans – often only to the benefit of families who have the resources to fight for support.
“I am determined to rebuild families’ confidence in a system so many rely on – so, there will be no more sticking plaster politics and short-termism when it comes to the life chances of some of our most vulnerable children. The reform families are crying out for will take time, but with a greater focus on mainstream provision and more early intervention, we will deliver the change that is so desperately needed.”
The government plans to toughen OFSTED inspections in mainstream schools to make them more accommodating for pupils with SEND and work has started on training for early years providers to identify children with SEND earlier. SEND and alternative provision policy will also now come under schools within the Department for Education.
Sefton and Wirral are also two out of 55 councils who are part of the government’s ‘Delivering Better Value in SEND programme’ which provides dedicated support for areas struggling to provide adequate SEND services and facing financial difficulties. This resulted in a £1m grant for Wirral in February 2024.