(England) Despite $7B govt bailout, councils face re-accruing SPED debt of $6.3B by Mar 2027

Oct 13, 2026, Express: Labour warned of looming 'financial catastrophe' facing local councils - must act now - AOL

An eye-watering £10 billion [$13B] debt could cause "financial catastrophe" for local councils, Labour has been warned. Special educational needs and disabilities debt (SEND) could hit the huge deficit just 18 months after a government bailout, councillors have warned.

The County Councils Network (CCN) said local authorities are "not out of the woods" despite ministers writing off 90% of accumulated SEND deficits up to the 2025-26 financial year. Linden Kemkaran, SEND spokeswoman for the CCN, said: "It is no exaggeration to say that the Government's SEND bailout, due within weeks this autumn, is a lifeline. But whilst this bailout addresses yesterday's debt, councils are not out of the woods, and tomorrow's deficits are already building at an even faster pace.

"Despite this, we have little clarity from Government on how much support we will receive - and when. Anything less than paying down 90% of this new debt would be a financial catastrophe for councils. These deficits have not accumulated because councils have chosen to spend recklessly: they are the result of having to meet rapidly growing statutory demand, which has only intensified this year, without funding keeping pace."

In January this year, the number of young people on Education, Health and Care Plans (EHCPs) reached a record high of 718,000 - a 13% jump over 12 months.

Council leaders have seen a sharp increase in applications for EHCPs as parents, carers and schools look to secure a support plan before any Government reforms begin.

Consequently, costs to councils are rising exponentially and their deficits are building up again, despite the Government paying down 90% of deficits accumulated up to March this year through a High Needs Stability Grant, due to be paid later this autumn.

The Government is providing over £5billion [$7B] this autumn to clear SEND deficits built up to March 2026.

But even after accounting for the upcoming bailout, councils say their deficits are re-accruing and could reach £4.8billion [$6.3B] by March 2027.

This is then set to more than double over the following 12 months, to a record high of £10.4billion [$14B] by March 2028.

Ms Kemkaran said: "If councils are left carrying billions of pounds of SEND debt, it will not just be a problem for local authorities.

"Taxpayers and local communities will ultimately bear the consequences as councils face impossible choices about how to protect frontline services while managing debts that have accrued through no fault of their own. We need clarity from ministers, followed by concrete action to support councils to pay down deficits." . . .

"Fixing the SEND system will take time and councils will need further support with deficits, so we will set out the details before March 2028."