School funding for local authorities is “far from sufficient” to meet the huge rise in demand for special educational needs and disability (SEND) support, and the government needs to create a “realistic” plan to resolve growing deficits, MPs have warned.
The Levelling Up, Housing and Communities Select Committee has called on the government to fully review the education, health and care plan (EHCP) system and consider reforms to make SEND provision sustainable.
In its latest report on local authorities’ financial distress, the committee says funding through the Dedicated Schools Grant (DSG) or other means is not enough to meet rising demand for costly SEND provision and transport to schools.
Measures to address the strain on local authority budgets, such as the statutory override and the Safety Valve programme, “are temporary measures and do not address the underlying mismatch between demand, costs and annual Dedicated Schools Grant funding”, the MPs add.
The report adds that the “mismatch” between demand and funding must be resolved or local authorities will continue to accumulate deficits.
MPs say that it is not realistic to expect councils to reduce the huge deficits some have accumulated in just two to three years.
SEND funding: Schools left to ‘pick up the pieces’
Paul Whiteman, general secretary of the NAHT school leaders’ union, said schools are being left “to pick up the pieces” as a result of the government “wildly underfunding” SEND education.
“We agree that a radical new approach is needed - namely, ensuring that education, health and SEND are all funded to be needs-led, not resource-limited,” he added.
The F40 group, comprised of the historically lowest funded local authorities, has estimated an additional £4.6 billion a year is needed to meet the increased demand for SEND support.
Geoff Barton, general secretary of the Association of School and College Leaders, said “schools are doing their best with inadequate funding, often waiting for EHCPs to be processed and providing what support they can afford while that happens”.
He added that government SEND reform plans need to be backed up with adequate funding or they will never be achieved.
Growing deficits
Derbyshire County Council leader Barry Lewis told the committee that the estimate of budget deficits relating specifically to SEND across England is around £2.3 billion - and is expected to increase to £3.6 billion by March 2025.
Government figures showed last week that 13 per cent of maintained schools reported deficits for 2022-23, up four percentage points on the previous year.
A statutory override was put in place in 2020, which allows local authorities to overspend on their DSG budgets and accumulate a deficit without having to issue a bankruptcy section 114 notice, which has a big impact on delivering services.
This override is currently due to expire in March 2026.
The Department for Education has also been reaching agreements with local authorities with the highest DSG deficits known as Safety Valve agreements, which require councils to set out how they will reduce their debt and reform high-needs provision in exchange for additional money.
Some 34 local authorities have agreements in place, with five currently in the negotiation process.
Councils ‘on a cliff edge’
Without an extension to the statutory override and significant additional funding via the DSG, MPs warn local authorities face a “cliff edge of section 114 notices”.
The report highlights that the government has also not provided clarity on whether local authorities will be expected to fund remaining deficits when the statutory override ends.
It adds that developing better provision locally will take time and will not address short-term financial pressures.
Gary Fielding, section 151 financial officer at North Yorkshire Council, said: “We now have a young person who costs just short of £1.5 million per annum.
“Those were unheard-of sums beforehand, but it is because of the complexity, the greater diagnosis, the advances in medicine, the advances in care.”
More funding ‘needed’
MPs call for the government to agree “realistic and achievable” steps with local authorities and to provide additional funding to resolve budget deficits by 31 March 2024.
They also want a cross-government independent review of EHCPs and consideration of fundamental reform of the system that would make it financially sustainable while ensuring that children can still access the support they need.
MPs also recommend that the government should: assess future SEND demand that may need financial support; and provide funding for transporting pupils to school in the short term, and look at the benefits of introducing guidance on making this less costly.
The DfE has been contacted for comment.
The Department for Levelling Up, Housing and Communities said it has announced a £600 million support package for councils in England and it is ready to talk to any council concerned about its financial position.
