Eliminating statutory overrides could compromise council budgets for Special Educational Needs and Disabilities (SEND)

In a significant development for local authorities across England, the impending expiration of the 'statutory override'—a mechanism that has allowed councils to exclude deficits on their Dedicated Schools Grant (DSG) spending related to special educational needs and disabilities (SEND) from their main revenue budgets—is set to have profound implications for the financial stability of these institutions.

The statutory override, which has been in place since 2020, has been a crucial buffer for councils managing mounting costs associated with rising numbers of children requiring Education, Health and Care Plans (EHCPs). With the override extended only until 2028, its expiration could expose councils to severe financial strain, as these deficits must be accounted for in councils’ main budgets.

According to a survey by the Local Government Association (LGA), over half of councils responsible for SEND children are worried about becoming insolvent when the override expires in March 2026. The LGA's research reveals that 53% of councils won't be able to set a balanced budget in 2026/27, rising to 63% in 2027/28 and 65% in 2028/29.

Cllr Arooj Shah, chair of the LGA's children and young people board, has emphasised the need for bold and brave action in the upcoming Spending Review to write off councils' high needs deficits and ensure the financial stability required to support children with SEND effectively. She also stated that only by doing so can councils meet the needs of children with SEND, which are expected to cost £12 billion to support in the coming years.

The expiration of the statutory override could lead to a reduction in capacity to support children with SEND, as councils may be forced to divert funds from other services or cut support to manage deficits. Given that SEND needs have sharply increased, with 423 requests daily for SEND support and 268 daily new EHCPs recorded in 2024, and the total number of children with EHCPs more than tripling since 2017, the potential impact on service provision is significant.

The LGA's research also highlights that Parliamentary oversight bodies have described the SEND support system as “reaching, or arguably, has already reached, crisis point” despite additional funding. The expiration of the override could exacerbate this crisis by intensifying financial instability for councils responsible for SEND.

The government has acknowledged the pressures on local finances but faces urgent calls to clarify future SEND funding arrangements. Lack of clarity about the override’s continuation or termination adds to uncertainty for councils planning their budgets and SEND provision.

In light of these challenges, the LGA is calling on the government to write off high needs deficits, estimated to rise to £5 billion next year, and implement a comprehensive reform plan that focuses on boosting inclusion in mainstream schools, early years settings, and colleges. The reform plan should ensure that these institutions have the capacity and expertise to meet the needs of children with SEND, thereby preventing a potential crisis point and maintaining the high-quality support that children with SEND require.

The financial stability of local government institutions is at risk due to the impending expiration of the statutory override, a mechanism that allows councils to exclude deficits on their Dedicated Schools Grant (DSG) spending related to special educational needs and disabilities (SEND).
Councils have been relying on the statutory override, which has been in place since 2020, to manage mounting costs associated with rising numbers of children requiring Education, Health and Care Plans (EHCPs).
The override, extended only until 2028, expires in March 2026, potentially exposing councils to severe financial strain as these deficits must be accounted for in their main budgets.
Over half of councils responsible for SEND children are worried about becoming insolvent when the override expires, according to a survey by the Local Government Association (LGA).
By 2028/29, 65% of councils won't be able to set a balanced budget without the statutory override, as revealed by the LGA's research.
Cllr Arooj Shah, chair of the LGA's children and young people board, has emphasized the need for bold and brave action in the upcoming Spending Review to write off councils' high needs deficits.
The financial stability required to support children with SEND effectively can only be ensured by writing off these deficits, according to Cllr Shah.
The total number of children with EHCPs more than tripled since 2017, with 268 daily new EHCPs recorded in 2024.
Given this increase in SEND needs, the potential impact on service provision is significant if councils are forced to divert funds or cut support to manage deficits.
The LGA's research also highlights that the SEND support system is already at or near crisis point, despite additional funding.
The expiration of the override could further intensify financial instability for councils responsible for SEND, exacerbating the crisis in the SEND support system.
The government faces urgent calls to clarify future SEND funding arrangements in light of these challenges.
Lack of clarity about the override’s continuation or termination adds to uncertainty for councils planning their budgets and SEND provision.
The LGA is calling on the government to write off high needs deficits, estimated to rise to £5 billion next year.
The LGA's proposed reform plan aims to boost inclusion in mainstream schools, early years settings, and colleges by implementing a comprehensive reform.
The reform plan should ensure that these institutions have the capacity and expertise to meet the needs of children with SEND.
Preventing a potential crisis point and maintaining high-quality support for children with SEND requires effective implementation of the reform plan.
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Eliminating statutory overrides could compromise council budgets for Special Educational Needs and Disabilities (SEND)