England’s local authorities have been granted a crucial two-year extension on the “statutory override” that hides rising deficits in Special Educational Needs and Disabilities (SEND) spending from their balance sheets. This pause, delayed from its original end date in April 2026 to April 2028, buys vital breathing space for councils but stops short of resolving the long-term financial crisis plaguing high-needs education.
A Temporary Reprieve
Under current arrangements, councils can continue borrowing to cover SEND deficits—now estimated at over £5.2 billion—without immediately reflecting this mounting debt in official financial statements. With interest and related costs projected at around £200 million per year, councils are relieved to dodge a fiscal cliff edge, at least for now. As Tim Oliver, chair of the County Councils Network, said: “Council leaders can breathe a sigh of relief knowing they no longer face a financial cliff edge in nine months’ time”.
Still, councillors caution that this is far from a cure. Iain Murray of CIPFA warns that without a permanent settlement, including the writing-off of historic deficits, many councils risk insolvency or draconian service cuts. Labour MP Helen Hayes echoed this, describing the extension as a “temporary fix” and urging full resolution of SEND debts by 2028.
Rising Demand Intensifies Pressure
Compounding the crisis, the number of children requiring formal Education, Health and Care Plans (EHCPs) has surged. Nearly one in five school children in England now have identified SEN, with approximately 482,600 children holding EHCPs. Councils report overspending by as much as £2 billion in a single year, pushing cumulative deficits near £5.2 billion by March 2026.
A Schools Week report highlights that over 50% of councils warn they will struggle to set balanced budgets without the override, even in 2026–27, with this rising to nearly two-thirds by 2028–29. Arooj Shah of the Local Government Association stresses that only decisive action, such as writing off debts and funding system reform, can restore councils’ financial health and ensure quality support for pupils.
Government Pledges Reforms, But Details Are Lacking
Officials say the extension allows time for broader reforms and promised a full reform package later in 2025. The government has also hinted at redistributing funding to deprived or rural areas and tourist hotspots, coupled with modest increases in SEND budget allocations. However, ministers insist this will not require raising council tax, assuming local authorities use the maximum allowable 4.99% annual increase.
Still, analysts, including the Public Accounts Committee, warn that these measures don’t address structural challenges. Without clarity on deficit write-offs or a retooled high-needs funding model, this delay could turn into a long-term postponement with little real impact.
What Lies Ahead
- Autumn 2025: Government to publish detailed reforms for SEND funding, including strategies for managing deficits.
- By April 2028: Extension period concludes—councils will once again have to show SEND debts on their balance sheets unless reforms intervene.
- Councils under pressure: Many warn they’ll face insolvency or must issue Section 114 notices—effectively declaring financial emergency—without decisive state intervention.
Funding uncertainty continues to affect local authorities, as the extension of the statutory override provides only a temporary reprieve. Councils remain under severe financial pressure, with no long-term solution yet in place to address SEND deficits.
Demand for SEND support is rising rapidly, with more children requiring Education, Health and Care Plans (EHCPs) than ever before. This growing need is forcing councils to borrow heavily to bridge the gap between available funding and actual provision costs.
The government is expected to publish detailed SEND reforms in autumn 2025, and these announcements could be pivotal. Changes may include the writing off of existing deficits, a reformed funding model, and additional support for councils, all of which could have a significant impact on the future of SEND provision and education recruitment.