Schools have limited incentives to be inclusive and ministers need to develop a long-term vision for mainstream schools, according to a report on the country’s special educational needs and disabilities (SEND) system.
The National Audit Office (NAO) has called on the Department for Education to reform the funding and the accountability system, and to build an evidence base of how mainstream schools can best support pupils with SEND.
The report also warns that more than two-fifths of councils face effectively declaring bankruptcy in 18 months due to deficits driven partly by SEND spending and it says the government has not yet identified a solution to this.
Published today, the NAO report says that “as a matter of urgency” the government needs to produce plans to ensure councils can be financially sustainable, and warns that deficits could rise to £4.6 billion by March 2026.
The public spending watchdog’s report says the SEND system is not delivering better outcomes for young people or preventing local authorities from facing “significant financial risks”.
The NAO adds that “insufficient capacity” within schools and longer waiting times to support children with SEND have contributed to low parental confidence in the system.
DfE unclear on what inclusivity could look like
It makes a series of recommendations including a call on the government to “develop a vision and long-term plan for inclusivity across mainstream education”.
This should include building an evidence base for where mainstream settings can best support children with SEND and how to improve parents’ confidence.
The report warns that, to date, the government “has not made clear what inclusivity could look like and there are limited incentives for schools to be inclusive”.
Ofsted is planning to look at inclusion as part of a new inspection system being launched next year.
Education secretary Bridget Phillipson said: “The NAO’s report 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.”
She said the reform that “families are crying out for will take time” and will involve a greater focus on mainstream provision and more early intervention.
The DfE will also encourage schools to set up resourced provision and SEND units to increase capacity in mainstream schools.
A Tes investigation earlier this month highlighted how there are concerns over a lack of guidance and oversight of both formal and informal additional provision being used in mainstream schools.
At last week’s Tes SEND Show, a multi-academy trust leader suggested that the department’s descriptor for inclusive education, produced to help it make decisions about academy trust growth, could be applied to all schools in the country.
Council deficit warning
The NAO report highlights the dire financial situation facing the SEND system.
There is currently a statutory override in place that means Dedicated Schools Grant deficits are not reflected in council books - but this is due to come to an end in March 2026.
The report warns that some 43 per cent of authorities may therefore be at risk of needing to issue a Section 114 notice if the statutory override ends as planned.
The report adds: “DfE estimates that the cumulative deficit will be between £4.3 billion and £4.9 billion at that time, with a central estimate of £4.6 billion. DfE indicated that there is currently no identified solution which can be implemented quickly and ensure children with SEND continue to have their needs met.”
It recommends that the DfE should urgently work with the Ministry of Housing, Communities and Local Government, as well as the Treasury, on plans for ensuring each council can achieve a sustainable financial position once the statutory override ends in 2025-26.
Safety Valve deals ‘may have been optimistic’
The DfE launched a “Safety Valve programme” to bring down spending in areas with the highest SEND deficits. The NAO report warns that the majority of these deficits (28 of 33) will not be cleared before the statutory override is due to end.
Although the DfE assessed 22 of the 33 local authorities with active Safety Valve deals to be on track to eradicate their deficits by the end of the deals, the NAO said these agreements “may have been optimistic”.
It highlights that the DfE has suspended agreements with five local authorities that did not meet payment conditions.
‘Warning lights are flashing red’
Headteachers’ leaders have called for council deficits to be written off to ensure funding reaches children and young people.
Paul Whiteman, general secretary of the NAHT school leaders’ union, said: “The warning lights are flashing red - without proper investment, things will get even worse, and the system may face complete collapse.
“High-needs deficits must be written off and urgent, targeted investment is needed to stop children in different parts of the country from being left behind.”
Pepe Di’lasio, general secretary of the Association of School and College Leaders, said the NAO was right to say interventions such as the Safety Valve and Delivering Better Value programmes are “not alleviating the problem”.
He added: “We’ve surely now reached the point where these deficits must be written off and funding directed to where it will make the biggest difference to the lives of children and young people.”
Mr Di’lasio also backed calls for the government to develop a vision and long-term plan for inclusivity across mainstream education, adding that the former Conservative government’s SEND and alternative provision improvement plan “is not sufficient to make changes of the scale required”.
Increased EHCP demand
The report also highlights that only half of the education, health and care plans (EHCPs) - which set out the provision of SEN support a young person needs - were issued within the statutory 20-week time limit in 2023.
Demand for EHCPs increased by 140 per cent between 2015 and 2024 - from 240,000 to 576,000 - and most of the increase related to autistic spectrum disorders, speech, language and communication needs, and social, emotional and mental health needs, the NAO says.
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